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Netherlands: Merger Control - The European Antitrust Review 2011

  • Netherlands
  • Competition, EU and Trade

13-12-2010

As of 1998, Dutch merger review is carried out under the Dutch Competition Act (DCA) by the Dutch Competition Authority (NMa). In 2009, 90 concentrations were notified with the NMa, compared with 129 notifications in 2008. Of the 90 notifications made, the NMa decided that one concentration required a licence. Four licence applications were filed with the NMa, and two were granted.

Substantive provisions

Concentration and control

Pursuant to section 27(1) DCA, the following situations fall under the scope of the term "concentration"

  • mergers of one or more previously mutually independent undertakings; and
  • acquisitions of direct or indirect control by: - one or more natural persons who, or legal entities which, already control at least one undertaking; or - one or more undertakings, or the whole or part of one or more undertakings, through the acquisition of a participating interest in the capital or assets, pursuant to an agreement or by any other means.

The creation of a joint undertaking, which performs all the functions of an autonomous economic entity on a lasting basis is a concentration within the meaning of section 27(1)(b).

The DCA defines control as the possibility to exercise decisive influence on the activities of an undertaking on the basis of actual or legal circumstances.

Thresholds

Pursuant to section 29 DCA, notification of a concentration is mandatory if certain turnover thresholds are exceeded. Parties will need to notify their intention to implement a concentration if, in the preceding calendar year, the combined turnover of the participating undertakings exceeded €113.45 million and at least two of the undertakings involved realised a turnover of E30 million in the Netherlands. Concentrations between undertakings which are not established in the Netherlands will also fall under the scope of Dutch merger control in the event that the above-mentioned turnover thresholds are met.

Lower thresholds health-care sector

Lower thresholds can be imposed for specific categories of undertakings for a period of five years. The minister of economic affairs imposed such lower thresholds for the health-care sector from 1 January 2008 until 31 December 2012. A concentration in the health-care sector must be notified if in the preceding calendar year:

  • the aggregate turnover of the participating undertakings exceeded €50 million;
  • at least two of the undertakings involved realised a turnover of €10 million in the Netherlands; and
  • at least two of the participating undertakings realised a €5.5 million turnover with health-care activities.
Calculation method for turnover of financial institutions

For the purposes of turnover calculation of financial institutions, the following revenues must be taken into account:

  • interest income and similar income;
  • income from valuable papers;
  • received commission;
  • results from transactions; and
  • other operating income, all after deduction of value-added taxes and other taxes directly related to the revenues concerned.

Filing procedure

After notification of intention to implement a concentration, the NMa has to decide within four weeks whether a licence will be required. This phase of the filing procedure is generally referred to as the first phase.

The NMa can ask the parties within five days following receipt of the notification for missing documents and information. In such case, the four-week period will commence after all parties concerned have provided the missing documents or information. In addition, the NMa can ask parties to complement the notification. The four-week period will then be suspended until the day that all parties have submitted the requested information. If the information is not submitted within six months following the NMa's request, the concentration will be deemed not to have been notified. Upon request of all undertakings concerned, the four-week period can be suspended once if (according to the NMa) such suspension is in the interest of the handling of the case.

If the NMa decides that a licence is required, parties can initiate the second phase by submitting a licence application. The NMa is required to decide on the application within 13 weeks. During the second phase, the NMa will apply the substantive test (similar to the substantive test used in the EC Merger Regulation) and assess whether the concentration significantly impedes effective competition in the Dutch market, or part of it, in particular as a result of the creation or strengthening of a dominant position. In its assessment of a concentration, the NMa will take the economic reality into account.

Efficiency defence

The NMa may accept efficiency defences. If the parties to the concentration can demonstrate that the concentration will further economical and technical development, the NMa may decide that no licence will be required.

On 25 March 2009, the NMa accepted an efficiency defence for the first time and granted a licence for the merger of two hospitals. The Dutch Healthcare Authority (NZa) also gave its view on the consequences of the merger. According to the NZa, besides quality advantages, the merger would have a negative effect on health-care accessibility. The NZa observed that the merger would lead to a monopolistic position for the merged hospitals and that the disadvantages of the merger should be compensated by making the concentration subject to strict conditions. These conditions varied from the disposal of specialisms to the creation of conditions under which medical specialists could offer competitive services.

The NMa followed the NZa's opinion that the merger would have negative consequences.

The hospitals then put forward the efficiency defence and argued that the merger would verifiably lead to a quality improvement for the purchasers on the relevant market. The NMa concluded that in this case, the cumulative conditions for an efficiency defence were not met. According to the NMa, it was insufficiently clear whether there would be efficiency improvements for the purchasers and whether the alleged quality improvements could actually be realised and in a timely manner. As the NMa was convinced that a merger was the best method for realising the proposed efficiency improvements, the NMa decided to grant a licence for the merger, subject to additional measures. Contrary to the conditions proposed by the NZa, these additional measures (inter alia) consist of one of the parties being subject to a price cap for the provision of certain services, the maintaining of necessary facilities (such as intensive care and first aid in each hospital location) and the possibility for new specialists to enter into the market by making operating rooms available to them.

Conditions and remedies

The NMa may make the granting of a licence subject to conditions. The NMa is not only able to attach conditions to its decisions in the second phase, but also in the first phase.

Prenotification, remedies proposed by parties

The NMa encourages parties to contact the NMa prior to notification. In case of competition concerns, a pre-notification meeting could be used to discuss possible remedies. Pursuant to the NMa guidelines on remedies, the proposed remedies should be appropriate and effective. A remedy will be deemed appropriate and effective if it completely and undoubtedly solves the identified competition issue. The remedy should address the core of the identified competition issue. In addition, the proposed remedy should be detailed and must be drafted in plain and intelligible language. Moreover, a remedy may not be open to several interpretations.

Structural, behavioural and quasi-structural remedies

Just as with the European Commission, the NMa distinguishes between structural remedies and behavioural remedies. The NMa holds the view that behavioural remedies should be avoided as much as possible, as they require constant monitoring and enforcement. The NMa may, under certain circumstances, accept behavioural remedies, for example, in case of vertical relations to avoid price squeezes or refusal to grant access. The behavioural remedies will in principle apply for an indefinite period of time. Behavioural remedies can only be limited in time if it is clear that the competition issue will not occur after a certain period of time has lapsed.

Besides structural and behavioural remedies, the NMa also distinguishes quasi-structural remedies. Quasi-structural remedies do not concern the divestment of business units, but do have a lasting (more or less structural) effect on the market. An example of a quasi-structural remedy is the granting of an exclusive and privative licence, as a result of which the new undertaking will keep the ownership rights but cannot actually use certain assets. Just as with behavioural remedies, quasi-structural remedies will in principle apply indefinitely, but could be limited in time if it is clear that the competition issue will not occur after a certain period of time has lapsed.

Joint ventures

The conditions pursuant to which a joint venture is regarded as a cooperative joint venture are in line with the EC Merger Regulation. This means that cooperative joint ventures are also subject to merger control. The supervision is, therefore, ex ante. In assessing whether a licence would be required for the realisation of the notified concentration, the NMa is required to check cooperative joint ventures against the cartel prohibition and rule of reason stated in section 6 (1) and 6 (3) DCA, respectively.

Filing fee

The NMa will level fees to compensate costs incurred for issuing a number of different decisions. A decision following a merger notification will involve a fee of €15,000. A decision following a licence application will involve a fee of €30,000. For other decisions the fee will amount to €2,000. Fees are due at the moment a decision is issued.

Fines due to infringement of merger control provisions

If an undertaking infringes the prohibition to realise a concentration without the NMa's approval, or if an undertaking realises a concentration which has been unapproved by the NMa, the NMa can impose fines or order to take action sanctioned by forfeiture of penalty payments serving to reverse the infringement.

Further to the NMa Fining Code, fines can amount to a maximum of €450,000 or, if this would exceed €450,000, a maximum of 10 per cent of the (worldwide) turnover of the undertaking in the year preceding the concentration.

 

"An extract from the 2011 European Antitrust Review - a Global Competition Review special report."

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