Contributed By Nysingh Advocaten-Notarissen N.V
The sanctions that the ACM may impose on undertakings are fines and orders for periodic penalty payments. An order for periodic penalty payments is designed to lead, among other things, to the quick termination of an infringement, and therefore serves a different purpose from a fine. A fine and an order for periodic penalty payments can both be imposed for the same infringement.
The maximum fine that the ACM may impose per violation of the cartel prohibition is EUR900,000 or 10% of the total (global) annual turnover of the undertaking involved, whichever is higher. The maximum amount also depends on the duration of the cartel, since the aforementioned maximum can be multiplied by the number of years the violation lasted (with a minimum of one and a maximum of four years). In the case of repeat violations, this fine can even be doubled.
As under the EU competition law regime, a parent company can (and will) be held liable for a fine imposed on its subsidiary. It is for the parent company to demonstrate that it does not or did not exercise a decisive influence over the behaviour of the subsidiary. Moreover, the highest administrative court in the Netherlands with respect to penalty decisions of the ACM recently ruled that the ACM may hold an investments firm liable for a cartel infringement committed by its portfolio company, because it exercised decisive influence over that portfolio company. In this particular case, the investments firm was fined separately instead of jointly and severally, as is normally the case regarding parent companies and their subsidiaries. This was due to specific circumstances of the case.
The ACM may also impose fines on individuals up to a maximum of EUR900,000. Such a fine may be increased by 100% if the individual committed a similar infringement within the previous five years.
The level of fines that the ACM may impose must be determined along the rules laid down in 2014 Policy Rules of the Minister of Economic Affairs on the imposition of administrative fines by the ACM, which provide detail on the manner in which the ACM may exercise its power to impose administrative fines – within the boundaries of the law.
The ACM sets a basic fine of between 0% and 50% of an undertaking's relevant turnover, depending on the seriousness of the violation, the circumstances in which it was committed and its duration. The relevant turnover consists of the revenues that a company has earned through the supply of goods and services that are directly or indirectly related to a violation, minus discounts, etc, and minus turnover tax, in the last full year in which the company committed the violation, multiplied by a factor of one twelfth for each month that the violation lasted.
The ACM may impose a sanction directly, but there is a separation (Chinese wall) between the ACM department that carries out investigations and prepares the statement of objections, and the department that decides whether a sanction should be imposed. After an investigation has resulted in a Statement of Objection (SO) by the Competition Department, the case will be handed over to the Legal Department of the ACM, which is not independent but part of the ACM organisation. The Legal Department must hear parties on the SO. Parties are entitled to respond to the statement of objections at least in writing, and are normally also allowed to respond orally. The oral hearing will take place in front of a hearing committee composed of officials of the Legal Department of the ACM. The Legal Department will consider the case and draft a proposal for a decision to be taken by the Board of the ACM.
Unlike the European Commission, which issued its Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 and Article 23 of Council Regulation (EC) No 1/2003, in cartel cases in the Netherlands there is no formal or otherwise explicit procedure with regard to settlements or plea bargaining.
In some cases, however, the ACM has showed its willingness to explore alternative ways to conclude cases, normally on the initiative of the companies involved and usually involving some kind of simplified case conclusion procedure. Whether or not to discuss a settlement is at the discretion of the ACM.
In the Natural Vinegar cartel, for instance, the ACM reduced fines by 10% because the parties involved, inter alia, acknowledged the alleged facts and the legal qualification of the misconduct. It is not clear from the ACM’s decision whether or not the parties involved agreed with the ACM that they abstained from the right to appeal.
Furthermore, the Competition Act provides a procedure according to which the ACM may decide to refrain from further investigation and sanctions if the companies involved in the investigation pledge in writing to refrain from certain behaviour, enabling the ACM to adopt a so-called commitment decision (comparable to a commitment decision under Article 9 of EU Regulation 1/2003). The ACM has the discretion to refuse a pledge if it intends to impose a fine. Normally, it will refuse a pledge in the case of hardcore cartels or when the pledge has been made when the investigation has nearly been completed.
According to the ACM, compliance programmes are particularly relevant to sectors in which ACM enforcement policy has been successful (eg, construction and insurance). Following ACM intervention, companies are willing to impose self-regulation, in the hope of ensuring enduring compliance with the Competition Act. It is up to the ACM to convince the companies involved that a system of checks and balances is most conducive to maintaining compliance.
A penalty decision by the ACM, against which no further appeal is possible, counts as compelling evidence in civil proceedings regarding damages actions. It is therefore clear that a decision is important for follow-on damages claims.
Furthermore, pursuant to Article 2.87 of the Dutch Public Procurement Act 2012, implementing EU Directive 2014/24 on public procurement, contracting authorities may exclude undertakings from taking part in procurement procedures, where the contracting authority can demonstrate by appropriate means that the undertaking is guilty of grave professional misconduct, which renders its integrity questionable. Violation of competition law is considered to be an example of grave professional misconduct. A penalty decision of the ACM may therefore lead to exclusion from a procurement procedure.
Under Dutch law infringement of competition law is not a criminal offence, so an infringement cannot lead to criminal proceedings.
In the Netherlands it is not possible to impose sanctions and penalties in a civil proceeding on an undertaking or individual that has violated the cartel prohibition. However, violation of the cartel prohibition may lead to civil damages claims (see 5 Private Civil Action Involving Alleged Cartels, below).
Having an effective compliance programme is not a mitigating factor in imposing sanctions and penalties. However, having an effective compliance programme can lead to lower fines or immunity from fines in the sense that, if a company has an effective compliance programme, cartel agreements will come to light in an early stage and the company can apply for leniency.
Sanctions in the administrative procedure cannot be extended to mandatory consumer redress.
Once the ACM has issued a decision, the addressees of the decision may lodge an objection with the ACM itself. One may, however, ask the ACM in the notice of objection to agree with a direct appeal against the decision with the District Court. The objection must be lodged within six weeks of the decision being received. If the ACM agrees with the direct appeal, it will forward the notice of objections and the file to the Court. If the ACM does not agree with a direct appeal to the Court, it will reconsider its decision, after having heard the company that lodged the objection. After the ACM has decided on the objection, an appeal may be lodged with the District Court of Rotterdam, again within six weeks of the decision on the objections being issued.
An appeal against a judgment of the District Court can be lodged with the Trade and Industries Appeal Tribunal.
Both the District Court and the Trade and Industries Appeal Tribunal have full jurisdiction and can therefore review the ACM’s findings of facts and legal assessments, as well as sanctions.