NMa Consults Private Sector about Procurement Power

The Netherlands Competition Authority (NMa) has published a consultation document on procurement power and sent it to the various parties involved. The aim of this consultation is to analyse how procurement power results in market distortions, which have a negative effect on the development of prosperity, in general, and on consumers, in particular.

NMa has a number of instruments to combat the emergence and abuse of procurement power. In its control of mergers, for instance, NMa can determine whether a dominant position will arise or be strengthened. If this is the case, NMa may prohibit the merger. The abuse of a dominant position is also prohibited. In essence, this means that an undertaking with a market position which is so strong that to some extent it can impose its will on buyers, suppliers and competitors, may not abuse its dominant position. Dominant companies have a special responsibility with regard to buyers, suppliers and competitors. Imposing unfair procurement conditions may therefore also be prohibited in the purchaser holds a position of power.

The joint ventures, which competitors sometimes enter into to provide a counterbalance to a purchaser with market power, is a related issue. Entering into agreements which restrict competition (cartels) is prohibited under the Competition Act. These agreements, however, may be exempted from the prohibition on cartels under certain circumstances. Sometimes, however, agreements that restrict competition may have positive economic effects which are also passed on to consumers. The document describes the opportunities which the parties have to counterbalance procurement power and the boundaries which the Competition Act stipulates in this regard.

The Procurement Power Consultation Document can be obtained from NMa's website (www.acm.nl). Through this consultation, which lasts until the end of August, NMa offers the private sector the possibility of describing its experience of procurement power. NMa will use this contribution to draw up a discussion document. NMa will then use this document in assessing cases in which procurement power plays a role.