It is also very fitting I think, to be placed, as a Dutchman, between the British and the French.

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Good afternoon. It is my great pleasure to speak to you this morning.

It is also very fitting I think, to be placed, as a Dutchman, between the British and the French.

(No matter what I say this morning, I shall appear to hold the middle ground!)

The NMa has excellent relations with the OFT and with the French Autorité de la concurrence, and I would like to begin this morning with a reference to one of the many principles binding us together as Competition Authorities, that is the modernisation of our approach to

competition law.

Secondly I will comment briefly on the limits of the degree of harmonisation that is desirable between our competition law systems, and the importance of maintaining our flexibility as national enforcers. This is a topic to which Philip has already referred, and which Bruno will take further in his comments this morning.

Since 2004 we have been operating under a system of self-assessment when it comes to competition law in Europe. The trend in all three authorities here before you, has been to move away from a formalistic competition law system, in which every restraint of trade is assumed to be illegal until it is notified and exempted.

And to move towards a more mature system, in which the competition laws and the

guidelines are set out clearly by the competition authority. The working assumption is that

companies themselves, with the assistance of their lawyers and consultants, are in the best

position to assess whether or not their actions are in breach of those laws and guidelines.

There has been correspondingly an increased emphasis in competition law on effects-based analysis, and an increased tendency to ground decisions in economic thinking. This is a trend that the NMa very much supports as a competition authority, perhaps even more so than the European Commission - although I myself would express some reticence because of the possible costs and the possible unpredictability that the effects-based approach can bring, especially in cases where it results in an arms-race between conflicting teams of economists. I will come back to that later.

The NMa’s support for the economics-based approach is evidenced, for example, in our acceptance of efficiency defences in merger cases and it is reflected in our economics- based approach to competition problems generally, and to vertical restraints in particular.

To take a particular case, the NMa issued a decision, in August of 2008, unconditionally clearing the merger between Dutch Yellow Pages and the Dutch Telephone Directory. This decision is currently under appeal in the Dutch courts, but I can tell you a little about it. This was a merger, which at first glance, might appear to lead to a reduction from 2 to 1 players, in the market for nationwide print directories. However, on the application of an effects-based analysis to this two-sided market, in which there are considerable network effects evident, it became clear

- that there was in fact limited competition between the parties,

- that the market was subject to increasing discipline from online alternatives

- that only a small group of advertisers could be adversely affected by the merger, and that this group could be expected to shrink (through diminishing use of print

directories) and

- that at the same time a large group of advertisers could benefit from the increased use that could be made of a single merged directory.

The attitude of the European competition authorities to vertical restraints is another example of an area where there is an increased focus on the use of an effects- based analysis. This is an area in which the Dutch would possibly go even further than the European Commission, as is evidenced by our liberal approach to cases of individual resale price maintenance.

Nevertheless, the point is that in each of our three agencies, that stand before you this

morning, you will find an increased presence of economists (from as little as 1 in 10 in earlier

years, to almost 1 in 4 in 2009). You will find more and more time spent during the

investigations on establishing the theory of harm, and on establishing the effects of alleged breaches of competition law. You will find an increased openness to economic reasoning and economic analysis.

Of course, an increased economic approach to competition law has possible downsides.

An effects-based approach does not always allow short, snappy decision making. The period from a cartel investigation until a judgement of the highest court may take five to seven years.

The NMa strives to keep its procedures as short as possible, but an economic approach to competition law does not make procedures shorter. This is a significant downside when we consider the importance of speedy processes under the due process requirements of the European Convention of Human Rights, to which we adhere; “ Justice is best, when justice is freshest” .

A second possible disadvantage of an effects-based approach is that it may lead to uncertainty of outcome. One can so easily end up at a hearing, listening to an arm’s race between two groups of conflicting `expert` economists. At the NMa, we have also been faced with the situation, where all the local reputable economic consultancies have been hired by the parties – sometimes referred to as “ hiring the street” . We have been forced to go as far as the United States, in order to find “ independent” economists, to test the support for the theories of our internal experts.

On the other hand, it can just as easily be claimed that an economics-based approach leads to certainty – in the sense that it leads to an objective certainty and a certainty of lack of bias and lack of a formalistic approach.

While it is a fact that an economics-based approach is increasingly important, such an

approach is not equally relevant in all cases. In certain investigations, involving hard-core

cartels, for example, the economic evidence is likely to remain limited. This is confirmed by

the judgment of the European Court of Justice in the recent Dutch Mobile Operators case,

where the Court made clear that hard-core cartels, also where there has been just one meeting

between the participants, are forbidden because they may affect the structure of the market,

and thus competition as such. In this sort of case, no investigation of the effects is required.

The fact that the Competition Authority is not obliged to produce volumes of economic evidence does not mean that cartel investigations are easy. The NMa, like the OFT and the French Autorité, has to be streetwise and efficient in its operations to complete its procedures within a reasonable timeframe. One of the most significant tools in our arsenal in this respect is leniency, followed closely by commitments and, in appropriate cases, direct settlements.

Another is cooperating with other competition authorities. This brings me to my second point this morning, the limits of a common approach and the importance of a flexible instrument- mix.

3. The limits of harmonisation - Importance of a flexible instrument-mix

It is crucial that competition authorities maintain a certain flexibility and absolute freedom when it comes to the design and implementation of their sanctions. We should focus on the outcome, in the case of the NMa, that is making markets work. Achieving optimal compliance is a balancing act; you need a mix of possible actions and sanctions.

In the Netherlands, as many of you are aware, we have an administrative system of competition law enforcement. Under that system the NMa may fine both undertakings and individuals. We are currently in discussions about extending our competition law to create criminal offences which could be imposed as an alternative to the administrative law sanctions, which would remain in existence. These new criminal rules may also extend to both undertakings, and individuals.

One thing with which I am concerned is to what degree a dual system of criminal and administrative sanctions might hinder the NMa’s powers, by constricting its leniency programme, for example. The danger is that leniency applicants could be deterred if the legislative proposal extends the possibility of criminal prosecution to undertakings rather than confining it to directors.

Another concern is that unlike in an administrative law culture, the criminal law culture is

intrinsically antagonistic. There is very little room (in Dutch criminal law, there is no room in

fact) for direct settlements, for commitment procedures, for categories A, B and C in leniency.

One of the basic principles we would have to ensure in the Netherlands is that the control over when and whether a criminal prosecution is undertaken by the public prosecutor rests squarely with the NMa. Only then would we have a chance of retaining some measure of effectiveness of enforcement.

The range of enforcement tools that are currently being used by the NMa, and by many of its European counterparts, is broader than it has ever been before. Compliance, leniency, commitments, remedies and direct settlements are all available for companies in order to ensure that the law is enforced.

• Compliance; Philip has already said a lot about compliance. Our motto at the NMa is:

“ the optimum of compliance is better than the maximum of enforcement” .

The NMa has taken a natural interest in the implementation of compliance programmes by companies. We have fostered compliance programmes in some sectors, where competition problems were identified. A good example is the sector/ wide compliance programme in the insurance sector in the Netherlands.

Just to add a few points to what Philip has said,

- Remember, a competition-compliance-programme is only useful when it works. If the programme does not work, or does not work properly, it is (a) a waste of time, money and energy and (b) will be a serious disadvantage for the company; remember the 2004 case of British Sugar where having a compliance-programme, that did not work, was even deemed to be an aggravating factor in fining.

- Compliance-programmes should be tailor-made so as to make that they really work.

So make your compliance programme as practical as possible. No offence meant to the lawyers present, (I’m a lawyer myself) but cut out the legal-speak and make it comprehensible.

- The introduction of a compliance programme should be used as an opportunity to

apply for leniency. We often see situations where an undertaking has been “ cleaned” .

It may seem tempting, when one comes across incriminating material while establishing a compliance programme, to bury the evidence. However, that can be most inconvenient when material is discovered at another undertaking, and you have binned the defence or potential leniency application material for your own

undertaking.

- Lastly, remember compliance should not lead to complacency. The presence of a compliance programme within an undertaking is no grounds for exonerating that undertaking from fines in the event of a competition law breach.

So it comes down to knowing the law, to exercising a praxis that is in conformity with the law and – if something has gone wrong- race to the authority with a leniency-application.

• Leniency; In the Netherlands, we have had the power since 2007 to impose fines on individual directors, for their role as the operating mind behind the cartel. We have not as yet made use of this power for that purpose. (It only applies to offences committed since October 2007.)However, as an administrative authority, we have fined

individuals for failing to co-operate with an investigation, even in a case concerning ex- employees of the undertaking concerned, who attempted to invoke a right to silence.

In the Netherlands, leniency is also available for the directors of undertakings, who would otherwise be exposed to the risk of individual fines. We have also formulated the policy to allow directors automatic immunity from fines where the undertaking is granted 100 per cent leniency.

• Alternative enforcement and Commitments; The NMa has a good track-record of using alternative methods of enforcement, such as compliance programmes, as mentioned. We have, for example, when deciding whether or not to proceed with possible cases, (outside the area of hard-core infringements) taken into consideration situations where companies have altered their behaviour and made prompt

compensatory payments to consumers possibly harmed by their behaviour. We did this in cases such as Frijters, an energy case, Groen Maastricht (where it played a mitigating role in the imposition of the fine) and Interpay.

In an audit done by the Dutch Court of Auditors two years ago, the NMa was urged to

formalise its alternative enforcement procedures. The aim was to increase legal

certainty, and to provide precedence value to its procedures. This was done by the introduction of a commitments procedure.

It is the NMa’s policy to accept commitments, in principle in non hard-core cases, and in principle before the issue of a statement of objections. That is to say, cases where there is evidence that the undertaking has been involved in some form of unlawful practice, but it is clear that it would be more effective to accept commitments by the undertaking to solve the problem and prevent its recurrence, rather than proceeding down a more adversarial route, involving a formal decision and fines. The effectiveness of the commitments is crucial to their acceptance, in the sense that the case must be sufficiently advanced, so that there is an expectation that a sanction may be imposed, but the commitments cannot be offered so late in the investigation, that their

effectiveness no greater is than proceeding with a regular sanction.

The NMa has as yet accepted commitments in only one decision. Commitments have been considered in other cases, but it must be said that many undertakings do not seem to treat this opportunity seriously. For example, undertakings claim to want to submit commitments, but they actually submit a written defence, saying we didn’t do what you claim we did, accompanied by a vague promise to respect the law in the future. That is not the professional approach that the NMa expects from undertakings and their counsel. The whole idea of the commitments decision is that the

undertaking;

o accepts that certain factual scenarios have occurred, o accepts that a competition law problem could arise,

o and asserts that particular actions can be taken to solve the problem,

o so that there is no need for anyone to establish whether or not the competition law has been breached.

The NMa is very willing to enter into commitment decisions in non hard-core cases, and we would encourage undertakings to make more effective use of the availability of this option.

• Remedies; more innovative remedies are being accepted by the NMa. This is evident, for example in the KPN –Reggefiber merger, that was cleared with remedies late last year. In that case, the remedy was unique because the monitoring of its

implementation was facilitated by the NMa’s close cooperation with the sector-specific

regulator. We also have, since 2007, a system whereby remedies may be accepted earlier in the clearance process.

• and if necessary there is the possibility of direct settlements; The Commission has had since the Summer of 2008, a direct settlement system for hard-core cartels, to reduce the procedural burden on the Commission of course, but also on the parties. The NMa already had a similar system, our so-called fast-track procedure, which we used in the construction cartel cases from 2001 to 2007. Some of the decisions in the

construction cases have been appealed in the Dutch Courts, but so far, the Courts have accepted the use of this fast-track procedure by the NMa.

4. Conclusion: actions that multinationals can take.

The final point to address is – what can you do as multinationals to stay on the right side of competition law in various jurisdictions.

I think the main thing to do is to continue the professionalisation of your business’ approach to competition. This means that you must be rigorous and vigorous in your self-assessment.

Even in times of economic crisis, you must continue to test your agreements and behaviour in the light of competition law.

From experience, I can tell you that we see that in the current time of economic crisis, parties try to convince us, and each other, that they are forced to turn to forms of cooperation that can be seen as cartels, and that forming a cartel is the best solution for everyone’s problems.

We have seen such situations in the graphic design sector, and in the inland waterway

transport sector. There is absolutely no evidence to substantiate such claims. The NMa’s line, and indeed the of Commission’s and every other Competition Authority’s, is therefore crystal clear: Cartelisation is not the answer; also in times of economic crises we will use our

enforcement power to fight cartels. When the need for flexibility becomes apparent, we may be flexible in our procedures, but not in our principles.

Finally, you can make use of the range of enforcement tools that are at your disposal;

compliance, leniency, commitments and remedies. My advices would be: take advantage of

the fact that a balanced approach to competition law enforcement is available in the

Netherlands, the UK, France and in the EU. Bruno Lasserre will be expanding on how competition agencies can work together in different ways to foster firm compliance.

In the NMa agenda, the NMa sets out what its plans are for the coming two years. The new NMa agenda, which will be published shortly in the New Year, will indicate our focus in these economically difficult times. We have consulted with our European partners in the setting of this agenda.

In the Netherlands, we will be watching manufacturing and processing industries,

professional services and healthcare particularly closely over the next two years. It may seem tempting for companies in such challenging times, to seek refuge in anti-competitive

agreements, but experience and history teaches us, that it is now, and especially now that competition is the very tool to lead us into economic recovery.

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