NMa: New policy rules on fines have come into effect
Dutch Minister of Economic Affairs Maria van der Hoeven has granted the Netherlands Competition Authority (NMa) the power to impose higher fines on undertakings that have violated competition and energy laws. These new policy rules supersede the current NMa Fining Code. In addition, the Minister has also drawn up new policy rules on leniency and combination agreements.
With these policy rules on fines, undertakings, but also lawyers and judges, are provided with more insight into how the NMa determines a fine for the various violations of the competition and energy laws. The NMa will soon also publish revised policy rules on fines regarding transport laws, such as the Railway Act, the Aviation Act and the Pilotage Act.
The most important amendments to the policy rules on fines are:
- For very serious violations of competition regulations, such as price cartels or agreements on dividing the market, the NMa can increase the base fine by up to 25 per cent of the relevant turnover the undertaking had in its final year of the violation. The European Commission uses the same percentage.
- For all violations, the fine will be increased by 100 per cent if the undertaking has already been fined for a similar violation (recidivism), unless such an increase, given the circumstances, would be unreasonable.
- When determining the fine, the NMa will take the gravity of the violation into account. Acting as a multiplier, this so-called ‘gravity’-factor is taken into account when setting the level of the fine. The factor’s maximum has been raised from 3 to 5, meaning the base fine can now, at the most, be quintupled.
Apart from these amendments, the Minister has left the current NMa Fining Code’s fining system largely intact. These new policy rules will apply to violations that undertakings have committed after these rules have come into effect (per October 1st, 2009). Earlier committed violations (before October 1st, 2009) will continue to fall under the NMa Fining Code. The policy rules can be found online on the NMa’s website.
Leniency program revised, though same message
The NMa’s current leniency scheme will be superseded by the Policy rules of the Minister of Economic Affairs on the reduction of administrative fines in connection with cartels. Several parts of the leniency scheme have now been better explained and illustrated. Yet, on a substantive level, the scheme has been left unaltered. The leniency scheme will remain one of the NMa’s most important tools in exposing cartels. Under this scheme, a cartel participant may qualify for fine reduction if he confesses the cartel to the NMa. The first cartel participant to confess the cartel may even escape a fine completely. The NMa’s Leniency Office can be reached at +31-70-330-1710.
Policy rules on Combination agreements
With the release of the new policy rules on combination agreements, the Minister aims to provide undertakings with insight into when they are allowed to form a combination in accordance with the Competition Act. Combination agreements used to enjoy an exemption from the prohibition of cartels, under certain conditions. This exemption has been repealed as of January 1st, 2009. This means that the prohibition of cartels has become effective again. The NMa will determine on a case-by-case basis, as well as taking into account the concrete circumstances, to what degree a combination agreement violates the prohibition of cartels. One industry where undertakings (that are each other’s competitors) often form combinations is the construction industry. This way, different specialties can come together that are needed when working on a complex construction project, for example, a sub-sea tunnel. However, when competitors unnecessarily form combinations, there is a danger that mutual competition may be restricted. This could lead to higher prices and less innovation. When concluding combination agreements, undertakings should therefore always investigate whether these agreements could restrict competition.