Introduction and Regulatory Framework

In this Trends & Development article we focus on the main developments in merger control proceedings in the Netherlands.

Dutch merger control is based on chapter 5 (articles 26 to 49) of the Dutch Competition Act/DCA (Mededingingswet/Mw). This national merger regime is modelled on the EU Merger Regulation and follows a similar approach.

The primary enforcer is the Authority for Consumers & Markets/ACM (Autoriteit Consument & Markt/ACM).

The ACM is an independent government organisation entrusted with the enforcement of the DCA and of a number of specific laws for the energy, postal, telecommunications and transport sectors. The ACM was founded on 1 April 2013 as a result of the merging of the Dutch Competition Authority with the Dutch Independent Post and Telecommunications Authority and the Dutch Consumer Authority. The ACM is also empowered to impose fines on undertakings and individuals for infringement of the competition rules, including of the standstill obligation in merger control proceedings. The ACM can also impose a fine for providing incorrect or incomplete information in merger filings.

Other than antitrust/competition review, there are other regimes to be aware of. For example:

• The Dutch Healthcare Authority (Nederlandse Zorgautoriteit/NZa) is the responsible authority for the enforcement of a healthcare-specific merger test which is laid down in the Healthcare Market Regulation Act (Wet marktordening gezondheidszorg/Wmg).
• The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten/AFM) and the Dutch Central Bank (De Nederlandsche Bank/DNB) have a role in assessing transactions involving certain financial institutions and public takeovers.
• Material changes to the (ownership or organisation of an) undertaking can also trigger the obligation to obtain advice from the works council of the undertaking concerned and to inform the trade unions and the Social and Economic Council of the Netherlands. 
• Changes with respect to control of a production plant with a rated electrical output of over 250 MW or an undertaking managing such a production plant must be reported to the Minister of Economic Affairs and Climate Policy by one of the parties involved. The same applies for any change in control with respect to control of an LNG plant or LNG undertaking. The Minister may prohibit or impose regulations on the change of control on the grounds of public safety, security of supply or security of delivery.
• Transactions that result in “predominant control” over a Dutch telecommunications party must be notified to the Minister of Economic Affairs and Climate Policy.
• The Investment Screening Act (Wet Veiligheidstoets investeringen, fusies en overnames/Vifo) came into force on 1 June 2023 and introduced a foreign investment control regime including a notification requirement to the Investment Review Agency (Bureau Toetsing Investeringen) for transactions involving a national security risk.

The merger control regime of the DCA applies to the same types of transactions that fall under article 3 of the EU Merger Regulation:

• a merger between two or more previously independent undertakings;
• an acquisition of direct or indirect control by one or more undertakings, of the whole or parts of one or more other undertakings; and
• the creation of a joint undertaking which performs on a lasting basis all the functions of an autonomous economic entity.

Article 29 of the DCA stipulates that such a concentration must be notified to the ACM if in the preceding calendar year:

• the combined aggregate worldwide turnover of the undertakings concerned exceeds EUR150 million; and
• at least two of the undertakings concerned had a turnover in the Netherlands exceeding EUR30 million each.

Specific thresholds can apply to certain credit and financial institutions, such as insurance companies and pension funds.

Developments

The most important overall trend in merger control is that the ACM continues to operate as an active enforcer, and this includes an active use of its merger control powers. Below we will describe the main developments regarding:

• merger control by the ACM;
• merger control in the healthcare sector;
• foreign investment control; and
• amendments to the DCA

Please note that this article focuses on developments in Dutch merger control and does not specifically address EU-wide developments, such as the new (gatekeepers) regime under the DMA/DSA, the EC guidance on the referral process under article 22 EU Merger Regulation, the EU simplification package, the Foreign Subsidies Regulation, the revision of the Market Definition Notice, the new Merger Implementing Regulation and the related Notice on Simplified Procedure, and other EU developments.

Merger Control by the ACM

The active role of the ACM in merger control is reflected in the relatively high number of so-called Phase II cases and the recent imposition of fines for gun jumping.

Increase in Phase II cases

In recent years there has been a steady increase in the number of Phase II cases. This Phase is also called the “licence phase”. If the ACM decides after the notification (thus during Phase I/the “notification phase”) that a licence is required, the undertakings involved must submit an application for a licence to the ACM. Notable recent Phase II cases are RTL/Talpa, Roompot/Landal, AEB/AVR and Ter Beke/Stegeman.

An increase in Phase II cases can simply be the consequence of an increase in complex transactions that warrant a more extensive review by the ACM. However, the recent increase from 2021 onwards also appears to be the result of a more stringent approach by the ACM and an increased reluctance to resolve complex transactions in Phase I.

Gun-jumping fines

Another interesting development is the imposition of gun-jumping fines by the ACM. In 2022 the ACM imposed fines in two separate cases and this was the first time in several years.

The ACM fined VNA (the Dutch trade association for pharmacies) for failing to notify the acquisition of four pharmacies. The VNA initially intended to sell on these four acquisitions within a one-year period. Under certain circumstances the initial acquisition would not in itself constitute a concentration as it would not result in a change of control on a lasting basis. This exception only applies when at the time of acquisition the sell-on is certain. This was not the case for VNA as it failed to sell on the pharmacies. As the sell-on was not set in stone, the initial acquisition constituted a concentration and should have been notified.

The ACM also fined Modulaire for failing to notify the acquisition of BUKO. Modulaire had failed to take into account its group turnover and wrongfully concluded that the transaction was below the thresholds. 

Breaking down killer acquisitions: article 22 EUMR referral and article 102 TFEU

Another interesting development will be the way in which the ACM deals with so-called killer acquisitions. These are acquisitions that occur often in innovative sectors and involve companies with strong market positions that acquire new (small) competitors or innovative start-ups. These acquisitions do not meet the merger thresholds (because of the small size of the target) but can have a substantial impact on the functioning of the market.

Competition authorities across Europe (including the European Commission) are exploring opportunities to address this problem. On the EU level this has sparked discussions about case referrals under article 22 EU Merger Regulation, under which national competition authorities can refer a case (which does not meet the EU thresholds or not even the national thresholds) to the European Commission. This has resulted in the now well-known Illumina/Grail case. The ACM has revised its general operational guidelines (Werkwijze bij concentratiezaken) and specifically included the possibility to refer cases that do not meet the national thresholds to the European Commission on the basis of article 22 EU Merger Regulation.

At the same time the European Court of Justice recently confirmed, in the Towercast case, that a national competition authority can review ex-post below threshold mergers under the abuse of dominance rules. This means that a transaction not meeting the thresholds can still be in violation of competition law when it would violate article 102 TFEU. It is important to note that strengthening a dominant position through an acquisition is not in itself enough to constitute abuse. It must be established that the acquisition creates a degree of dominance that would substantially impede competition. The Towercast ruling is in line with earlier case law and strengthens the possibility for the ACM to limit ‘killer acquisitions’ on the basis of article 102 TFEU. Interestingly, it will not be possible for the ACM to use the national equivalent of article 102 TFEU, which is laid down in article 24 DCA. This ‘national’ prohibition on abuse of dominance explicitly states that the creation of a concentration is not considered an abuse of a dominant position. It is possible that article 24 DCA will be amended by the Dutch government to align it with the EU competition rules.

First ministerial merger licence overturned

In 2022 the Trade and Industry Appeals Tribunal (CBb) ruled that the Minister of Economic Affairs and Climate Policy was wrong to grant a licence for the acquisition of Sandd by PostNL (after an earlier refusal by the ACM to clear the concentration). The licence by the Minister was based on a specific provision in the DCA which allows the Minister to grant a licence on public interest grounds. This was the first time that the Minister overruled the ACM’s prohibition decision and cleared the concentration. The ruling of the CBb clarifies that the ACM has broad discretionary powers and that there is a high standard for intervention in merger cases by the Minister.

Merger Control in the Healthcare Sector

ACM: lower thresholds not extended

Until 1 January 2023 specific lower turnover thresholds applied to concentrations in the healthcare sector. As of 1 January 2023 the above-mentioned regular thresholds apply. 

Dutch Healthcare Authority: changes to healthcare-specific merger test

The rules for the healthcare-specific test of the Dutch Healthcare Authority (Nederlandse Zorgautoriteit/NZa) changed in 2022. The specific test will have a more limited scope, and notification to the NZa is only required if a healthcare provider is directly involved. The notification procedure has also been adjusted, and the notifying parties will have to provide more financial information and involve staff and clients in an earlier stage of the transaction.

Since 2016, there has been a bill pending before Dutch parliament under which the healthcare-specific merger test would be transferred from the Dutch Healthcare Authority to the ACM. In 2023 the Minister of Health, Welfare and Sport indicated that this transfer is no longer likely and that the merger test will most likely remain with the Dutch Healthcare Authority.

Foreign Investment Control

As mentioned above, the Investment Screening Act came into force on 1 June 2023. This foreign investment control regime introduces a notification requirement for transactions involving a national security risk. The regime applies to certain transactions involving vital providers, managers of corporate campuses and companies that operate in the field of sensitive technology. The notification process with the Bureau Toetsing Investeringen also has two phases and is focused on the assessment of whether the transaction and specifically the underlying investment poses a risk to national security.

Amendments to the DCA

On 1 January 2023 there were some (minor) changes to the Dutch Competition Act which are relevant for merger control. For example, article 30(2) DCA has been revised, clarifying the relevant time period within which a series of transactions can be considered as one transaction. This reference time period has now been set at two years.