Since the opening of the online gambling market in the Netherlands, a lot of developments have taken place. A ban on the use of role models in advertisements was introduced and the announced ban on untargeted advertising is expected to take effect by 1 July 2023. In addition, a tightening of the rules on the duty of care, in particular playing limits, is on its way.

In this blog, we update you on the recent and expected developments on the Dutch online gambling market.

Ban on untargeted advertising

In summer 2022, the Minister for Legal Protection (Minister voor Rechtsbescherming) published a draft Decree to amend the Decree on Recruitment, Advertising and the Prevention of Addiction to Gambling (Besluit werving, reclame en verslavingspreventie kansspelen; “Marketing Decree”) (“draft Decree”).

The draft Decree introduces a ban on untargeted advertising for online games of chance, as a result of which:

• License holders for online games of chance will no longer be allowed to advertise via TV, radio and in public indoor and outdoor areas;
• Advertisements via the internet and direct mailing will still be possible, but the rules will be tightened further in order to prevent vulnerable groups from being confronted with the advertisements; and
• The use of sponsorship by providers of online games of chance will be prohibited in phases, so that the sports sector can find alternative sponsors:
  • Program and event sponsoring will no longer be allowed a year after the ban has entered into force;
  • Two years after the entry into force, sports sponsorship and shirt sponsorship will be prohibited.

Advice Council of State

On 2 January 2023, the Advisory Division of the Council of State (Afdeling advisering van de Raad van State; “Advisory Division”) published its advice regarding the ban. In short, the Advisory Division made several comments:

• The Advisory Division recommends explaining in the explanatory memorandum why a ban on untargeted advertising is necessary at this time – before the 2024 evaluation and numeric insight – and how the draft Decree relates to advertising policy for other potentially addictive activities, such as smoking and alcohol;
• Several parts of the draft Decree are not yet sufficiently developed, such as:
  • what is meant by the ‘demonstrable measures’ to prevent internet advertising from coming to the attention of vulnerable groups;
  • who are subject to the ban;
  • the remaining scope for untargeted advertising for land-based providers; and
  • to the extent that the government is pushing for the use of algorithms, it does not explain how this relates to the General Data Protection Regulation (Algemene verordening gegevensbescherming).

The Advisory Division thus expressed several concerns which the Minister should reconsider.

Expected publication of the ban

While the ban was meant to enter into force on 1 January 2023, the decree to amend the Marketing Decree has not been published yet. On 22 March 2023, the Minister gave an update on the expected entry into force of the ban on untargeted advertising: the ban will enter into force no later than 1 July 2023. The reason for the delay is the implementation of the advice of the Advisory Division, specifically the feedback regarding the proportionality and the enforceability. The Decree is expected to be published soon.

Belgium

In Belgium a similar ban has recently been adopted. The ban will enter into force on 1 July 2023, as a result of which:

• General advertising will be prohibited from 1 July 2023, such as advertising on TV, radio, cinema’s, on websites and platforms;
  • There is a transitional period for existing contracts that meet the requirements until 1 October 2023.
• Advertising around sports (in stadium’s) will be prohibited from 1 January 2025;
• (Shirt) sponsoring of professional clubs will be prohibited from 1 January 2028, strict rules apply from 1 January 2025 – 31 December 2027; and
• (Shirt) sponsorship for non-professional sports clubs will still be allowed, but under strict rules (50cm² per advertisement).

Professional sports clubs have announced in the press that they will start litigation against the ban in Belgium.

Cap for playing limits being drafted

The Minister is currently working out a framework for a cap for playing limits. In the first quarter of 2023, the Minister consulted with various parties, such as addiction experts, the Ksa and banks to see how tightening the playing limits can be more protective, which will be worked out in regulations. The Minister aims to have a draft ready in the first half of 2023. Parliament will be informed this spring on its contours. In addition, the Minister will start a pilot in cooperation with operators and scientists to arrive at behavioural interventions that will make players set lower limits.

Extension Advertising Code Online Gambling until 1 June 2023

The board of the Advertising Code Foundation (Stichting Reclame Code) has extended the validity of the Advertising Code Online Games of Chance (Reclamecode Online Kansspelen; “ROK”) until 1 June 2023. The reason for the extension is the pending comprehensive evaluation of the ROK and the expected government measures against untargeted advertising for online games of chance.

Initially, the ROK was valid until 1 March 2023.

The government publishes interim report on Key Figures Addiction Care 2016-2021

On 16 March 2023, the government published the interim report on Key figures Addiction Care 2016-2021 (Tussenrapportage Kerncijfers Verslavingszorg 2016-2021; “report”). The report shows that there is a slight decrease in number and proportion of persons seeking help for gambling problems from 2016-2021. This decrease is also visible for 2022 from a survey of addiction institutions.

If you require any assistance in this regard or have any questions regarding the above, please do not hesitate to reach out to Machteld Robichon or Lisa Uppelschoten.

On 15 March 2023 the District Court of Amsterdam ruled that for a period of almost 10 years Facebook Ireland unlawfully processed the personal data from its Dutch users. The data that was unlawfully processed was not only used by Facebook for the functioning of the social network, but the court emphasizes that it was also used for advertising purposes.

The case was brought before the court by the foundation, Data Privacy Stichting, in collaboration with the Dutch consumer association, the Consumentenbond. The foundation claimed that Facebook Netherlands B.V., Facebook Inc.[1] and Facebook Ireland Ltd.[2] violated the General Data Protection Regulation and its predecessor, the Personal Data Protection Act.[3]

The foundation brought the case under the old collective action system, which only allows a representative organization to ask for a declaratory judgement regarding the unlawful acts, as opposed to the WAMCA which also allows representative organizations to claim damages on behalf of a group of victims.

The court ruled that Facebook Ireland, as the entity responsible for processing Facebook users’ data, unlawfully processed the data belonging to Dutch Facebook users that it was processing from 1 April 2010 until 1 January 2020.

Highlights of the decision

The court considered a number of issues that are relevant to collective actions regarding privacy violations in general. The field of collective actions on this topic is developing incredibly quickly, and there are many unanswered questions since both the WAMCA and the GDPR are fairly new. As such the considerations in this judgement – and in the potential judgement on appeal – could help determine the outcome of future cases.

Sufficient interest

Firstly, the court decides that the foundation had sufficient interest in its declaratory claims, because there is a plausible possibility of damage. The court considered that, in determining whether there is sufficient interest a certain level of abstraction from individual circumstances is appropriate. The possibility of damage could not be excluded in advance and in a general sense. One can conceive of circumstances in which the privacy violations (may) have resulted in material and/or immaterial damage. As such the possibility exists that damage was suffered. This possibility is sufficient as the foundation is asking for a declaratory judgement. According to the court, the question of whether damage was actually suffered does not need to be answered.

Statute of limitations

Secondly, the court rejects Facebook’s defense that the limitation period for the foundation to bring the claims has lapsed.[4] Under Dutch law, the applicable five-year limitation period begins to run on the day following the day on which the injured party became aware of both the damage and the person liable for it (actual awareness). The court considers that it is difficult to answer the question of whether the claims have (partially) lapsed. In collective actions, a defense based on the limitation period can only be successful if an individual approach is not necessary, as individual circumstances must be abstracted from. Facebook’s defense that the limitation period has lapsed, could only succeed if it could otherwise be determined that all members of the represented group became aware of both the damage and the person liable for it (actual awareness) before 30 December 2014. This is five years before the foundation brought the claim. The court goes on to state that in this case Facebook’s unlawful handling of data was not generally known before 30 December 2014. This meant that the limitation period for the collective claims has not elapsed, but the court explicitly states that it could not rule on the question whether in an individual case the limitation period might have been lapsed.

Data controller

Thirdly, in discussing the different Facebook entities as defendants, the court explains when an entity can be considered a data controller in terms of the GDPR/PDPA. According to the court, Facebook Ireland is the only Facebook entity responsible for processing the users’ data during the relevant period.

Burden of proof

Fourthly, the court sets out the application of the burden of proof in cases regarding violations of the GDPR and the PDPA. Under Dutch law, the general rule is that a party that invokes the legal consequences of a certain fact carries the burden of proof for that fact, unless any special rule or the requirements of reasonableness and fairness dictate a different allocation of the burden of proof. According to the court, both the GDPR and the PDPA contain an alternative division of the burden of proof. This means that it is up to the data controller, Facebook Ireland, to prove that the data processing is in accordance with the law and that it complied with the information obligations.

Similarity requirement and declaratory decision

Fifthly, Facebook argued that the declaratory decision could not be granted since not every Facebook user was a victim of the privacy violations. In an interim decision, the court already ruled that the similarity requirement of Article 3:305a of the Dutch Civil Code (old) had been met. In these collective proceedings, it is not yet necessary to be able to determine which individual may have been affected. It is sufficient that an individual can determine whether he has been affected by a possible privacy violation. In the court’s opinion, the circumstance that not every Facebook user belongs to the represented group does not stand in the way of granting the declaratory judgment. There is no further need to differentiate. What exactly is the size of the represented group does not need to be established in these proceedings. That can be addressed in any follow-up proceedings.

Unfair commercial practices

Sixthly, the court motivated why Facebook’s unlawful data processing also constitutes an unfair commercial practice. According to the court, both the GDPR/Data Protection Directive and the Unfair commercial practices directive can apply to the same situation simultaneously. This means that Facebook argued incorrectly that the claims based on data protection do not leave room for claims based on the Unfair commercial practice with regard to the necessary provision of information to users.

Unjust enrichment

Lastly, the court reviewed the foundation’s unjust enrichment claim. Damages resulting from privacy violations are difficult to assign a monetary value to and unjust enrichment is a frequently suggested method of approaching this issue. The court recognized that the personal data of the Facebook users were very valuable for Facebook. However, the court decides that the foundation did not sufficiently show that the Facebook user actually experienced a decrease in the value of his assets or increase in his liabilities (the impoverishment of the Facebook user).

Ongoing controversy regarding Facebook’s privacy practices

Facebook has announced its plans to appeal the ruling. Meanwhile, the foundation and the Consumentenbond have announced that they are starting a second case against Facebook, because Facebook continues to send personal data of its European users to the United States.

Expertise

bureau Brandeis has a great deal of experience representing claimants in collective actions regarding privacy violations. Our collective action team has previously instituted legal proceedings against large tech companies such as TikTok and Oracle and Salesforce. For more information please contact Michelle Krekels.

[1] Now called Meta Platforms Inc.

[2] Now called Meta Platforms Ireland Ltd.

[3] Prior to the GDPR the Data Protection Directive applied in the European Union. This directive was codified in the Netherlands in the PDPA.

[4] Facebook argued that the statute of limitation of the claims of the foundation, insofar as they relate to events before 30 December 2014, has lapsed under Section 3:310 of the Dutch Civil Code.

Many arbitration procedures involve the interpreting of the provisions of a contract. In such cases the arbitrator needs to determine the meaning of a certain phrase in a specific contract. One can however reach significantly different conclusions when faced with the same provision. Different countries also apply different rules to the interpretation of contracts; even within the European Union each member state has its own way of interpreting a contract.

The challenge that participants in arbitration face is predicting how the tribunal will approach the issue of interpretation within the legal framework chosen in the arbitration. It is thus important to ensure that the arbitrator is familiar with the right way of interpreting a contract under the applicable law.

Practical tips on how to ensure the right interpretation of  a contract

Selecting the arbitrator

The parties generally choose the arbitrators themselves. The first practical tip is to make sure to select at least one arbitrator with extensive experience in the relevant contract law. An arbitrators can serve as sole arbitrator or as one of multiple arbitrators on a panel. Extensive experience in a comparable legal system of contract law could also be an advantage. When an arbitrator has a background in a legal system opposite to that of the applicable contract law, it can be challenging for the arbitrator to correctly understand and apply the relevant contract law. After all, the various approaches to contract interpretations can differ strongly.

The assistance of experts

An additional concern lies in the attitude of certain international arbitrators. According to research, there seems to be a widespread inclination amongst international arbitrators to interpret contracts according to their commercially reasonable meaning. In doing so the interpretative rules that are provided in the governing law are sometimes (unconsciously or consciously) ignored. To prevent this from happening, one should offer the arbitrator information regarding the correct interpretation according to the applicable contract law.

One of the opportunities arbitration provides is the possibility of submitting testimonies from experts. This means that a legal expert with an understanding of the relevant contract law and principles is allowed to offer assistance to the arbitral tribunal. Especially when the arbitrators are not familiar with the applicable law, an expert can explain and clarify the relevant foreign law principles to the arbitrators.

Questioning a legal expert can also aid an arbitrator in understanding the relevant contract law. The legal expert would preferably have specific contract law knowledge, strong communication skills, familiarity with the formal rules of the arbitration process as well as prior experience as an expert witness. Merely being an expert on the topic is not enough, given that the ability to communicate such expertise to the arbitrator(s) in a clear and concise manner is crucial.

Expertise

bureau Brandeis’ arbitrage team has many specialists in (international) arbitration. For more information, please contact our specialists.

Recent developments of the Dutch Act on Government and Free Markets in a nutshell – part 2

In this second of two blogs on recent developments of the Dutch Act on Government and Free Markets (“M&O Act“) (in Dutch: Wet Markt & Overheid), we discuss the most recent developments in the M&O Act over the past year. We conclude with a number of practical tips for entrepreneurs who are faced with (unfair) competition from state-owned companies.

In the first of two blogs on recent developments of the M&O Act, we discuss the intended legislative amendment and case law concerning so-called “general interest decisions”.

Other recent developments

In addition to the case law on the reasoning of public interest decisions (discussed in part 1 of this blog series), other important issues in the context of the M&O Act have been decided by the Dutch courts and the Authority for Consumers & Markets (“ACM”) in the past year.

ACM decision on objection DVI: Ministry’s roadshows provides benefit

On 21 December 2021, ACM confirmed in a decision on objection that the Ministry of Economic Affairs and Climate Policy (“EZK”) gave preferential treatment to its public company Dutch Venture Initiative (“DVI”) over other investment funds. DVI invests in funds that in turn invest in innovative, fast-growing SMEs. The case was prompted by a signal from the private investment fund, MKB Multifunds, which ACM received. According to MKB Multifunds, DVI and Oost NL have benefited in several ways. In its decision of 23 februari 2021, ACM found that there was no violation.

In its decision on the objection, ACM revised the primary decision on one point and came to the conclusion that there was, after all, preferential treatment within the meaning of Section 25j(1) of the Competition Act (‘Mw‘) (in Dutch: Mededingingswet). According to ACM, EZK had tried to interest investors in the DVI by organising ‘road shows’ and this constituted an infringement of the prohibition against preferential treatment within the meaning of Section 25j(1) Mw. ACM considered that the prohibition against preferential treatment, in the same way as the prohibition on State aid laid down in article 107 of the TFEU, aims to prevent the public authorities from conferring competitive advantages on an undertaking for the performance of economic activities. Therefore, ACM assesses whether the interest of an investor in DVI-funds fulfils the cumulative State aid elements of Article 107 TFEU.

The three cumulative elements of the State aid prohibition are: a) the direct or indirect granting of State resources; b) the advantage provided is not in conformity with the market; and c) there is selectivity. According to ACM, all three elements have been met and the Ministry of Economic Affairs is violating the M&A Act with this conduct. Non-financial support can therefore also qualify as ‘preverential treatment within the meaning of the M&A Act.

ACM decision on objection Land Registry: Klickviewer is governmental task

In its decision on objection, ACM focuses on the question of when a public service task can be exercised. The decision on objection is based on ACM’s earlier rejection of a complaint by BlindGuide, Geodirect, GOconnectIT, MijnKlic, Prosilic, Syntax Inframediairs, GO WIBON and Spatial Eye (the “Service Providers”). In the complaint, the Service Providers claimed that the Land Registry and Mapping Agency (the “Land Registry”) acted contrary to the M&O Act by not including the integral costs. The further developed KLIC-viewer is in fact offered free of charge. According to the Service Providers, the Land Registry should have offered the KLIC-viewer at least at cost price. The KLIC-viewer enables excavation contractors to see exactly where cables and pipelines are located at the location where they intend to carry out excavation work. The purpose of this is to prevent excavation damage. The Service Providers offer (paid) applications that provide insight into this data (among other things).

The central question is whether the provision of the further developed KLIC-viewer should be regarded as an economic activity or falls within the public task of the Land Registry. In its analysis, ACM explicitly refers to the Tendernet case of the Court of Justice of 7 November 2019 and Compass Datenbank case of the Court of Justice of 12 July 2012. On the basis of this European case law, ACM finds that when assessing activities carried out by public authorities it is sufficient to assess whether there is a close connection (connection criterion) between the activity concerned and the exercise of powers of the public authority. In that case there is no economic activity. Only if there is no such close connection and the activity qualifies as an economic activity, it should be assessed whether the activity can be separated from the public task (separation criterion).

According to the ACM, the provision of the KLIC-Viewer was closely linked to the Kadaster’s public service task as laid down in the Information Exchange of Above-ground and Underground Networks Act (‘WIBON‘) (in Dutch: Wet informatie-uitwisseling bovengrondse en ondergrondse netten en netwerken) and the Kadaster Act. ACM rejects the Service Providers’ argument that it should have applied the separation criterion even though there was a close link between the public service task and the activities of the Land Registry. According to ACM, the separation criterion only plays a role if there is no close link with the exercise of a public authority.

ACM decision parking garages municipality of Hilversum: unfair competition

In its decision of 26 januari 2021, the ACM ruled that the municipality of Hilversum had violated the M&O Act. ACM established that the municipality of Hilversum did not pass on all costs for the three municipal parking garages. As a result, it was competing unfairly with two commercial parking garages and a Q-Park parking garage.

The ACM has repeatedly rapped the knuckles of municipalities because the charges for municipal car parks and parking areas did not cover the cost price. This was the case in the municipalities of s’-Herthogenbosch, Hengelo, Emmen and Veenendaal. In the latter case, the municipality of Veenendaal took the position that barrier parking, like street parking, falls within the exercise of public authority and should therefore not be regarded as an economic activity, or at least that barrier parking and street parking are related in such a way that they cannot be seen separately, so that barrier parking should not be regarded as an economic activity either.

The CBb rejects this reasoning in ruling of 8 december 2020, in which it established that, unlike parking behind a barrier ‘barrier parking’, parking at the street parking ‘street parking’ is exclusively governed by public law. After all, the powers to regulate street parking are exercised exclusively by public authorities. The CBb ruled that barrier parking is an economic activity. The CBb must then answer the question whether the provision of ‘barrier parking’, in view of its nature, its purpose and the rules applicable to it, cannot be regarded as separate from the regulation of street parking, either because the regulation of street parking without the provision of barrier parking would be largely pointless, or because these activities are closely connected (seperation cirterion). The Court answered this question – not entirely surprisingly – in the negative. According to the CBb, ACM was right to make a distinction between the character of the activity of ‘barrier parking’ on the one hand, and that of street parking on the other hand.

ACM decision on objection camper municipality Stadskanaal: after increase of rates no more preferential treatment

In decision on objection dated 7 January 2021, the ACM rejected an objection from a commercial campsite, Camping Musselkanaal, about camper pitches from the municipality of Stadskanaal. Initially, the ACM could not act because the municipality of Stadskanaal had made a general interest decision. After the Court of Rotterdam annulled this decision, the ACM ruled in its decision that the municipality of Stadskanaal did not pass on all of its integral costs for the operation of the Spoordok camper pitches between 1 July 2014 and 1 June 2018. With regard to the period from 1 June 2018 to 31 December 2018, the ACM ruled that the municipality did cover the integral costs with a rate increase. Camping Musselkanaal objected to the decision but its objection was declared unfounded. In the end, the municipality was no longer able to circumvent the M&O Act by the annulled general interest decision and ultimately complied with the M&O Act after all.

Court decision on Heumen sports complex: rent unjustly too low

On 5 January 2021, the Court of Rotterdam ruled in the appeal cases brought by the municipality of Heumen and the lessor of sports facilities against the decision on objection of ACM. In that decision, the ACM confirmed its earlier opinion that the municipality of Heumen had leased a sports complex to a private company, Laco, in 2018 and 2019 without passing on all of the integral costs. Among other things, the municipality paid an operating fee to the private landlord. The competitive position of a competitor of the lessor, Lierdal Sportcentre, was thus affected. According to ACM, the municipality acted contrary to the M&O Act in doing so. The court upheld ACM’s decision but did not get around to a substantive assessment of its opinion. The two appeals were declared inadmissible by the court on formal grounds.

Suffering from an overly entrepreneurial government? Five tips for duped companies

Based on the developments discussed, we distil the following practical tips for companies dealing with a (potentially) competitive government:

• Be alert to possible “general interest decisions” of municipalities and provinces and object to them in time. This can prevent the public interest decision from overriding the M&A Act.
• Check whether there is an economic activity. This may be the case if a government offers products or services that other entrepreneurs also (can) offer. An overview of examples of economic activities can be found here.
• Take a critical look at the service or products offered by the authority and at what remuneration. If the fee charged by the authority is not in line with the market, the integral costs may not be passed on properly. It may also be the case that the government is favouring its own company by granting subsidies or in some other way.
• A company that suspects that a government body is competing unfairly can file a complaint with ACM.
• A company that is faced with an unfairly competitive authority can claim compensation for the period during which the authority competed unfairly with the company.

Bas Braeken and Lara Elzas

In this first of two blogs on recent developments of the Dutch Act on Government and Free Markets (“M&O Act“) (in Dutch: Wet Markt en Overheid), we discuss in a nutshell the legislative proposal to amend the M&O Act (the “Legislative Proposal”). The Legislative Proposal was submitted to the House of Representatives on December 7, 2021 and was debated in the House of Representatives on 14 January 2022. The main amendment of the Act concerns the justification of the so-called “public interest decision”. The submission of the Legislative Proposal did not happen overnight; the proposal was submitted four years after the consultation of the Legislative Proposal Legislative Proposal. In the meantime, the Dutch Trade and Industry Appeals Tribunal (“CBb“) (in Dutch: College van Beroep voor het bedrijfsleven) has clarified the legal framework clarifying the adoption of a public interest decision. This legal framework largely corresponds to the new obligations in the Legislative Proposal. In this blog we discuss the intended legislative amendment and the current assessment framework.

Market and Governance Act and the Legislative Proposal

The M&O Act which is incorporated into the Dutch Competition Act (“Mw”) (in Dutch: Mededingingswet) contains rules of conduct for administrative bodies that perform “economic activities” and compete with companies in that capacity. Autoriteit Consument en Markt (“ACM“) supervises the Act. The M&O Act applies only to activities that are not considered public service. The purpose of the M&O Act is described in the explanatory memorandum of the Legislative Proposal as creating a level playing field between administrative bodies and entrepreneurs in situation where administrative bodies perform economic activities. In order to realize this goal, four rules of conduct have been established that administrative bodies must adhere to when performing economic activities, namely:

1. Integral cost calculation. Administrative bodies must pass on the integral costs of these activities to customers when performing economic activities (Article 25i Mw).
2. Prohibition of favouritism. Administrative bodies may not favour their public undertaking over undertakings with which that undertaking competes and may not grant their public undertaking advantages going beyond normal commercial practice (Section 25j of the Act).
3. Making data available. Administrative bodies may only use data obtained in the performance of public tasks for economic activities if the data can also be made available to third parties (Section 25k Competition Act).
4. Prohibition on mixing functions. If administrative bodies carry out economic activities and also exercise a power under public law with respect to these economic activities, the same persons may not be involved in both activities (Section 25l of the Competition Act).

In practice, the first and second rules of conduct are the most relevant and are most frequently invoked by third parties.

A frequently heard criticism of the current law is that administrative bodies easily circumvent the M&O Act by making a public interest decision. This is because the M&O Act does not apply to economic activities carried out in the public interest on the basis of Article 25h paragraphs 5 and 6 of the Mw. Over 90 percent of the municipalities have frequently taken public interest decisions recently for this reason. In recent years, for example, public interest decisions have been taken for economic activities such as the lease of municipal real estate, the operation of parking garages, the operation of sports facilities, the collection of industrial waste and the operation of camper sites or berths in marinas. Often the reasons for the public interest decisions are limited. The Legislative Proposal should change this.

Legislative amendment – stricter justification of public interest decision

The Legislative Proposal clarifies and tightens the requirements for justification and the process of decision-making for a public interest decision. Administrative bodies that take a public interest decision must from now on:

1. describe the activity for which the public interest exception is invoked;
2. describe the public interest served by the decision;
3. explain the need to invoke the public interest exception;
4. describe the impact of the use of the public interest exception on entrepreneurs;
5. weighing the need to deviate from the rules of conduct under the public interest exception against the impact on entrepreneurs.

These requirements should ensure that public interest decisions are better substantiated and thus raise the bar for making a public interest decision.

Furthermore, the new law obliges administrative bodies to consult entrepreneurs if they wish to take a public interest decision. This will ensure that the interests of entrepreneurs are better weighed and it will become clear at an early stage whether a certain interest can also be realized by a company.

The change in the law obliges administrative bodies to evaluate decisions of public interest every five years, whereby entrepreneurs must also be consulted during the evaluation. In this way administrative bodies are forced to take changing market conditions into account. This also means that the public interest decisions taken by various municipalities in recent years must be re-examined.

The Bill is therefore good news for entrepreneurs. Tightening the law will reduce the risk of unfair competition between administrative bodies and entrepreneurs.

Other legal changes

Another change in the Legislative Proposal is that the release of the source code of open source software will be exempt from the rule of conduct for integral costing. The purpose of this exemption is to make it easier for administrative bodies to publish the source code of open software, thereby stimulating innovation, among other things. In addition, the “sunset clause” of the M&O Act will be scrapped, which will remove the temporary nature of the law.

Entering into force

It is not yet known when the new law will enter into force. A logical moment for this would be 1 July 1 2023 because the M&O Act expires on this date due to the sunset clause. Until more is known about the planning and final content of the legislative amendment, it is wise to use the assessment framework from case law as a guideline.

Assessment framework jurisprudence public interest decisions

Although the Legislative Proposal has not been given priority by the legislature for a long time, the CBb has not been idle and, on December 18, 2018, in the cases parking garage municipality of Hengelo and Marina municipality Zeewolde, provided more clarity on the legal framework applicable to public interest decisions. In both cases the question was whether the public interest decisions on the basis of which the municipality offered its services below the integral cost price had been established with sufficient care.

The CBb elaborates on the framework for substantiating public interest decisions. In summary, the assessment framework implies that administrative bodies:

1. has gathered the necessary knowledge of the relevant facts and the interests to be weighed prior to making the public interest decision;
2. must demonstrate that there is a public interest decision that is served by the economic activity in question. In any case, this public interest does not exist if the offering of the economic activity below cost price is not necessary to serve the public interest pursued; and
3. in view of the interests involved, could reasonably decide to make use of its authority to take a decision as referred to in Article 25h(6) of the Competition Act in the manner in which it did. In this respect it is of importance, among other things, whether the administrative body has included in the decision a price-setting mechanism which, on the one hand, actually achieves the intended effect and, on the other hand, the disadvantage for the undertaking(s) concerned as much as possible, on the other hand, whether it has attached a deadline to the decision and whether it has offered compensation for the disadvantage that should not reasonably be borne by the undertaking(s) concerned.

The review framework creates a barrier for administrative bodies to easily sideline the M&O Act by taking a public interest decision. It obliges administrative bodies to actually investigate the consequences of the decision for all parties and to make a proper balancing of interests. If they fail to do so, the decision can be annulled. This happened, for example, recently in the decision of CBb of 6 April 2021 in the case of parking garages ‘s-Hertogenbosch. The CBb ruled that the municipality had insufficiently examined why it was necessary to operate below integral cost price and wrongly failed to take into account the interests of the commercial provider. In the decision of the Rotterdam District Court of 14 October 2021 in the ‘s-Hertogenbosch case and the decision of the Rotterdam District Court of 2 February 2021, the District Court concluded that the reports showing the necessity of not passing on the costs in full were too general and, moreover, did not sufficiently weigh up the interests (for the latter point, see also the decision of the Rotterdam District Court of 28 June 2018 in the Hilversum case of parking garages). Thus, it is not unusual for public interest decisions to be annulled due to inadequate reasoning by municipalities. The case law is in line with the planned legislative amendment and therefore remains relevant for entrepreneurs who want to challenge a public interest decision.

In the second part of recent developments of the Dutch Act on Government and Free Markets bird’s eye view, we discuss the most relevant developments of the M&O Act over the past year.

Bas Braeken en Lara Elzas

Today, bureau Brandeis launched its Paris office. Throughout the EU, collective actions are on the rise in many areas, in particular antitrust damages cases. bureau Brandeis has been active in this and other high stake areas of litigation for many years , with a clear preference for the challenger. It now joined forces with seasoned French antitrust litigators Marc Barennes, Sarah Subrémon, David Reingewirtz and Philippe Zeller to increase its access to the French market and expand its network of first-class economists, data collectors and litigation funders. The office of bureau Brandeis Paris is located in 4 rue de Penthièvre, 75008 Paris, in the heart of the Paris business arrondissement.

bureau Brandeis Paris is the first European plaintiff litigation boutique in France dedicated primarily to assisting companies, public entities and groups of individuals harmed by competition law infringements. Other fields of high stake litigation will be added in due course.

bureau Brandeis Paris founding members declared: “We are thrilled to set up this office together and work with our Amsterdam colleagues in getting justice and compensation for large groups of antitrust victims.”

Hans Bousie, partner of bureau Brandeis Amsterdam about this new venture: “Clients want these cases brought where is best for them, whether that is in Amsterdam or elsewhere. With the opening of bureau Brandeis Paris, we take a major step in developing our EU presence, with unique access to claims funding. We are thrilled that Marc, Sarah, David and Philippe open a bureau Brandeis office in Paris. We share the same values and work from the belief that litigation is a tool to obtain justice. Apart from that, they are the nicest French (wo)men you can imagine. We are looking forward to working with them in antitrust cases and in other areas of litigation in the future”.

bureau Brandeis was established in Amsterdam in 2014, as a boutique law firm, specialized in litigation, and has a preference for the challenger. bureau Brandeis is a law firm with an emphasis on litigation and in (international) arbitration. We act, often together with other law firms at home or abroad, for national and international companies and other organizations, with a preference for the challenger. We participate in the social debate.

Marc Barennes was a référendaire with the General Court of the European Union and an officer with the European Commission (DG Competition) for 15 years, after starting his antitrust career with a US law firm in Brussels and Paris. He also gained significant experience in private damages actions as a senior executive of an antitrust claims aggregator in the past two years.

Sarah Subrémon is a former Deputy Rapporteur General of the French Competition Authority and a former official with the European Commission (DG Competition) and the English Competition and Markets Authority, where she worked for more than 15 years. She started her career as an antitrust lawyer in Paris. She joins bureau Brandeis Paris from an antitrust claims aggregator where she was also a senior executive.

David Reingewirtz is an antitrust and commercial litigator. After practicing antitrust law in various well-known UK and US law firms in Paris, Brussels and Washington for 8 years, David was appointed Secrétaire de la Conférence du stage in 2008, a prestigious position for French litigators. He then co-joined an independent litigation boutique, specializing in antitrust, commercial and criminal disputes.

Philippe Zeller is an antitrust, regulatory and public litigator. After earning his Ph.D. in public law and lecturing in this field in various law schools, Philippe joined prestigious US and French law firms in Paris where he held Counsel and Partner positions. He specializes in litigating cases before the French independent administrative agencies and Courts.

This is the first bureau Brandeis quarterly report of 2019 on the developments in the area of cartel damage litigation. You may download our quarterly report here.

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On 16 July Bas Braeken will be joining bureau Brandeis in Amsterdam as a partner. Bas is a recognised specialist in the field of (European) competition law and economic regulation in a variety of sectors, such as telecoms, media and fintech.
He is joining bureau Brandeis from Maverick, a company he helped found six years ago. Before that he was a long-time employee of Allen & Overy.
“Bas’s appointment fits in perfectly with our strategy of continuing to build on a broad litigation firm with a focus on complex cases,” says Louis Berger, one of the founders of bureau Brandeis. “Bas is an important piece of the puzzle that will give our ambition further shape. He enjoys an outstanding reputation in the field of European competition law, but also has specific sector knowledge of markets such as telecoms, media, mail & parcels, mobility and fintech. In Bas we see an ambitious partner who has the same entrepreneurial drive, level and values as the other partners of bureau Brandeis, which will provide a huge amount of synergy.”
In the last few years Bas Braeken has achieved major successes for T-Mobile, Canal+, Prijsvrij and others. He also regularly conducts legal proceedings before the European judicial authorities in Luxembourg.
Partner Machteld Robichon: “Bas’s outstanding knowledge and experience are a perfect fit with the regulated market practice of Simone Peek (financial law and life sciences) and mine (practices of change, media and telecoms) and with the cartel damage practice of Hans Bousie and Louis Berger. His focus on telecoms and media is also in keeping with the focus of Christiaan Alberdingk Thijm’s practice.”
Bas Braeken: “I am very impressed by the level of the lawyers at bureau Brandeis, the professionalism of the organisation and the single-minded desire to deliver the best service day after day. The existing practice at Brandeis is a seamless fit with my own practice, which very largely consists of proceedings, compliance and investigations, in addition to providing guidance to clients in complex merger control processes. I see a great deal of synergy and look forward to working with my new partners.”
About bureau Brandeis
bureau Brandeis is a boutique law firm that specialises in conducting complex proceedings for the corporate sector. It has experience in all the relevant fields of law, with a preference for the challenger: corporate litigation, commercial litigation, privacy, competition law, financial law, administrative law, intellectual property, media law, telecommunications law, class actions, international arbitration and cassation. With the arrival of Bas Braeken the firm will have 31 lawyers, seven of them partners.

speech at Eurosonic Noorderslag 2011

If I would only find myself on Twitter and not in real life I would almost believe that copyright is just a burden, just so much dead weight. And today I have the honour to exchange ideas with you about whether this is in fact true. Is copyright the devil?

Before answering this question, I should first explain, of course, who I am, because when you hear a message, it is always a good idea to realise who the messenger is. I am a lawyer specialised in copyright and active in the creative industries. In other words, I earn my money with copyright. I breathe copyright. I work for large organizations in the field of music, books and films that earn their money by exploiting copyright. So I am a lawyer working for the majors and I fully understand the side of the big earners in the world of copyright. So tell me, do you expect me to give you an objective answer to the question whether copyright is the devil, what do you think? Am I objective or not?

Let’s take it one step further. As a lawyer I also represent artists and those who challenge claims to another’s copyright. I summon collecting society´s, or bring proceedings against them before Competition Authorities. I advise people how to escape the clutches of BREIN (that our Dutch copyright police). In recent years, I have provided legal support for many initiatives launched by people who are trying to create an alternative, such as Sellaband. As a result, I see the other side of copyright exploitation in the music industry every day; this other side often results in initiatives dying an early death. So let me ask the question again. Do you expect me to tell an objective story, yes or no?

Let me first make this speech absolutely boring. What in fact is copyright? Copyright is the author’s exclusive right to exploit a work. Nobody else has that right. And rights exploited in the music industry are our subject today. Today we are talking only about the music industry, because in this industry, copyright functions or hinders creativity totally differently from the way it works in other sectors. For instance in the book business, contracts are much more balanced than in the music business, and so there are fewer conflicts. Another example, developments in the fashion industry are so fast that copying does not make sense: by definition, those who copy lay behind in this business. So let’s get back to our beloved music industry.

And what’s the excuse from those in the music industry that invoke copyright? That they are on the side of the creative, because it is the interests of the poor musician that is promoted by all collecting societies, music watchdogs such as BREIN, publishers and record companies. That sounds good, in fact it sounds almost holy, but it is bullshit. All these organizations are acting primarily in their own interests. In itself, there is nothing wrong with that. As you might gather, I also act in my own best interests, as everybody in this room does. But it is important to get the facts clear here today. These representatives act in their own interests, not in the best interests of the composer or artist or the consumer for that matter. So copyright is not about protecting creativity but about collecting money. That´s why they are called collecting societies.

In practice, composers assign their copyrights to collecting societies and publishers and grant licences to record companies for the purpose of making recordings. And so, when the dust has settled, the composers’ and artists’ place is taken over by the middlemen who represent their interests.  By collecting societies, by BREIN, by Warner Music, by Sony ATV et cetera. Their priority is not protecting the author’s creation but making money off the author’s work. Copyright is not the right to copy, but the right to a creative income.

And how is this right exercised nowadays? Lets talk about the business of digital downloads. As early as 2002 there were entrepreneurs that understood that digital downloading was the new model and that the industry really had to get started with making the most of that. To sell digital downloads, parties had and have to get in touch with all cbo´s  in Europe to be granted a licence for each territory. And some societies grant licences more easily than others, for which reason Spotify is available in the Netherlands but not in Germany.

After getting a deal with them parties must get an agreement with all record companies to exploit the relevant recording and performance rights. Do you know how many record companies and publishers there are in the world? Experience shows that it takes a long time to even make an appointment with anyone in the music industry in the first place, let alone reach an agreement. And then the business faces prohibitive financial requirements.

Let me illustrate this with an example. It’s a bit of a complicated one since it contains figures and maths. So I try keep it simple. We all know that thanks to iTunes, the selling price of a download is 1 euro or a dollar worldwide. In other words, you cannot ask more than 1 euro for a download, because otherwise you do not sell anything.  That includes VAT; in other words, your net selling price is 83 cents. Make a mental note of this figure, your maximum net selling price is 83 cents.

Now let’s do some figuring. Collecting societies demand 10% of your selling price, with a minimum of 10 cents per track (be it somewhat lowered these days in some countries), the record companies demand at least 70% of your selling price with a minimum of 70 cents per track. We then arrive at 80 cents and then only the music industry is paid. Remember your maximum selling price of 83 cents? So you bought something for 80 cts and you can not sell it for more than 83 cts. You now have 3 cts per track to work with. You have to pay the operating costs of the entire organization. The software, the office organization, the web application, maintenance, distribution (bandwidth costs) and then you have to make a profit, too.  In this example, you are absolutely certain to suffer a loss on each and every track you sell.  And that is even before you have paid your staff and yourself. This is exactly why even iTunes is not profitable.

And if all these parties have granted permission, which will be even more time-consuming than your whole business plan, you are often supposed to pay in advance, too, so you will be bankrupt even before you have properly started. It used to work like this. Anyone at the gate of the music industry had to pay advances, so having a deal with the majors would mean to pay 200.000 euro up front. These advances were not returnable and only recoupable within the first year. So if you would not sell enough tracks, your money would be gone. Don’t think I’m only talking about the majors here. Some Indies behaved even worse. They would charge you a fixed fee up front for any right to a download whether sold or not.

For anyone familiar with normal figures in the music industry, these figures are ridiculous. A normal album that would cost 18 euro in the store is sold to retailers for about 10 Euros. So retail has a healthy margin to work with. And amongst themselves the prices are even lower. If a record company wants to clear the right of a track for a compilation album it would be charged 5 cents per track, for a number one hit, max 15 cents. So one record company charging another one for max 15 cents per track. Remember the figures. If a retailer wants to sell a physical compilation cd, he would have to pay 10 Euros and with a normal price of 18 Euros would have enough margins to work with, to even lower the net selling price. If however a retailer in the example above would want to sell a digital download, he would be charged 80 cts at least with a maximum selling price of 83 cents. And that is, I repeat, why even iTunes isn’t a viable business model in itself.

So what happened here? By invoking copyright, these parties have succeeded in obstructing developments in digital music exploitation in this way for years now. For this reason, music consumption has gone its own way. People thought: if we cannot do it legal, let’s do it illegal. And this is how Napster, Kazaa, Mininova, and Piratebay were created and apparently, this exploitation satisfied a need that the music industry failed to respond to. And as a result, the big wigs in the record industry and the societies of this world sit with their fat asses on a big pile of content while this content is creeping outward under their own weight, becomes fluid and is dispersed  all over the place beneath them. But it is to no avail to the industry itself.

Imagine all the music in the world as one large iceberg. This iceberg is guarded by the music industry. If you want a chunk out of it, you must buy it. But they made a big mistake; they are desperately trying to store this iceberg in the Sahara and refuse to tow it to a safer place. They might even think that it’s too expensive to tow the iceberg all the way up to the poles. The tragedy is that the industry is not even aware that the iceberg melts, so what they are trying to sell is slipping away and is freely admissible as plain and simple water. So on the Internet music is available like water, entirely free, but, unfortunately, illegal.

And here the execution of copyright kicks in. Has copyright been an exclusive property right until now? I propose that we replace it with the right to a creative income.  The creative who communicates his work to the public or reproduces it must be paid for it, but there will be a different point of departure. Let’s not longer require from all parties to ask for prior permission, but make it possible to just exploit music and pay a fee for that afterwards.

What should we agree about?

• From now on, we will prohibit the industry from charging minimum fees.
• Copyrights will only be paid as long as revenues allow it and always afterwards.
• Allow new initiatives a starting-up period.
• Use a royalty or a subscription model.
• Award initiatives like Spotify the Nobel Prize.

If we reach agreement on this, we will be able to enjoy music legally at last.

Let’s wrap it up. The current copyright system is ok in most cases, but the underlying idea does not work for digital music. Remember that copyright is not there to protect the creative but to earn a creative income. It turns out that a copyright system based on exclusive rights and prior permission is not effective at all on the Internet.

Let me finish.. Let us make sure that in the future music copyright will no longer be a right to intellectual property but a right to creative income. You always have permission, provided that you pay a reasonable fee afterwards. What we need is play now and pay later.And please industry, remove this iceberg from the Sahara.
Eurosonic Noorderslag 2011