Contributed By Nysingh Advocaten-Notarissen N.V
Investigations can be triggered in four ways:
Depending on the information that the ACM receives, it will gather more data on market positions before taking further investigative steps. If the case so requires, economic analyses and digital desk research may be conducted, or collaboration with other authorities such as public prosecution and the Dutch Authority for the Financial Markets (AFM) may be sought (see also 3.4 Inter-Agency Co-operation/Co-ordination, below).
The ACM also has the option to start sector inquiries.
After these steps, most of the time the ACM will carry out a dawn raid, copy documents and digital data and interview employees.
The ACM is entitled to enter every place (with the exception of a private home) without the consent of the occupier and may take with it the requisite equipment. If necessary, ie, if the company involved refuses entrance, it may gain entry with the assistance of the police. Entitlement to enter ‘every place’ means that the ACM is, for instance, also entitled to enter employees’ cars.
ACM officials are authorised to enter a private home without the resident’s permission, insofar as this is necessary, within reason, for the purpose of exercising the ACM’s investigative powers. However, this requires obtaining a warrant in advance from the examining magistrate entrusted with handling criminal proceedings before the District Court of Rotterdam. If asked for, the warrant must be presented.
ACM officials are authorised to seal off business premises and objects, insofar as is reasonably necessary for the exercise of their investigative powers. As a rule, officials will seal off offices at business premises if they are not able to complete the investigation within one day.
Companies are obliged to co-operate fully with ACM officials, who may reasonably demand this in the exercise of their powers, within such reasonable time limit as they may specify. Refusal to co-operate will result in a fine being issued.
The ACM is allowed to execute its investigative powers only to the extent that is reasonably relevant for the completion of the task at hand, ie, to examine data that reasonably falls within the scope of the investigation.
However, the ACM is not entitled to examine communication falling under attorney-client privilege.
ACM officials are entitled to seize documents or data carriers like laptops or mobile phones only if it is not possible to make copies at the companies’ premises, and only for the time needed to make those copies. Written proof of the seizure shall be provided.
In practice, an inspection focuses on digital data (see 2.9 Enforcement Agency’s Procedure for Obtaining Evidence/Testimony, below). To this end, the ACM published its inspection procedure regarding digital data in 2014. Once data have been secured, the enforcement official hands an overview of the data in the secure data set to the individual involved, including the relevant hash values. The purpose of calculating a hash value is safeguarding a file’s integrity. Any change to a file will result in a different hash value.
No later than the moment of making them available for perusal, the ACM official hands to the individual involved an overview of the data set that, given their nature and/or contents, may reasonably fall within the objective and subject of the investigation (the within-scope data set), and of the manner in which the within-scope data set was realised. According to the 2014 ACM Procedure for the inspection of digital data policy rules, the search queries that have been used are provided immediately to the individual involved after a data search has been conducted, and the individual involved also receives the reasons for using the search queries at the moment of granting the inspection. It could be suggested that providing the search queries after a data search has been conducted is not in accordance with the law, since it gives the ACM the authority to require inspection of business information and documents, which implies that the ACM should ask for the documents it wants to inspect.
An enforcement official may see reasons to demand inspection of the data under Article 5:17 of the General Administrative Law Act without having inspected it at the time the data were demanded and secured. If the enforcement official inspects the demanded and secured data in order to assess whether it is within scope, and the individual involved indicates that some of the data concerns privileged correspondence, the enforcement official will give the individual involved the opportunity to be present at the offices of the ACM when such data is inspected.
There is no obligation to keep documents or data on the basis of the Act or the General Administrative Law Act. There may be obligations to keep documents and data on the basis of other laws (like tax laws).
However, once the ACM requires inspection of business information and documents, the spoliation of that information or those documents would mean a violation of the obligation to co-operate with the ACM, for which the ACM may impose fines.
The ACM has the power to conduct interviews with any company employee. This power is not limited to the official representatives of the company but can involve any of the employees that may be relevant for the ACM’s investigation. Interviews may be held on the spot during a dawn raid as well as afterwards. They may take place at the company’s premises or at the ACM’s offices. The ACM contends that a company’s employee is obliged to answer questions, although he or she has the right not to answer questions that could incriminate his or her employer. Counsel are allowed to attend interviews. ACM officials take minutes of the interview and will ask the employee to sign these minutes; it is recommended to exercise due care in doing so, because signing will be seen as agreeing on the contents of the minutes.
Officers or employees have the right to be assisted by a legal representative. The ACM may refuse to allow assistance by a person against whom there are serious objections. This does not apply, however, to counsel that are admitted to the Bar. Legal counsel are not allowed to give answers or to advise on the answer, though they are allowed to advise the interviewee to remain silent.
In general, legal counsel assisting the company during a dawn raid also assist officers or employees during interviews. Officers or employees are, however, allowed to obtain separate counsel. Especially when interests of company and employee are not aligned, it is advisable that employees obtain separate counsel.
In order to be able to control whether the ACM’s officials stay within the scope of their investigation, at an initial meeting at the start of the investigation counsel should request a copy of the ACM officials’ mandate and review whether its scope is sufficiently defined as to subject-matter. They should verify whether all ACM officials have proper identification and make appointments, for instance requiring that ACM officials must always be accompanied if they want to walk through the building or that no interviews will take place without attendance of a counsel. During the investigation itself, counsel can oversee the investigation by accompanying ACM officials that scan company documents or by ensuring that the legal privilege procedure is followed, and the officials stay within the scope of the investigation. Furthermore, during the investigation counsel should stay in contact with the company management permanently to evaluate the progress of the investigation, for instance in order to be able to decide whether the company should submit a request for leniency.
After the investigation at the premises, counsel should evaluate with the company what information the ACM discovered, what the possible consequences of that information are and what next steps should be taken.
In practice, an inspection focuses on digital data. Once the data has been secured, the enforcement official hands an overview of the data in the secure data set to the individual involved, including the relevant hash values. The purpose of calculating a hash value is safeguarding a file’s integrity. Any change to a file will result in a different hash value.
No later than the moment of making them available for perusal, the enforcement official hands to the individual involved an overview of the data that is included in the within-scope data set, and of the manner in which the within-scope data set was realised. According to the 2014 ACM Procedure for the inspection of digital data policy rules, the search queries that have been used are provided immediately to the individual involved after a data search has been conducted, and the individual involved also receives the reasons for using the search queries at the moment of granting the inspection.
An enforcement official may see reasons to demand inspection of the data under Section 5:17 of the General Administrative Law Act without having inspected it at the time the data was demanded and secured.
If the enforcement official inspects the demanded and secured data in order to assess whether it is within scope, and the individual involved indicates that some of the data concerns privileged correspondence, then the enforcement official will give the individual involved the opportunity to be present at the offices of the ACM when such data is inspected.
Non-documentary information can be obtained in the same ways as documentary evidence, ie, through complaints, tips and leniency requests. Furthermore, the ACM can conduct interviews with various people in the field and gather relevant market data through (online) desk research. The ACM is not entitled to tap telephone conversations, but if the public prosecutor’s office (lawfully) tapped telephone conversations within the framework of a criminal law investigation and encounters information that may be relevant for the ACM (for instance, a conversation on bid-rigging), then the public prosecutor may share that information with the ACM, and the ACM is allowed to use such information as evidence.
Companies are required to co-operate with the ACM investigations and, if so requested, produce the documents within the scope of the investigation, and the ACM is authorised to demand the inspection of any type of business data or document. Also, it has jurisdiction over practices that affect the market in the Netherlands, irrespective of where the companies involved are located. Therefore, the authority has the power to request the provision of information of companies located outside the Netherlands. The General Administrative Law Act also does not limit these powers to companies located in the Netherlands. Where needed, the ACM may request the assistance of other competition authorities.
The ACM has laid down its procedures regarding legal privilege in its ‘2014 ACM Procedure regarding the legal professional privilege of lawyers’. The procedure applies to the exercise of the power to demand inspection of data under Section 5:17 (inspection of business information and documents) of the General Administrative Law Act. This procedure may similarly apply if the power to demand inspection of data under Section 5:16 of the General Administrative Law Act (request to provide information) is exercised.
The ACM considers documents to be privileged regardless of what regulation the data is related to. In other situations, existing jurisprudence is followed with regard to the material scope of the right to privileged correspondence. The procedure applies to communication with a lawyer (ie, a counsel that is admitted to the Bar), but not to communication with other legal professionals. On the other hand, according to Dutch law, attorney-client privilege also exists in relation to in-house lawyers who are admitted to the Bar. If ACM officials conduct investigations on the basis of Dutch competition law, Dutch national rules apply and the correspondence with both in-house and external counsel, if admitted to the Bar, is covered by attorney-client privilege. The same goes for investigations by the ACM at the request of the Commission or a competition authority of another Member State. However, if ACM inspectors only assist the Commission officials, EU rules apply and correspondence with in-house counsel, even those admitted to the Bar, has no legal privilege coverage.
When inspection of data is demanded under Section 5:17 of the Administrative Law Act, the company may indicate that it contains privileged correspondence. If the company believes that the document is privileged (in part or completely), then it is not obliged to disclose the entire contents to the ACM official. The company must support such claims by putting forward to the enforcement official grounds that the document is indeed protected by confidentiality. The company can indicate and explain, in particular, who the author is, whom the file is for, the respective positions and duties of each of them, and the objective with which and the context in which the document was created. If the ACM official is not convinced of the claimed privileged nature of the data but the company persists in its claim, the ACM official takes the data with him or her in a sealed envelope. After the dawn raid is finished the sealed envelope will be handed over to the LPP officer for verification of the privileged nature of the data. LPP officers are ACM officials who are not and will not be involved in the investigation in relation to which they have examined data or documents, or in any other investigation in which the data or documents (or parts thereof) from the former investigation are used. They are not, however, independent. The LPP officer will give the company the opportunity to indicate which of the data (or parts thereof) that have been submitted to the LPP officer is, in his or her opinion, privileged.
The ACM organisation has taken the necessary measures (technical and non-technical) to guarantee compliance with the safeguards mentioned in this procedure. For example, it stores correspondence with the LPP officer on a closed network that cannot be accessed by ACM enforcement officials, alongside the data that is given to the LPP officer.
The procedure regarding legal privilege is not mandatory. If the company believes that an assessment by the LPP officer offers too few safeguards, it is free to start (civil law) interim injunction proceedings against the inspection (superficial or not) of the document by an ACM official. In such a case, the ACM official can leave the document in question with the company, in a sealed envelope, and the individual involved has ten working days to have a writ served on the Dutch state.
For interrogations with a purpose of adopting a punitive sanction, ACM officials are legally required to inform the individual being interrogated of their right to remain silent. The interrogated person is not obliged to provide any statements regarding the perpetration of Article 6(1) of the Act. This is a codification of the nemo tenetur principle (see also 2.5 Procedure of Dawn Raids, above).
Generally, companies and employees comply with requests for information, since non-co-operation with the ACM can result in a fine of up to EUR900,000 or 1% of the annual turnover. This does not mean, however, that requests for information should not be treated critically. If, for instance, requests are unreasonable or vague, this should be discussed with the ACM.
The ACM is authorised to access any type of document, regardless of whether it contains confidential or proprietary information. After the ACM adopts a decision, it will send it to the company involved in order to give it the opportunity to indicate any confidential information. The ACM will then publish a public version of the decision with the confidential information removed.
From a formal perspective, the target of a cartel investigation has the opportunity to raise legal and factual arguments against the ACM’s view on the case when the ACM has issued its Statement of Objections (SO). The company involved can submit its comments on the SO in writing and orally. In practice, however, defence counsel will be in constant contact with the ACM from the outset of an investigation, submitting information in favour of the company. Defence counsel may also try to persuade the ACM to adopt a a so-called commitments decision (comparable to a commitments decision under Article 9 of EU Regulation 1/2003) and stop the investigation.
The rules of the Dutch leniency programme have been laid down in the Policy Rule of the Minister of Economic Affairs of 4 July 2014, No WJZ/14112586, on the reduction of fines in connection with cartels (Leniency Policy Rule). The Policy Rule does not protect the company from private enforcement actions by third parties.
The leniency programme only applies to ‘cartels’, ie, an agreement or concerted practice between two or more competitors with the objective of impeding competition, in violation of Article 101 of the TFEU or Article 6 of the Act.
The ACM grants immunity from fines to the first leniency applicant to submit a request for immunity from fines with regard to a cartel, if the application concerns a cartel into which the ACM has not yet launched an investigation and the applicant provides information that enables the ACM to perform a targeted inspection. No immunity will be granted if the applicant has coerced another undertaking into participating in the cartel. Furthermore, the applicant is obliged to co-operate with the authority, which means that the applicant refrains from any action that may impede the investigation or the proceedings until the decision to impose an administrative fine becomes final with respect to all practices involved in the cartel. The applicant is also obliged to provide the ACM with all information regarding the cartel that they have or may reasonably obtain, of their own accord or at the ACM’s request, as soon as possible, and to ensure that individuals who are working for the applicant and, insofar as is reasonably possible, individuals who have worked for the applicant are available for making statements. The company must cease any involvement in the cartel after submission of the leniency application, unless and insofar as the ACM considers the continuation thereof to be reasonably necessary in order to preserve the effectiveness of inspections.
The ACM also grants immunity from fines to a leniency applicant if the above-mentioned conditions have been met and the application concerns a cartel into which the ACM has already launched an investigation but not yet sent a statement of objections to any of the parties involved. This immunity will only be granted, however, if the application provides the ACM with documents that stem from the period of the practice in question that were not already in the ACM’s possession, and on the basis of which the ACM is able to prove the existence of the cartel.
A company or individual considering applying for leniency may contact the ACM to exchange ideas about a body of facts and the applicability of the leniency policy in that context. This may take place anonymously or through a lawyer and may concern a hypothetical set of facts. A prospective leniency applicant may also inquire with the ACM by telephone, but solely through a lawyer, as to whether immunity from fines (the position of the first-in-the-door whistle-blower) is still available. If the ACM responds positively to the inquiry, the lawyer is required to submit an application for immunity from fines immediately.
A leniency application includes a written leniency statement with the following information, insofar as is known to the applicant at the time of submission:
A leniency application also contains evidence corroborating the statements, insofar as the applicant has such evidence or such evidence is reasonably available to the applicant at the time of the submission of the application. The leniency statement contains an explanation of the evidence.
A natural person who submits a leniency application may be eligible for the same immunity or reduction of a fine as the undertaking at which he or she works, if he or she declares that he or she wishes to be considered a leniency co-applicant with the undertaking, and he or she meets the conditions for immunity from fines on his or her own.
With the ACM’s permission, a leniency statement may be submitted orally, if the ACM believes that the leniency applicant has a legitimate interest in doing so. In such cases, the ACM records the oral statement and draws up a transcript
The ACM does not disclose the identity of the leniency applicant to third parties until the statement of objections has been issued to anyone involved in the cartel, unless the leniency applicant has consented to disclosure.
In accordance with Article 12 of EU Regulation 1/2003, the ACM only forwards a leniency statement to another competition authority or to the European Commission if:
A leniency applicant who submits an incomplete leniency application may be eligible for a marker if the ACM believes the application offers a concrete basis for reasonable suspicion of the applicant’s involvement in a cartel, and the leniency applicant provides information on at least the name and address of the leniency applicant, the cartel participants, the affected products or services, the cartel’s geographical scope, the cartel’s duration, the nature of the cartel’s practices and whether the leniency applicant has approached or may approach the European Commission with regard to the cartel. The duration of the marker will be set by the leniency officer and depends on how long the applicant reasonably needs to complete its application. As soon as a complete application has been submitted within the time limit the leniency officer has set for it, the marker will turn into a proper leniency application.
Reduction of Fines
The ACM grants a leniency applicant a reduction of at least 30% and no more than 50% on a fine if immunity from fines is no longer available because the applicant is not the 'first in the door' and the ACM has not yet sent a statement of objections. In order to qualify for reduction, the applicant must be the first to submit an application that contains information with significant added value, and complies with the obligation to co-operate. The second company that submits an application for reduction of a fine can get a reduction of 20-30%; subsequent applicants can get a reduction of up to 20%.
Lastly, the ACM does not keep an official public record of granting leniency, nor publishes it in its annual reports. However, in each decision in which it imposes fines, the ACM will publish the extent to which it applied leniency.