NMa looks back on results of first six months
In the first six months of 2008 the Netherlands Competition Authority (NMa) undertook six announced and unannounced business visits to AWBZ institutions in the healthcare sector, companies in the food and agricultural sector, the cosmetics sector and the construction sector. The competition authority also drew up two reports against businesses active in home care because of a suspicion of violation of the Competition Act. These concerned preliminary findings. In a next phase of the procedure the businesses involved will be questioned.
Evading a fine imposed by the NMa doesn't pay.
This emerged from a court case that the NMa had instituted against a construction company that said it could not pay the fine that the NMa had imposed for participation in a construction cartel. The court did not consider this proven and agreed with the NMa that the company was simply refusing to pay. The court ordered the director to pay the fine in full, plus all court costs with interest. What does sometimes pay is requesting leniency. This emerged from a special informational film about the leniency scheme that the NMa posted on its website in April. Participants in a cartel can get a reduction in their fine or even be exonerated from paying a fine if they confess their involvement to the NMa early and provide information that can help track down the cartel. The aim of the film is to increase awareness of this scheme, among professionals, entrepreneurs and a larger public. The NMa received a total of nine leniency requests in the first and second quarter of the year.
Mergers and acquisitions
In the area of assessing proposed mergers and acquisitions, the NMa received 63 notifications in the first six months of the year, it issued 61 approvals after an initial investigation and imposed a licence requirement on the takeover of the Gouden Gids (part of Truvo Nederland) by De Telefoongids (part of European Directories), which means that the NMa wishes to undertake further investigation to examine any possible impediments to competition. These parties have since applied for a licence.
The NMa also set requirements for the merger between Evean Groep, Philadelphia Zorg and Woonzorg Nederland. The original merger plans came up against competition objections. After amendment to the reported concentration, whereby Woonzorg committed to hive off 11 nursing and/or rest homes, the NMa approved the merger. After the approval the parties formed a personnel union that could be designated a concentration and for which NMa approval is necessary.
Minister for Housing, Communities and Integration (WWI) Ella Vogelaar put a brake on further integration of Woonzorg Nederland with the healthcare institutions at the end of June since this is at odds with the current regulation. Housing corporations are explicitly not permitted to take on healthcare tasks as well, the Minister said. The NMa also imposed requirements on the Stichting Amsterdam Thuiszorg before it can merge with the Stichting Cordaan Groep. After Amsterdam Thuiszorg hived off a quarter of its activities in the area of household assistance, personal care and nursing and guidance, the NMa approved the proposed merger. Thanks to the NMa's decision the market share of Cordaan and Amsterdam Thuiszorg together is smaller than the market share Amsterdam Thuiszorg enjoyed before the merger. The new combination will also encounter competitive pressure from the other players on the Amsterdam healthcare market.
The merger of Cordares Holding N.V. with APG Groep N.V. (only in Dutch available), subsidiary of Stichting Pensioenfonds ABP, received approval. In August 2007 the NMa indicated it wanted to further investigate the merger of Stichting AMC de Meren and Stichting JellinekMentrum (only in Dutch available). After extensive investigation in the licensing phase the NMa extended its approval to this merger in the mental healthcare sector in April.
Consultations
The NMa consulted the business sector, the legal profession and other stakeholders about the funeral services sector and SEPA, the introduction of the 'Single Euro Payments Area that provides for a single European payment market. Pieter Kalbfleisch, chairman of the Board of the NMa said regarding SEPA: 'I am concerned about comments from banks that there will reportedly be no future for PIN in SEPA. If banks already start jointly speculating about the scrapping of PIN, they create a situation in which the competitive position of PIN is weakened in advance in comparison to the other payment products.'
An important conclusion from the market scan of the funeral services sector is that extra payments are deemed the greatest problem in the sector. Surviving relatives often have to unexpectedly pay high additional amounts, even though they thought that the entire funeral would be reimbursed by the insurer. It is possible that a lack of transparency and communication, as well as different interpretations of policy terms and conditions, is the reason behind unexpected high additional payments for funerals. More transparency in the market can be achieved if funeral insurers communicate more clearly to consumers what exactly they are insured for and for which facilities customers must pay extra. The NMa has called on the sector to achieve this transparency.
Competition
As of 1 June the NMa has a Competition department, which arose from the merger of the Competition Regulation and Concentration Control departments. By combining knowledge of the different markets from the perspective of competition and merger supervision the NMa can better fulfil its tasks as competition authority in the future. There was also a change to a sector-specific regulator within the NMa, the Office of Energy Regulation (DTe) became the Energy chamber (only in Dutch available), thereby providing consistency in the names of the NMa divisions that act as regulators in specific sectors within our economy.
A significant development for the regulatory duty of the NMa's Energy Chamber was the announcement of the method decision 2008-2010 (only in Dutch available) in February and the height of the efficiency discounts on the basis of which the transport tariffs for the regional gas transmission network managers are calculated. On the basis of this the network managers made proposal for the tariffs in 2008. The NMa announced these tariffs for nine network managers on 20 June and for the remaining three managers on 1 July. The reason that some rates were announced later was that the three network managers had instituted emergency proceedings with the Appeal Board for the Business Sector (CBb) against the method decision, on the basis of which the NMa sets the tariffs. The CBb rejected the request from the network managers that the method decision be suspended and also fixed the tariffs for these companies. On average households will pay eight euros less in 2008 for the supply of gas.
In April regulators, network managers and market parties in countries in north-western Europe who are members of the Gas Regional Initiative North West (GRI NW) adopted a roadmap for the 2008-2012 period. This took place at a joint meeting in the West-Indisch Huis in Amsterdam, attended by representatives from Belgium, Denmark, Germany, France, the United Kingdom, Ireland, Sweden, the Netherlands and Norway. The aim of this roadmap is to bring completion of the internal European gas market closer by, with a regional market in north-western Europe as a step along the way. The roadmap shows how the parties within the GRI NW can cooperate to take a step in the right direction in order to achieve a fully liberal gas market throughout Europe in the long term. This involves tackling as many obstacles as possible that currently stand in the way of trading on the European gas market.
The NMa also published an investigation of energy companies' websites at the beginning of May which indicated that consumers can trust the information on prices and conditions on these sites now more than in the past. This investigation was prompted by the fact that until recently these sites did not offer enough comparable information for consumers. The right information makes it simpler for consumers to make a good comparison of energy companies and easier for them to change providers. The NMa placed an Information package on energy at www.ConsuWijzer.nl to help in this process. This package contains 5 informative leaflets with concrete tips on the most important energy-related topics, such as comparing energy companies, changing providers, points of attention in attracting customers and the energy bill.
In October 2007 the NMa determined the technical terms and conditions for flexibility services (only in Dutch available). Flexibility services enable providers of gas to accommodate predictable and unpredictable fluctuations in the purchase of gas, for example when drastic temperature differences occur. This decision was to come into effect on 1 July 2008, but the NMa decided in June to postpone this until 1 January 2009, after objections about the feasibility of this date from market parties. All other objections to the technical terms and conditions were rejected. In June the NMa also found that electricity networks at recreational parks should be characterised as a 'network' when the recreational homes linked up to this network are owned by third parties. This means that a network manager is responsible for these electricity networks. A network manager is an independent utility company that manages a transmission network for energy. If the homes are the property of the owner of the recreation park, then no separate network manager needs to be appointed for management of the network and the owner is responsible for such management. This question arose in a case brought by owners of recreational homes on Park Emslandermeer.
At the end of June the NMa fined five suppliers of traffic regulation equipment and traffic regulation installations for more than EUR 400,000 for making cartel agreements between January 1998 and the end of December 2003. This is the last case in which the NMa gave companies the opportunity to participate in the accelerated sanction procedure to allow the businesses to 'come clean' after the so-called 'construction fraud affair.' This procedure entailed that the companies were not individually questioned, but expressed their view on the report collectively via a representative. The NMa has now concluded all cartel cases against construction companies who participated in this scheme.
At the end of June the NMa also imposed fines on ProRail for a total of EUR 826,000 and an order for incremental penalty payments for violations of the Railways Act. ProRail, the manager of the Dutch rail network infrastructure, did not adhere to the regulations of the Railways Act which aim to guarantee that railway companies are able to use the main railway infrastructure properly and fairly. 'Our investigation indicates that ProRail not only misinformed the railway companies, but provided them with incomplete information. In addition to this, after capacity had already been distributed for service in the year 2007, ProRail went ahead and allocated capacity to its own company at the expense of the capacity that had been allocated to the railway companies,' says Pieter Kalbfleisch, chairman of the Board of the NMa. 'It is very important that the regulations which guarantee access to the railway infrastructure are applied fairly and without discrimination. Only then are the railway companies able to offer their customers, the travellers and shippers, a good product, specifically a train that runs on time.'
The Appeal Board for the Business Sector (CBb) ruled in June on a case that had been running since 1999 concerning a salvage regulation for stranded automobiles (the Incident management system). This regulation is implemented by the Stichting Incident Management Nederland (SIMN), which represents eight emergency centres. The NMa has granted an exemption for this partnership since the salvaging of stranded vehicles can thus take place efficiently on the state motorways (primary road network). The Association of Salvagers' Interests (VBB) represents a group of salvagers who by means of a number of procedures have resisted the introduction of the Incident management system and the exemption that the NMa has granted for this system. The court declared that the salvagers' appeal was unfounded since the VBB did not put forward any arguments for why the exemption for the primary road network should be revoked.
The Transport chamber of the NMa processed five complaints (only in Dutch available) from railway companies about the actions of ProRail, the manager of the rail network infrastructure. The disputes concerned the manner in which ProRail had scheduled maintenance on the tracks during the 2008 timetable. As manager of the rails, ProRail is responsible for allocating capacity. ProRail had granted itself too much capacity. The NMa is still handling a similar dispute that NS has taken to court. A complaint submitted by Rover on the same topic was declared inadmissible by the NMa, since the NMa cannot handle any complaints from travellers (or organisations representing their interests).
On the basis of the 2000 Passenger Transport Act the NMa confirmed a protocol (only in Dutch available) in which providers of municipal public transport (bus, tram, metro) declare they will maintain separate accounting. The NMa has checked whether the declaration has been properly drawn up and published. For the third NMa Rail monitor (only in Dutch available) the NMa consulted parties active on the rail transport market, including most of the railway companies and ProRail. The aim of the rail monitor is to obtain insight into how parties see the implementation of the Railways Act in the context of the relationship between infrastructure manager and transport company. The NMa also consulted the parties on the Transport chamber's supervision and prioritising.
The NMa set the Weighed Average Cost of Capital (WACC) as a method for calculating the weighted average cost of capital for the Pilotage service. Calculating the weighted average cost of capital is important in determining the maximum income from the tariffs for piloting sea-going vessels. The Dutch Pilotage corporation, which sets the maximum tariff income, must take into account the WACC fixed by the NMa.
Over the past year 6,200 consumers reached the NMa via www.ConsuWijzer.nl (external website) . The NMa's business counter was contacted about 1,800 times.