Netherlands: Initial Amendments to Competition Act Completed

The first part of a long-awaited modernization of the Dutch Competition Act 1997 has recently been finalized.

On July 20 2004 an act amending the Competition Act was published in the Law Gazette. The amendment was deemed necessary on two grounds: (i) the Dutch competition regime needed to be harmonized with the EU regime as determined by EU Regulation 1/2003; and (ii) a thorough evaluation of the Competition Act, which included a Social and Economic Council advisory report, concluded that the act, which entered into force in 1998, needed updating. A reduced set of modification proposals survived a long process of policy decisions and parliamentary discussions.

The amendment, which will be followed shortly by a second amendment, contains two noteworthy changes: (i) the individual exemption system has been abolished; and (ii) the fine for failure to cooperate with the Dutch Competition Authority has been increased one hundredfold to €450,000. The amended Competition Act entered into force on August 1 2004.

As in Brussels, the Dutch Competition Authority will no longer grant exemptions. The notification system of potentially anti-competitive agreements has been abolished by repealing Article 17 of the Competition Act. Instead, a third paragraph has been added to Article 6, providing an equivalent to Article 81(3) of the EC Treaty. From now on, companies (and their legal advisers) must consider the potential effects of agreements on competition, and therefore the Dutch Competition Authority can no longer guarantee beforehand that an agreement will pass this test. Consequently, companies no longer benefit from immunity to fines pending the decision.

Furthermore, and contrary to EU amendments, the Competition Act stipulates that individual exemptions which have already been granted will cease to be valid after their term of operation or after August 1 2009, whichever is sooner. Hard-fought-for exemptions may therefore be subject to reconsideration, so it is no longer guaranteed that an agreement will not be considered anti-competitive later on.

The second amendment is intended to enable tougher punishment of violations of the duty to cooperate with Dutch Competition Authority investigations. Article 5(20) of the General Administrative Law Act requires full cooperation with any reasonable requests of a supervisory authority within a reasonable time limit that it may specify. In anticipation of greater enforcement powers (eg, the power to enter private homes, which is likely to be introduced by the end of 2004), and following complaints about the lack of a deterrent effect, the minister has increased the maximum fine for a failure to cooperate from €4,500 to €450,000.

In addition, the amendment creates explicit powers for the Dutch Competition Authority to cooperate with the European Commission and other competition authorities, implementing duties that are provided for in the Notice on Cooperation within the Network of Competition Authorities. Previously, a separate act gave the legal basis for cooperation between the Dutch Competition Authority and the European Commission.

A proposal to extend the enforcement powers of the Dutch Competition Authority, particularly the powers to enter private premises to search for evidence of anti-competitive behaviour and to award personal fines to directors and executive personnel, has been stalled, pending a second proposal to amend the Competition Act, which needs to be evaluated further by Parliament.

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