EUROPEAN COMMISSION
Competition DG
Director General

Brussels, 09.09.2010
COMP/A4/JC D(2010) 92813

Mr J.A. Vijlbrief
Director-General
for
Energy,
Telecom and Markets
Ministry of Economic Affairs
P.O. Box 20101
2500 EC Den Haag
The Netherlands

Subject:

IIT.1535 - Private member's bill amending Article 7 of the Dutch
Competition Act

Dear Mr Vijlbrief,

Introduction
By letter received on 23 July 2010 you informed the Commission that the First Chamber
of the Dutch Parliament has voted an amendment to the Dutch competition act expanding
the 'bagatelle exemption'. A final step in the legislative process is the approval of the
Dutch government. In considering whether or not to grant such approval, it first would
like to learn from the Commission whether the amended bagatelle exemption is
compatible with EU law.
Currently, the Dutch bagatelle exemption foresees a double threshold of 5% combined
market share and €40 million combined turnover. That rule is inspired by the NAAT-rule
(non-appreciable affectation of trade) in the European Commission's Guidelines on Effect
on—Trade) Hence, an-agreement-that, in the-absence-of-an-appreciable-effeet-on-tradebetween Member States, can be presumed to fall outside the scope of EU competition
law, is equally exempted from the application of competition law in the Netherlands. The
current law in the Netherlands does not state that restrictions such as price fixing or
market sharing (so-called ‘hardcore' restrictions) do not fall under the bagatelle
exemption.
The proposed amendment of the law foresees that agreements, decisions of associations
of undertakings and concerted practices (hereafter jointly referred to as 'agreements')

I Guidelines on the effect-on-trade concept contained in Articles 81 and 82 of the Treaty, OJ C 101,
27.04.2004, p.81.

Commission europeenne, B-1049 Bruxelles / Europese Commissie, B-1049 Brussel - Belgium. Telephone: (32-2) 299 11 11.

would not be prohibited if the combined market share of the participants does not exceed
10% on any affected market. The previous criteria (5% and € 40 million) would be
dropped. The new rule would equally apply to all types of agreements including hardcore
restrictions.
The Dutch bagatelle exemption would as a result no longer mirror the EU's NAAT-rule.
Most clearly it would mean that agreements exceeding 5% market share (or the aggregate
annual turnover of €40 million), but which stay below 10% market share, would now be
exempted where previously they were not.
The stated objective of the law is to provide more market power to small and mediumsized enterprises, so that their position vis-à-vis stronger buyers can become more
balanced, allowing hence the conclusion of agreements e.g. on prices and customer
division.
In your letter, you have asked whether the Commission could share its views on the Bill.
More particularly, you question whether the new bagatelle exemption might be contrary
to Article 4, paragraph 3 of the Treaty on the European Union and to the judgment of the
Court of Justice of 9 September 2003 (Case C-198/01, CIF) as the new law would
support agreements which are contrary to Article 101 TFEU.
By letter of 30 July 2010 we provided you with a number of considerations which plead
against the foreseen change, notably identifying a risk of increased legal uncertainty for
undertakings. At that time it was stated that our views were without prejudice to a full
legal analysis. Subsequent telephone contacts between our services took place in which
clarifications were asked by your services.
We hereby provide you with a more complete assessment of the proposed legislation.
This letter may repeat certain points made in the letter of 30 July 2010, but please use this
submission as stating our complete position, superseding therefore the letter of 30 July. It
represents the opinion of the Directorate-General for Competition within the
Commission.

Assessment
1. Legal Framework: The Commission's de minimis Notice, the Guidelines on Effect on
Trade; primaayLof-EUlaw:
Appreciable effect on competition (de minimis)
The Commission's de minimis Notice considers that certain agreements are, due to the
absence of an appreciable effect on competition, not prohibited by Article 101(1) TFEU
if the parties' aggregate market share does not exceed a defined threshold (paragraphs 7 to
10 of the Notice). 2 The threshold used for agreements between competitors is 10%

2 Commission Notice on agreements of minor importance which do not appreciably restrict competition

under Article 81(1) of the Treaty establishing the European Community (de minimrs), OJ C 368,
22.12.2001, p.13.
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aggregate market share on any relevant market affected by the agreement.3 The
Commission, however, considers that the de minimis exemption does not apply to
agreements containing hardcore restrictions (paragraph 11 of the Notice), such as
price fixing, output limitations or market sharing agreements. Such agreements are
considered to have merely detrimental effects on the economy (even if they concern
agreements between small or medium-sized companies).
Effect on Trade between Member States
The above mentioned de minimis Notice does not deal with the issue of when EU law
becomes applicable (Article 101 TFEU particularly for the issue at stake). In other words,
for the de minimis Notice to become applicable, it first has to be established if trade
between Member States can be appreciably affected. As you are aware, the Commission
has issued separate Guidelines on the Effect on Trade Concept. The principles laid down
in those guidelines reflect Commission practice and the case-law. To assess the element
of appreciability, the Commission uses a negative basic standard indicating when in
principle agreements are not capable of appreciably affecting trade between Member
States (NAAT-rule). This negative presumption applies to all agreements where the
parties have a maximum 5% aggregate market share on any affected market within the
EU and where, for horizontal agreements, the undertakings concerned have a maximum
anneal EU turnover of EUR 40 million in the products covered by the agreement. Hence,
the application of these principles requires a consideration of market shares by the
Commission and the economic operators. It must be noted that a 'potential' effect may be
enough to trigger the application of EU law. The guidelines of the Commission are
without prejudice to the interpretation of Articles 101 and 102 TFEU which may be given
by the Court of Justice and the General Court of the European Union.
The criterion under which EU law becomes applicable is one that is relatively
quickly satisfied, as a 'potential' influence on trade may be sufficient. For agreements
where EU law does not apply, it does not mean, however, that these cannot have a
detrimental effect on the (national or local) economy.
Horizontal agreements and concerted practices which do not fall short of the above
thresholds are subject to EU law, and hence may fall under the prohibition of Article
101(1) TFEU (a case by case analysis is required: see point 51 of the Guidelines Effect on
Trade).
2. Comments on the proposed legislation
The proposed law may conflict with Treaty obligations
Price-fixing and market sharing are presumed to have only negative effects on the market
and to jeopardise the objectives pursued by the EU competition rules, i.e. to ensure
markets operate free from distortions and to benefit consumers.

de minimis notice uses two different thresholds: 10% aggregate market share for
agreements between actual or potential competitors and 15% aggregate market share for agreements
between non-competitors: both cases the de minimis rule does not apply if the agreement contains
hardcore restrictions. This letter will further focus on agreements between competitors.

3 The Commission

3

It is not entirely clear whether the proposed extension of the Dutch bagatelle rule is
intended to apply to agreements that are capable of appreciably affecting trade between
Member States. At least the new law does not exclude this possibility. This, together with
the purpose of the proposed amendment, seems to suggest that the new rule would apply
to a category of agreements which may also fall under EU law.
Contrary to the proposed Dutch bagatelle exemption, Article 101(1) TFEU generally
prohibits agreements containing a hardcore restriction even if the combined market share
of the parties involved is below 10%. Thus, in respect of agreements that contain
hardcore restrictions and are capable of affecting trade between Member States, it seems
that the new rule seeks to exonerate agreements that may be prohibited under EU
law. In our view, this would jeopardise the attainment of the Union's objectives
(Article 4(3) TFEU).
In all cases where an agreement or practice is capable of affecting trade between Member
States, Article 101 `114EU has to be applied in full, pursuant to Article 3 (1) of Regulation
1/2003. Due to the open nature of the Dutch economy it cannot be excluded that
agreements would fall under EU law when the affectation of trade criterion would be
met. If such an agreement or practice contains a hardcore restriction, the Dutch
competition authority (NMa) and Dutch courts would, due to the primacy of Article
101 TFEU, have to disapply the Dutch 'bagatelle exemption'.
However, even if the new 'bagatelle exemption' would only apply in cases where an
agreement is not capable of affecting trade between Member States it would still raise a
number of important concerns. In listing these we will focus on the possibility that the
new Dutch law applies, to hardcore restrictions - the type of agreements that indeed
appear to be at the heart of the considerations for making the proposal.

The amendment would create risks of legal uncertainty
The stated aim of the new law is to offer certain business opportunities to SMEs, bringing
them in an improved competitive position against stronger market counterparts with
buying power.
The practical result of the new bagatelle rule, however, might be that SME businesses,
confident that they act legally under national competition law, may in fact be infringing
EU law thus exposing themselves to the possibility of administrative fines or civil claims
for damages.
Companies colic-hiding- agreements may consider, de-pen-ding on their assessment of the
market definition and calculation of market shares, that under the Dutch competition act
they would conclude restrictions that are exempted. However, if the agreement is capable
of affecting trade between Member States (as determined e.g. by a national court
confronted with the question, the NMa or the Commission being solicited for instance as
a result of a complaint), the SMEs that have concluded anti-competitive agreements and
that were meant to become exempted may well attract fines or civil law consequences
from their behaviour. In other words, the proposed law is liable to introduce a measure
of legal uncertainty that may turn out to be detrimental rather than beneficial for
SMEs.

Against 'trend Of convergence in EU; general prioritisation on - hardoore
restrictions
4

The proposed amendment to the Dutch Competition Act would also seem to convey a
wrong signal to the business community. Indeed, it would be contradictory, on the one
hand, to prioritize the fight against hardcore cartels, while, on the other hand, relaxing the
opposition to the same type of behaviour for undertakings with a market share below
10%. Furthermore, it would not be a safe premise that due to the prioritisation decisions
of competition authorities, price fixing or market-sharing agreements involving
undertakings with low market shares would in any case escape strict scrutiny. These types
of hardcore infringements are generally the main focus for competition enforcement
across the EU.
The introduction of the new bagatelle exemption would also run counter to the
approach adopted at EU level and the clear trend within the European Competition
Network (ECN) towards convergence of substantive competition provisions.
Competition authorities in all neighbouring countries of the Netherlands rely on de
minimis rules which are identical or similar to those of the Commission and,
consequently, do not exempt practices such as price fixing and market sharing.
Convergence of competition rules across the EU is very much welcomed as it further
contributes to the simplification and transparency of the legal framework for businesses
and ensures a level playing field for undertakings operating within the Internal Market.

Based on a case-by-case analysis, in application ofArticle 101(3) or exemptions
under national law, agreements that offer benefits can already be permitted
The Explanatory Memorandum to the proposed law states that the law intends to provide
more balance for small suppliers vis-à-vis big companies by allowing the former to
conclude restrictive agreements among themselves even if they contain hardcore
restrictions. This possibility would be detrimental for customers (which, depending on
the market, can also be SMEs) as it would enable undertakings to raise prices. Moreover,
the new bagatelle exemption will not only apply in situations of unbalanced market
power but it would enable all kinds of undertakings to strengthen their market position
and increase prices, even where they already hold a strong position vis-à-vis buyers. We
note that under the current legal framework, both at national and European level,
undertakings, and especially those with a limited market share, already have the
possibility to cooperate, provided that their agreements fulfil the conditions
mentioned in Article 101 (3) TFEU.4 Hence, joint selling arrangements, for instance,
can be assessed on a case-by-case basis in considering whether possible anticompetitive
effects are outweighed by other benefits.

Conclusion
I hope this complementary explanation will allow you to assess the compatibility of the
new Dutch bagatelle exemption with competition law and policy in the EU and as applied
by the Commission. In summary, the adoption of the amendment raises questions of
conformity with EU law to the extent that it seeks to exonerate agreements that may be

de minimis Notice, see footnote 2, Commission Guidelines on the
application of Article 81(3) of the Treaty, OJ C 101, 27.4.2004, 97, Commission Guidelines on the
applicability of Article 81 of the EC Treaty to horizontal cooperation-agreements, OJ C 3;6:L2001, 2
and Commission Guidelines on vertical restraints, 03 C 130, 19.5.2010, 1, point 23.

4 See for instance point 7 of the

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prohibited under EU law which, in our view, would jeopardise the attainment of the
Union's objectives (Article 4(3) TFEU). Moreover, it conflicts with Commission policy
and appears undesirable for business because of the uncertainty and risks it creates. It
would provide for inconsistent signals to companies and go against the very purpose of
the application of competition law to agreements that experience shows have no benefits
for efficiency or innovation. Also from the point of view of consistency within the
European Competition Network, the proposed legislation would appear to run counter to
the trend of convergence that Member States and the Commission strive for. In short, the
proposed amendment raises, in our view, several issues of EU competition law and policy
which weigh against adoption.
Should you have any additional questions, please do not hesitate to contact me again.
Your staff may also get in touch with
, tel.
,
tel.
or

Yours sincerely,

Alexander IlFALIANER

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