New NMa fining rules come into force

The Netherlands Competition Authority (NMa) is the first among European competition authorities to issue fining guidelines for infringements under energy and transport legislation. Such guidelines are put forward in the NMa Fining Code 2007, together with fining guidelines for infringements under the Competition Act. 'In the main, the fining rules for infringements under the Competition Act have remained unchanged. However, you will look in vain for the 'fast-lane' procedure and special fining guidelines which the NMa implemented during its investigation into the construction industry', emphasises Pieter Kalbfleisch, Chairman of the Board of the NMa. 'Upon closing our investigation into the construction industry, this unique procedure also came to an end.'

By means of the fining code, the NMa provides insight into its method of setting fines for infringement of provisions laid down in competition rules as well as energy and transport regulation, compliance with which is supervised by the NMa.

As regards the fining code, the NMa Chairman is keen to point out the existing possibility of raising fines, by 100% in some cases, if a company has been previously fined for infringement of competition regulation (recidivism). 'The European Commission also applies this rule. This establishes a deterrent fine, which may be many times as large as the potential gains to be obtained by infringing competition legislation', warns Kalbfleisch.

For infringements of sector-specific legislation, fines are set on the basis of an amount related to the total turnover of the offender. This also holds good for infringements of the obligation to cooperate with the NMa during an investigation and infringements relating to merger control, for instance failure to make timely notification of a merger or acquisition. Infringements of energy and transport regulation may involve the supply of energy without a supply license or a lack of agreements between transport companies and the rail infrastructure operator. These infringements have been divided into six categories based on the seriousness of the infringement. Each category stipulates a permillage of the total turnover and a minimum fine, which provide the starting point for setting the fine.

For the cartel prohibition and the prohibition on the abuse of a dominant position, the methodology chosen in 2001 is maintained: the fine is set on the basis of a percentage of the relevant turnover. In short, this comprises the total turnover achieved by the company for the duration of the infringement through the sale of all goods and services affected by the infringement. If a company commits an infringement lasting several years, the relevant turnover will equal sales for the total number of years. For very serious infringements (which are referred to as 'hard-core' infringements), the basic amount may increase to a maximum of 30% of the relevant turnover. On the grounds of aggravating circumstances (for instance relating to the fact that an offender has been fined before), this amount may be raised. The NMa may also take into account mitigating circumstances. In case of an offender's timely compensation of injured parties, for instance, the NMa may reduce the fine. In line with European legislation, the fines are statutorily tied to a maximum.

Setting fines on the basis of the value of goods and/ or services to which the infringement relates is in line with the methodology that is currently being applied by the European Commission and competition authorities in the United Kingdom, Germany, Italy, Hungary and Sweden. This is in keeping with the aim of realising the convergence of rules, in the field of competition law also, across the European Union.

As regards fining natural persons, the NMa is still in the process of preparing additional fining rules. These will be incorporated into the Fining Code shortly, as the Senate of the Dutch Parliament has recently approved amendments to the Competition Act, following an evaluation of the Act.

As from now, all new cases will be subject to the Fining Code. Cases which have already resulted in a statement of objections prior to this date still come under the Fining Guidelines 2001. The Fining Code is available on the NMa's website (www.acm.nl).