NMa Publishes Policy in Relation to Fines
Today the Netherlands Competition Authority (NMa) published the main principles of its policy for determining the fines that companies may expect if they contravene the prohibition on cartels or the prohibition on the abuse of a dominant position. In doing so, NMa aims to provide clarity with regard to the level of possible fines and to make a contribution to the prevention of very serious infringements, in particular those which have direct consequences for buyers, such as consumers.
Level of the Fine
The starting point in determining the level of fines is the turnover involved. Briefly, this is the total turnover achieved by the company for the duration of the infringement through the sale of all goods and services to which the infringement relates. If the company has contravened the law for a number of years, the turnover involved would amount to the sales generated in all these years. Initially the fine will be based on a percentage of this turnover involved. In the case of very serious infringements, for instance, this percentage will range from a minimum of 15% to a maximum of 30%. In addition, the total annual turnover of the company on the Dutch market and circumstances resulting in an increase or decrease in the fine may be taken into account. In the case of very serious infringements, the fine may increase to an amount well above 30% of the turnover involved. The level of the fine is not subject to a maximum other than the 10% of total net annual turnover referred to in the Competition Act. The fine may therefore amount to a multiple of the (potential) advantage that the company enjoyed from the infringement of the Competition Act.
In imposing a fine, NMa also takes into account the individual situation of the offender. The seriousness and duration of the offence are decisive in determining the level of the fine to be imposed. This may be higher or lower depending on the behaviour of the company that contravened the Competition Act. Companies that obstruct NMa's investigation or have contravened the Competition Act repeatedly may expect a considerable increase in the fine. Companies that offer their victims compensation of their own accord may expect a reduction in the fine.
Types of Infringements
NMa makes a distinction between less grave, grave and very grave infringements. Very grave infringements of the Competition Act include, for instance, horizontal price agreements, agreements in relation to tenders and forms of abuse of a dominant position aimed at excluding or driving a company from a market. Grave infringements include, for instance, vertical price agreements which have a direct effect on prices or sales opportunities. NMa regards, for example, branch schemes that limit competition and which do not relate directly to prices and sales opportunities as less grave infringements.
In order to ensure that smaller companies, in particular, are not affected more harshly than larger companies, these guidelines, in contrast to the guidelines of the European Commission, are not based on fixed fines for each category of infringements. The guidelines correspond to the system set out in the Competition Act and have been drawn up taking into account the experience of other countries with regard to the imposition of fines on cartels and in relation to other practices that limit competition.
After applying the guidelines in a sufficient number of cases, the guidelines will be evaluated. If necessary, the guidelines will be amended. In the short term, a consultation document will also be published containing rules which explain how companies can apply for a reduction or even immunity from fines, if they (are the first to) provide NMa with information on cartels and if they meet a number of other conditions (rules in relation to leniency).