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NMa: sound enforcement requires political investment

Competition brings prosperity, such is the effect of our work, states Pieter Kalbfleisch, Chairman of the Board with the Netherlands Competition Authority (NMa), at the occasion of the presentation of the NMa Agenda for 2007. 'We have to be careful not to lose sight of the ever-pressing need for competition enforcement. It is said that the number of civil servants should be reduced, but I have also heard pleas for more effective enforcement. If high-quality enforcement is what we want – and it is, I am sure – we have to realise that this requires an investment', according to Kalbleisch, in words directed at politicians and the general public.

The NMa Chairman warns against a simplification of the debate. Cutting down on market monitoring authorities will have important effects that may not now be known. It puts at risk the detection and sanctioning of businesses that have infringed the Competition Act. 'Particularly in this day and age, it is important for the NMa to be visible and effective. Markets must work and should continue to do so. This requires a permanent effort on behalf of market monitoring authorities, businesses and critical consumers.' The NMa observes an increase in levels of competition experienced by businesses, for instance in the construction industry, a sector that has over the past years required the NMa to work hard. 'Markets that work well provide for a prosperous Netherlands. This principle needs constant reiteration at a time in which the benefits of competition seem cast aside ever so easily, emphasises Kalbfleisch.

With a view to the above, the NMa will in the coming year outline the effects of its policy. The Office of the Chief Economist, established in 2006, plays an important role here. The total direct economic effect of the NMa in 2006 amounts to approximately EUR 800 million. Kalbfleisch underlines that the effects of competition enforcement are not only of a quantitative economic nature: 'Effects also have a legal dimension and affect society: cartels are not only harmful in an economic sense, but are also subject to a legal prohibition and considered undesirable from the point of view of the public good. Apart from these 'static' effects, competition also gives an incentive to innovation, relating to product innovation as well as a renewal of processes. In a competitive market, it is possible to outdo competitors by reducing costs and improving efficiency in company processes.'

In conjunction with the Ministry of Economic Affairs, the NMa will in 2007 evaluate its leniency programme with a view to stimulating participation. The Authority also has high expectations of a new statutory instruments such as the so-called 'commitment', requiring parties to commit to a change in (market) practices. As a result, further investigation and sanctioning are rendered unnecessary. The NMa will monitor subsequent compliance with commitments made. 'This is in line with our view that optimal compliance is more important than maximum enforcement', adds Kalbfleisch.

As stated in the Agenda for 2007, the NMa will this year focus on the following areas of attention: energy, transport, media and communications markets, the financial sector and healthcare. In 2006 various markets were outlined in a systematic and thorough way. Specific enforcement plans have now been drafted on the basis of this research, resulting in concrete actions in 2007.

Annual Bulletin 2006
Besides the Agenda, the NMa today also presents its first figures on 2006. In the past year, the NMa imposed sanctions in 13 cases, amounting to more than EUR 114.1 million, involving more than 900 sanctions decisions in various sectors of the construction industry. Furthermore, the NMa handled 108 complaints on infringements of the Competition Act and in 7 cases completed procedures by using an instrument alternative to the Statement of Objections, as parties had for instance altered procedures/ regulation to accord with the Competition Act. In 2006 a total number of 5 investigations in various sectors resulted in a suspected infringement, as set out in a Statement of Objections. Also, the Authority drew up 117 decisions on mergers, acquisitions and joint ventures. Five cases on healthcare concentrations stood out, requiring further investigation by the NMa. In 2006 a total number of 45 energy disputes were settled on the basis of energy legislation. ConsuWijzer, the joint information desk operated by OPTA, the Consumer Authority and the NMa, was officially launched on 4 October 2006. From 1 July onwards, it dealt with more than 5800 signals on the issue of consumer rights, including 90 tip-offs and 180 complaints that possibly involve infringements of the Competition Act.

Prior to its annual selection of priorities the NMa consults society. Response submitted to the consultation (Dutch only), the NMa Agenda 2007 (Dutch/ English) and the Annual Bulletin 2006 (Dutch/ English) are available on the NMa website.