Business concentrations may result in powerful companies which are dominant enough to affect competiton significantly or eliminate competition in a specific market. To prevent this, the Competition Act provides for a system of ex ante assessments of mergers and acquisitions above specific turnover thresholds. The NMa has to be notified of a proposed concentration, which cannot be pursued unless NMa clearance is received.
Which concentrations come under merger control regulation?
Three types of concentrations: mergers, acquisitions and certain types of joint ventures
The Competition Act distinguishes between three types of concentrations: mergers, acquisitions and certain types of joint ventures. A merger brings together two or more independent businesses and creates a single new company. In the case of an acquisition, one company acquires control of another company, for instance by purchasing a large packet of shares. Acquiring control means that the purchaser obtains a decisive influence over the activities of the company that is being acquired. A joint venture is a joint company which is operated by two or more existing companies. Merger control regulation only applies to joint ventures which constitute a complete company, in other words, which fulfil all the functions of an independent economic entity on a durable basis. Joint activities in specific areas, for instance in relation to sales or research and development, fall outside the scope of merger control regulation.
Large concentrations only
Merger control regulation only applies to large concentrations. A ‘large’ concentration exists if the following conditions are met:
- the joint annual turnover of the undertakings worldwide amounts to more than EUR 113,450,000;
- and at least two of them each have an annual turnover in the Netherlands of at least EUR 30 million.
Concentrations of undertakings which do not meet these turnover thresholds are permitted without notification. The other concentrations must follow the notification procedure, unless one of the following exceptions applies.
Exceptions (sections 32 and 33)
- The Competition Act does not apply to concentrations subject to regulation by the European Commission. This relates to very large concentrations.
- The other exceptions are:
- temporary participating interests held by financial institutions;
- control by receivers in the event of a moratorium on payments or bankruptcy or in accordance with a decision of the Dutch Central Bank or the Netherlands Pensions and Insurance Supervisor Authority [Pension- & Verzekeringskamer];
- control by private equity companies insofar as the voting rights are only exercised for investment purposes.
Concentrations in healthcare
As of 1 January 2008 merger notification thresholds will be lowered in healthcare. From that date onwards, notification is obligatory in case of a concentration in which at least two of the companies involved have a turnover exceeding EUR 5,500,000 through providing healthcare services, provided:
1. companies have a joint turnover amounting to more than EUR 55 million worldwide and
2. at least two of the companies concerned each have an annual turnover of at least EUR 10 million within the Netherlands.
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