© Springer-Verlag Berlin Heidelberg 2015Pierre Kobel, Pranvera Këllezi and Bruce Kilpatrick (eds.)Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social ResponsibilityLIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition10.1007/978-3-662-45753-5_14
14. The Netherlands
Van Doorne N.V., Amsterdam, The Netherlands
Sonos, Hilversum, The Netherlands
The Dutch agricultural sector is becoming more concentrated. There are fewer farmers with larger businesses. Most farmers sell their produce via cooperatives to international traders. A large part of the production is then exported. National demand for agricultural products is largely supplied by supermarkets with strong buying power. The supermarkets are in fierce competition with each other with the result that there are ‘price wars’. Consumers benefit from this competition and the lower retail prices. The strong buying powers of supermarkets lead, however, to a risk of exclusion of competitors and exploitation of suppliers. Market players have raised complaints about the behaviour of supermarkets. The Dutch government is therefore encouraging the industry to adopt a code of conduct. This code should ensure that the supermarkets do not abuse their strength and apply unfair conditions in their dealings with their trading partners. In the case of abuse or unfair trading, the general competition law and civil law rules apply.
14.2 Economic Background
The Dutch agricultural production sector comprises approximately 67,000 farmers. Since 2000, the number of farmers has decreased by 31 %. Over the same period, the reduction in the surface area used for agricultural purposes was only 7 %. Farmers therefore run bigger businesses. The average turnover per producer has increased over this period by approximately 62 % to EUR 315,000. The increase in turnover differs per sector. The largest increase was in the livestock sector, followed by the horticultural business; it was relatively modest in arable farming (e.g., fruit, vegetables and potatoes). A significant part of agricultural production consists of dairy farms and livestock farms (25 %). Arable farming is the second-largest sub-sector (18 %).
Most producers are members of producers’ associations or cooperatives, which sell the products on behalf of their members. Membership regulations generally require members to sell exclusively via the association or cooperative. Some producers’ associations also act as traders at the secondary level. By way of example: there are 1,600 apple growers active in the Netherlands. Seventy-five percent of the apples produced by these growers are collected and distributed via either The Greenery or Fruitmasters, two producers’ associations that also act as international traders.
Depending on the type of product, there may be one or more trading levels and/or processing activities involved. The level of market concentration at each trading levels varies per product and per activity. By way of example: after the sales at the initial wholesale level (including The Greenery and Fruitmasters), apples are delivered to the retail channel via a large number of service providers, the largest of which has a market share of 10–15 %. The secondary level has in international character. Seventy percent of the fruit and vegetables that have been produced in the Netherlands are exported, while 45 % of the fruit and vegetables consumed in the Netherlands have been imported.
The grocery retail level comprises approximately 13,000 retailers, operating from approximately 30,000 sales points. A total of 5,700 of these sales points are supermarkets, which distribute 75 % of grocery produce in the Netherlands. Although at the time of writing there are still very few hypermarkets, they are on the rise. The turnover of supermarkets in 2013 was approximately EUR 34.2 million. Of the money that consumers spend on groceries, over 50 % is spent in a supermarket.
Dutch supermarkets are in fierce competition. From 2003 until 2007, there was an outright ‘price war’. This led to the demise of two supermarket chains and discussions on whether a prohibition of sales below cost would be desirable (see Sect. 14.5.3 below).
Currently, the top three retail purchasers represent approximately 85 % of the market: Albert Heijn (33.7 %), Jumbo (20–22 %) and purchasing cooperative Superunie (30 %). Discounters Aldi and Lidl are growing and currently have a market share of approximately 8 %.
14.3 Legal Background
14.3.1 Prohibition of Restrictive Agreements
The Dutch competition rules are set out in the Dutch Competition Act (the ‘DCA’), which entered into force in 1998. The rules are modelled on and interpreted in accordance with the European competition rules. Article 6 DCA prohibits restrictive agreements. Article 24 DCA prohibits abuse of dominance. The DCA also contains a merger control regime. The Dutch competition authority, ACM, supervises compliance with competition law in all sectors.
The same restrictions that are considered hard-core restrictions under the EU rules will in general be considered hard-core restrictions under the Dutch competition rules. Having said this, during the consultation on the review of the Block Exemption Regulation on Vertical Restraints in 2009, the Dutch competition authority suggested that vertical price maintenance should be removed from the list of hard-core restrictions. This suggestion was not followed. Consequently and given that the EU block exemptions have direct effect under the Dutch competition rules, resale price maintenance remains listed as a hard-core restriction in the Netherlands. To date, however, the Dutch competition authority has not given any priority to enforcing resale price maintenance cases.
In addition, unlike the EU de minimis exemption from the prohibition on restrictive agreements, the Dutch statutory de minimis exemption also includes hard-core restrictions. Article 7 DCA exempts (1) all agreements, decisions and concerted practices that involve no more than eight undertakings whose combined turnover does not exceed EUR 5.5 million if they are involved in the sale of goods or EUR 1.1 million in all other cases and (2) all agreements, decisions and concerted practices between (potential) competitors provided that the combined market share of the parties involved does not exceed 10 % on any of the markets concerned. This second exemption was introduced in 2011. It aims to strengthen the position of small and medium-sized undertakings, including those dealing with large retailers.
Finally, there is a national block exemption that exempts certain price-fixing agreements (see Sect. 14.5.3 below). Like the EU competition rules, the DCA does not include provisions relating to unfair trading practices. Unfair practices by large retailers are a subject of debate in the Netherlands (see Sect. 14.3.4 below).
14.3.2 Merger Control
As mentioned above, the ACM is responsible for the supervision of mergers and other types of concentrations. Parties to a concentration are required to notify their transaction to the ACM if the following thresholds are met: (1) the combined worldwide turnover of the undertakings concerned exceeds EUR 150 million and (2) at least two of the undertakings concerned realised an individual turnover in the Netherlands of at least EUR 30 million. There are no specific thresholds for mergers in the grocery retail sector.
18.104.22.168 Relevant Market
The DCA does not contain a definition of the relevant (product and/or geographic) market, nor does it specify how to define markets. Markets are defined in accordance with the rules and principles set out in the EU competition rules.
In previous decisions, at grocery retail level, the ACM distinguishes separate product markets for
the sale of daily consumer goods via supermarkets (the ‘supermarket market’);
the procurement of daily consumer goods for sale via the retail market, in which account is taken of the differences between groups of products (however, to date the ACM has not defined separate markets for such product groups) (hereafter, the ‘purchase market’);
offering supermarket franchise services (hereafter, the ‘franchise market’).
The ACM takes into account the store size, calculating the market share of the merging parties on the basis of both turnover and ‘sales surface’. Moreover, in some cases involving concentrations between large supermarkets, the ACM takes into account that small supermarkets (<less than 500 m2) generally offer a limited product range and therefore do not constitute a full substitute for a large supermarket. Consequently, the ACM has excluded such small supermarkets from its assessment. The ACM considers that the supermarket market could potentially be split into a market for supermarkets, hypermarkets and discounters. It has however to date not adopted such narrow market definition.
The online activities of supermarkets have to date not been the specific subject of a competition law review.
The geographic scope of a market is established in accordance with the rules and principles set out in the EU competition rules.