Update on Dutch call-in power: ACM responds to critical remarks by the Council of State

The Advisory Division of the Dutch Council of State (Afdeling Advisering van de Raad van State) has issued somewhat critical advice to the government in response to the draft bill establishing a so-called ‘call-in power’ for the Dutch competition authority, the Authority for Consumers and Markets (ACM). 

Subsequently, the proposer of the bill has requested the ACM to respond to this criticism. In its public response, the ACM underlines the importance of establishing a general call-in power for effective merger control enforcement.

The main objections of the Advisory Division are that the justification for such a broad power is insufficiently substantiated and that the general scope could result in a disproportionately wide-ranging competence. It also cautioned that the measure may increase legal uncertainty and administrative burdens and that the necessity for introducing an additional ex ante call-in power is weakened by the fact that the ACM already has two mechanisms at its disposal: regular merger control above the notification thresholds and, since the repeal of Article 24(2) Dutch Competition Act, the ability to intervene ex post on grounds of abuse of a dominant position under the CJEU’s Towercast caselaw. See also our previous article in this respect.

It is not surprising that the ACM does not agree with this position and, to be fair, we fully agree with the ACM that Article 24 of the Dutch Competition Act (the Dutch equivalent of Article 102 TFEU) is not particularly effective and that sector-specific regulations or a sector-specific focus would lack the necessary flexibility to address competition concerns in fast-changing markets. This also applies to roll-up strategies and killer acquisitions that are not strictly limited to specific sectors.

We are more critical of the ACM’s position that there are no or very limited legal certainty concerns in relation to the desired call-in power as – briefly put – the “norms are exactly the same." Notwithstanding the guidance, precedents and experience from above-threshold merger control for the substantive analysis, the norms for calling in below-threshold transactions are yet to be developed and tested in practice. However, we can draw from experience in Member States that already have call-in powers, and competition lawyers generally have a well-developed gut feeling on whether a transaction risks being called in by the ACM.

What the ACM has, at least, tried to do in its response is to provide some clarity on what is coming and how it will ensure legal certainty and transparency, to the extent possible:

1. The ACM will issue guidance on the factors that are of relevance to determine whether a transaction may be called in;
2. The ACM will make available a form that parties can use to proactively (and voluntarily) submit the proposed transaction to the ACM to acquire some certainty on whether the transaction may be called in by the ACM;
3. The ACM will issue a policy rule on ex post scrutiny of transactions under the abuse of dominance framework if such transactions could also have been called in under the ACM’s proposed call-in powers.

In order not to (further) upsurge the burden for itself as well as for companies following the draft bill, the ACM keeps pushing to increase the current thresholds. As a reminder, concentrations (currently) must be notified to the ACM if:

• the aggregate worldwide turnover of the undertakings concerned exceeds €150 million in the previous calendar year; of which

• at least two of the undertakings concerned must each achieve turnover of at least €30 million in the Netherlands.

In its response to the advice of the Council of State, the ACM anticipates that the second threshold of €30 million will be increased to €50 million — whilst this is not included in the draft bill. The ACM has consistently advocated increasing the current thresholds as a trade-off for the call-in power, but the government has not followed this approach just yet (see also our previous article on the call-in consultation documents). As the thresholds have not increased in over a decade, it is about time to account for inflation and the like, especially if the ACM will also have a general call-in power.

Positively for businesses, the call-in power “threshold” as proposed in the draft bill includes that one of the parties concerned must have a turnover exceeding €30 million in the Netherlands for the ACM to be able to call in a transaction.

Finally, the general call-in power is one to watch when considering future transactions, especially in terms of strategy on whether (and when) to proactively approach the ACM and in terms of taking account of the call-in possibility in transaction documents.

For more information or further guidance in this area, please contact Pauline Kuipersand Tialda Beetstra.

VISIT OUR COMPETITION LAW HOMEPAGE