Dutch municipality must pay penalty payment

The municipality of Heerhugowaard has to pay a penalty payment to the Netherlands Authority for Consumers (ACM). ACM had previously ordered the municipality to stop competing unfairly with commercial marinas and berths. At Broekhorn, the marina operated by the municipality, the tariffs do not include all costs. As a result, the municipal marina competes unfairly with commercial marinas and berths. This is not allowed under the Dutch law on competitive neutrality, the Dutch Act on Government and Free Markets. 

In order to force the municipality to adjust its tariffs, ACM had previously imposed an order subject to periodic penalty payments on it. Rather then adjusting its marina’s tariffs, the municipality chose to issue a decision designating a service of general economic interest. This means that the municipality no longer needs to comply with the Dutch Act on Government and Free Markets.

Chris Fonteijn, Chairman of the Board of ACM, comments: “Technically speaking, the municipality has complete freedom in choosing the appropriate instrument in order to comply with the rules. Issuing a decision designating a service of general economic interest is one such instrument. However, it unfortunately does not take away the distortion of competition.” Since Heerhugowaard issued the decision designating a service of general economic interest too late, it does have to pay a penalty payment of EUR 5,000.

The Dutch Act on Government and Free Markets

Government organizations are allowed to offer products and services on the market. If they do, they will have to play by the rules though. Those rules are to protect commercial businesses against unfair competition by government organizations.