Unannounced Inspections by the ACM: Do’s & Don’ts during Dawn Raids

Due to Covid-19 restrictions, the Netherlands Authority for Consumers and Markets Consumer and Market Authority (“ACM“) has not carried out unannounced inspections (also called ‘Dawn Raids’) for a while. Given that most restrictions have been phased out, the ACM has announced that it will start again to conduct Dawn Raids in the near future.

In the Netherlands both the ACM and the European Commission (“Commission“) are allowed to carry out Dawn Raids for alleged infringements of competition law. These authorities are competent to use this power when there is a concrete indication of anti-competitive agreements or behaviour. Such indications may arise from (anonymous) tips from competitors and (former) employees, and as a result of an official investigation or a market study (see for example our blog about the Commission’s market study into the Internet of Things).

If the ACM knocks on your company’s door in order to execute a Dawn Raid, the ACM’s inspection will proceed (roughly) along the following lines:

  • Entry and opening interview
  • Analogue research
  • Digital research
  • Interview and/or administrative interview

This blog discusses what can be expected and indicates the limits of the investigative powers of the ACM.

Entry and opening interview

During a Dawn Raid, pursuant to article 5:15 of the Dutch General Administrative Law Act (“Awb“) (in Dutch: Algemene Wet Bestuursrecht), officials of the ACM are authorized to enter business premises and open vehicles without prior announcement. They may also enter private homes under article 50 of the Dutch Competition Act (“Mw“) (in Dutch: Mededingingswet). Please note that in order to enter a private residence they need prior authorisation from the supervisory judge.

At the beginning of the Dawn Raid the ACM will ask for a specific person or a person with a specific job description. They will conduct an opening interview with this person. The ACM will usually also ask for an IT person to join the opening interview to map out the IT infrastructure.

During the opening interview the ACM will identify itself on the basis of article 5:12 of the Awb and hand over the search warrant which describes the purpose and object of the Dawn Raid. The ACM must point out to the company that it has a right to legal assistance and will often be willing to wait for a maximum of half an hour for their arrival.

The ACM will clearly state, at the start of a Dawn Raid, that employees must cooperate with the investigation on the basis of article 5:20 of the Awb and that they may not destroy evidence. The duty to cooperate means that employees must not obstruct the ACM and must provide access when so requested. A fine of EUR 900,000 (also for natural persons) or 1% of the group turnover may be imposed for non-cooperation pursuant to article 12m of the ACM’s Establishment Act. In the event of a difference of opinion about the scope of the duty to cooperate, it is advisable to cooperate under protest and to have a note made in the report. This avoids the risk of a fine but gives the company the opportunity for judicial review (e.g. interim injunction proceedings or an appeal against a sanction decision).

Relevance of search warrant

The search warrant determines the limits of the ACM’s investigative powers. Under article 5:17 of the Awb the ACM may request access to all files that fall within the scope of the warrant. The ACM is not allowed to view or copy any files that fall outside the scope of the search warrant. Such files may include e-mails and other correspondence, WhatsApp messages, agendas, memos, minutes of meetings, photographic material, expense claims, and travel tickets. Contact with lawyers – ‘privileged’ communication – is excluded and may not be viewed or copied.

The search warrant that the ACM is obliged to provide must state the purpose and object of the investigation at the time of the Dawn Raid. However, pursuant to the Nexans judgment of June 2014 of the Court of Justice of the European Union (“ECJ“), the statement of purpose and object does not have to contain, and certainly not in the initial phase, a precise definition of the market concerned or a precise legal qualification of the alleged illegal acts. A judgment of the district court of The Hague in preliminary relief proceedings of October 2018 also shows that the ACM has a certain amount of discretion for the formulation of its purpose. What is important is that the definition of the purpose allows the company to determine the scope of its duty to cooperate and its rights of defence.

The question whether something falls within or outside the scope of the investigation task often leads to considerable discussions between the (lawyers of the) company and the ACM, as was the case in a recent dispute at the District Court of The Hague of June 2021. A number of companies brought preliminary relief proceedings because the ACM had considerably expanded the scope of its investigation in response to information found during a Dawn Raid. Initially, the assignment focused on procurement. However, during the Dawn Raid officials also copied files relating to other departments. When the officials at the ACM’s offices took a quick look at these files they came to the conclusion that not only the purchasing department but also the sales department had probably violated competition law. The ACM extended its investigation on the basis of this information.

The central question was whether the ACM was allowed to use this information that it acquired during a Dawn Raid to expand the scope of its investigation. The District Court ruled that on the basis of the Deutsche Bahn judgment of the ECJ, competition authorities are allowed to briefly inspect information in order to verify whether it falls within the scope of the investigation. The competition authority does not have a duty to ignore information that it happened to become aware of during this brief inspection. Accordingly, the District Court of The Hague ruled that the ACM was allowed to use the information that it acquired during its Dawn Raid even though the information clearly fell outside of the scope of the search warrant.

Analogue research

Officials can and may request access to physical files located in locked rooms, cabinets or drawers. In principle, employees must grant access to physical files as long as the ACM acts within the limits of scope of the search warrant.

The limits of the power to conduct analogue investigations were discussed in the so-called wastebasket case. The case concerned officials of the Dutch Financial Markets Authority (“AFM“), who like the ACM are allowed to conduct Dawn Raids. During a Dawn Raid the AFM had independently and randomly taken files from cabinets, opened drawers and searched through wastebaskets and paper bins. According to the Trade and Industry Appeals Tribunal (“CBb“) these actions were unlawful.

The CBb considered the actions of the officials of the AFM unlawful because they qualified as “fishing”. Officials of the AFM and ACM are not allowed to do this; they may only “look around” and subsequently must request access to documents. If, after requesting access, a discussion arises about the relevance of certain files, the officials may only inspect them briefly for verification purposes. Ultimately the CBb’s ruling on the unlawfulness in the wastebasket case made very little difference in practice; the fine imposed on the AFM was upheld because sufficient lawful evidence had been found. In general the case law on this topic shows that claimants are seldom able to prove that officials are guilty of “searching”.

Digital research

In contemporary practice most of the investigation during a Dawn Raid will be focused on digital files. The ACM is authorised to copy digital files from mobile phones, laptops, PCs and other data carriers. In order to manage digital investigations the ACM has published a Digital Working Method in 2014. This describes how the ACM proceeds when collecting and processing digital data taken during a Dawn Raid. In its Working Method, the ACM deviates from the Commission’s practice.

Mobile phones

Pursuant to article 5:17 of the Awb the ACM is permitted to inspect mobile phones if it has sufficient indications that the mobile phone is used for business purposes. The inspection of mobile phones will often take place on site in the presence of the employee that owns or usually uses the phone. The ACM must be able to establish briefly whether, for example, WhatsApp messages are business-related. On the basis of the proportionality requirement, the ACM should stop inspection if the chat is (partly) private. Any disagreement will be referred to the ACM’s confidentiality officer. The limits of the ACM’s authority with respect to the safeguarding and investigation of mobile data regularly leads to legal disputes.

In an anonymised summary proceeding of November 2017, a company argued that the ACM was not allowed to inspect mobile data, because it also included private data of the employee. However, the District Court of The Hague found that the phone contained a lot of relevant data and the ACM could not separate business and private data on the spot. The ACM was therefore allowed to copy all data including any private data. The District Court more over ruled that the ACM had provided sufficient safeguards in order to prevent it from obtaining access to private data in its Digital Working Method.

Deleting data from mobile phones after the ACM has pointed out to the company its duty to cooperate can lead to substantial fines. Recently, the ACM imposed a fine of EUR 1.84 million for deleting WhatsApp chats during a Dawn Raid.

Other digital files

During a Dawn Raid the ACM may seize many digital files for further investigation. These are often millions of individual files such as e-mails, minutes and contracts which the ACM can take with it by making integral copies of (several) complete computers. The files taken by the ACM are referred to as the ‘Safeguarded Dataset’.

Subsequently, the ACM will use search terms to filter out irrelevant documents from the Safeguarded Dataset to arrive at an ‘Within the scope Dataset’. An anonymised judgment of March 2019 of the Court of Appeal of The Hague shows that the ACM has discretion when it comes to choosing the search terms it uses in order to filter its datasets. Pursuant to article 1 of the Digital Working Method files may be considered within the scope of an investigation if the nature or content of the data can reasonably be deemed to fall within the purpose and object of the investigation. The search questions must therefore be sufficiently specific to be able to state that the hits are reasonably within the purpose and object of the investigation.

Finally, a specially designated official will filter out of the ‘Within the Scope Dataset’ all privileged files and private communications to create the ‘Investigation Dataset’. The investigating officials of the ACM then use this dataset to build a file against the company in question. In a judgement of September 2020 the interim relief judge of the Rotterdam District Court ruled that a company is entitled to inspect the Investigation Dataset that the ACM has compiled.

Interrogation or administrative interview – right to remain silent

Pursuant to article 5:16 of the Awb, the ACM also has the power to obtain information from employees in the course of an investigation. The duty of cooperation requires employees to answer questions unless they themselves are personally suspected of violating competition law. Before an interrogation begins, the interviewing official must inform the employee of his or her right to remain silent. If the employee is a suspect he or she is no longer obliged to answer questions with which he or she could (possibly) incriminate him or herself or the company (pursuant to article 5:10 of the Awb).


Dawn Raids often last longer than one day. To prevent evidence from being tampered with during the night officials of the ACM will seal rooms or closets as they see fit. Sealing can also be a solution to a discussion about the relevance or privileged status of certain material. That way a discussion can be postponed to be conducted in the presence of a lawyer.

The ACM can impose a very high penalty if a seal is broken almost regardless of whether the company can do anything about it. Therefore the risk of a seal being broken rests almost entirely with the company in question. The exception that confirms the rule in this respect is the National Association of General Practitioners case. In this case, the National Association of General Practitioners (“LHV“) was fined €51,000 for breach of seal. LHV shared its office with several companies and had taken precautions in order to prevent a seal from being broken. Nonetheless a night time security guard broke the seal during his normal rounds. The CBb annulled the fine imposed on LHV because it had taken all necessary precautions and did not directly employ the guard who had broken the seal.

After the Dawn Raid

Towards the end of the dawn raid, the ACM and/or the Commission will draw up an inventory of all the (digital) documents they have taken or copied. Companies are advised to draw up an inventory themselves in which they can compare to the inventory of the investigators and on which they can record any particularities that occurred during the Dawn Raid.

Checklist in case of Dawn Raid

  • Appoint a Dawn Raid specialist within your company, and make sure they have the contact details of a trusted competition lawyer in advance.
  • Please also read our preparatory documents (in Dutch) for a Dawn Raid, including:
    • separate instructions for receptionist,
    • separate instructions for staff who accompany ACM personnel during Dawn Raids, and
    • a detailed legal framework for Dawn Raids of the ACM.
  • Create a ‘legal privilege’ folder where all (e-mail) correspondence with lawyers is stored.
  • In the event of a Dawn Raid, send the ACM to an empty conference room.
  • Formally object to the Dawn Raid without breaching your duty to cooperate and ask for proof of your objection.
  • Make copies of all documents copied by the ACM during the Dawn Raid.
  • Always make a note of whether, when and who is considered personally suspect by the ACM. The ACM will not directly state that an employee is a suspect so this must be derived from the fact that an employee is informed of his or her right to remain silent.
  • Take a picture of any seal and hire a security guard to protect the seal.
  • When the ACM is leaving, ask for a copy of their inventory.

Is the ACM currently performing a Dawn Raid at your premises? Would you like more information about the do’s and don’ts during a Dawn Raid? Or are you interested in a compliance training course in which employees are prepared for a Dawn Raid? The Dawn Raid team at Bureau Brandeis has extensive experience with raids of the ACM. Please feel free to contact Bas Braeken, Jade Versteeg, Lara Elzas, Timo Hieselaar, Demi van den Berg and/or Berend Verweij.


ECJ redefines the “economic entity”-doctrine and rules that subsidiary may be liable for behaviour of its parent company

On 7 October 2021 the Grand Chamber of the Court of Justice of the EU ( “ECJ”) handed down a landmark judgment for the victims of antitrust infringements in Case C-882/19 Sumal. In essence,  it held for the first time that victims of a cartel infringement may, under certain circumstances, bring an action for damages against the subsidiary of a parent company which was found guilty of that infringement. This ruling has numerous practical implications for antitrust victims, notably in terms of choosing the legal entities against which they may bring a private damages claim and the jurisdiction(s) before which they may bring their claims. In so doing, the ECJ also appears to nuance the well-established “economic unit” doctrine.

In this blog, we briefly (i) sum up the background to the dispute, (ii) recall the questions asked to the ECJ and the Opinion of its Advocate General Pitruzzella, (iii) examine and clarify the answer and the reasoning of the ECJ, (iii) and formulate some observations about the solutions adopted by the ECJ.

Background to the dispute

The case referred to the ECJ is one of the many referrals sent by the Courts to the ECJ in the aftermath of the 2016 decision of the European Commission imposing fines on the European truck manufacturers for their participation in a cartel (“cartel decision”).

In casu, the claimant, a Spanish company seated in Barcelona had acquired between 1997 and 1999 two Daimler trucks from a dealership in Spain under a leasing contract.

To obtain compensation for the trucks it had purchased at cartelised prices, it brought a damages action before the Barcelona Commercial Court against the Spanish subsidiary of Daimler AG. While Daimler AG is one of the addressees of the European Commission’s cartel decision, its Spanish subsidiary was not.

On 23 January 2019, the Barcelona Commercial Court dismissed the action brought against the Spanish subsidiary, reasoning that it could not be sued since the cartel decision was only addressed to its parent company.

The Claimant appealed this ruling before the Barcelona Court of Appeal, which asked the ECJ for a preliminary ruling.

The Question asked to the ECJ and the AG’s Opinion

In essence, the referring court asks the ECJ whether the victim of an anti-competitive practice by an undertaking may bring an action for damages, without distinction, either against a parent company which has been punished by the Commission for that practice in a decision or against a subsidiary of that company which is not referred to in that decision, where those companies together constitute a single economic unit (para. 31).  While the question whether a parent company may be held liable for the behaviour of its subsidiary (‘upward liability’) has been answered by the ECJ both in the public (Akzo) and private antitrust (Skanska) contexts, it is the first time that the ECJ addresses the question whether a subsidiary may be held liable for the behaviour of its parent company in the context of a damages action (‘downward liability’).

In its Opinion delivered on 15 April 2021 (Opinion)Advocate General (AG) Pitruzzella proposes to give a positive answer to the question asked to the ECJ.

After quoting the case law regarding the concepts of “undertaking” and “economic unity” which, according to the AG, allow a parent company to be held liable for the anti-competitive behaviour of its subsidiary when the parent company “exercises a decisive influence on the commercial policy of its subsidiary”, AG Pitruzzella considers that, for the subsidiary to be held liable for its parent’s behaviour, the subsidiary must have taken part in the economic activity of the parent company that has materially committed the infringement (para.56 and 57 Opinion).

This leads the AG to consider that the criteria to hold the parent company liable for its subsidiary’s anti-competitive behaviour are different from those required to hold the subsidiary liable for the parent’s anticompetitive behaviour (para. 59 Opinion).AG Pitruzzella concludes therefore that a subsidiary may be held liable for its parent’s behavior if two requirements are met:

(i) They formed an ‘economic unit’ as established by their economic, organizational and economic links;

(ii) The subsidiary has contributed substantially to the realization of the objective pursued by the parent company and in the materialization of the effects of the infringement (for example, because the subsidiary sells the goods that are the subject of the cartel) (para. 53 Opinion).

The ECJ’s ruling

In its ruling, the ECJ agrees with the AG’s Opinion that a subsidiary might be held liable for the damage resulting from anti-competitive conduct of its parent company under certain circumstances but adopts a different reasoning from the AG.

As a first step of its reasoning, the ECJ relies notably on Skanska to insist on the right of antitrust victims to obtain redress against the “undertakings” which participate in anti-competitive behaviours (paras. 31 to 36), as well as the fact that the concept of “undertaking” has a similar scope in the context of private and public competition enforcement (para. 37).

As a second step, the ECJ details the concept of “undertaking” as defined in its well settled case law and its consequences on liability, i.e., the possibility of holding the parent company liable for the anti-competitive behaviour of its subsidiary when they form an “economic unit”. As the ECJ notes it, pursuant to the well-known Akzo judgment, such an economic unit exists when the subsidiary does not determine independently its own conduct on the market, but essentially carries out the instructions given to it by the parent company, having regard especially to the economic, organisational and legal links between those two legal entities (paras. 38 to 43).

As a third step, the ECJ appears to apply a new and nuanced approach to the existing functional concept of “undertaking”. It first finds (in para. 45) that there are groups of companies of the “conglomerate” type which are active in several unrelated economic fields. As a consequence of this finding, it considers (in para. 46) that an action for damages cannot automatically be brought against any subsidiary of the parent company referred to in a Commission decision. According to the ECJ (still in para. 46), this is because “the concept of an ‘undertaking” used in Article 101 TFEU is a functional concept, in that the economic unit of which it is constituted must be identified having regard to the subject matter of the agreement at issue”. The ECJ then explains (in para. 47) that, if the “undertaking” was not identified having regard to the agreement at issue, a subsidiary within a group of companies of the conglomerate type “could be held liable for infringements committed in the context of economic activities entirely unconnected to its own activity and in which they were in no way involved, even indirectly”.

The ECJ finds, as a consequence, that establishing that a subsidiary and the parent company which participated in the anti-competitive behaviour constitute an “undertaking” requires to prove, on the one hand, “the economic, organizational and legal links” between them, and, on the other hand, the “existence of a specific link between the economic activity of that subsidiary and the subject matter of the infringement for which the parent company was held to be responsible” (para.51).

Applying this rule to the circumstances of the case, the ECJ rules (in para. 52) that the victim should in principle establish that the anticompetitive agreement concluded by the parent company, for which it has been punished, concerns the same products as those marketed by the subsidiary. In so doing, the victim shows that it is precisely the economic unit of which the subsidiary, together with its parent company, forms part that constitutes the undertaking which actually committed the infringement found earlier by the Commission pursuant to Article 101(1) TFEU, in accordance with the functional interpretation of the concept of ‘undertaking’ (para.52).

The ECJ goes on (in para. 53 et seq.) to address the rights of defence for a subsidiary which is faced with an action for damages. The ECJ distinguishes two situations. In cases where no prior Commission decision has been adopted against the parent company, the ECJ states (in para. 54) that the subsidiary is entitled to dispute both that it belongs to the same undertaking as its parent company and to rebut its liability for the alleged damage (para. 53 and 59). By contrast, in cases where the Commission adopted a prior decision against the parent company, this decision is also final vis-à-vis the subsidiary which may dispute before the national courts that it belongs to the same undertaking as the parent company, but which may not dispute the existence of an infringement if it is found to be part of the same “economic unit” (paras. 52 to 55). This is because the undertaking has had opportunity to challenge the finding of an infringement in the administrative procedure.

The ECJ observes (in paras. 62 and 63) that the Commission is free to impose a fine on any legal entity of an undertaking which has taken part in an infringement of Article 101 TFEU. The Commission’s choice of a parent company as an addressee of its decision, does not preclude the national courts from finding that any of its subsidiaries being part of the same undertaking are also liable for the same infringement.

Finally, the ECJ finds that in the case at hand, the claimant could have brought an action before the Spanish Courts against both the parent company and the subsidiary if the conditions the ECJ set out in its ruling were met. Relying on its Tibor Trans judgment, it rules that where the market affected by the anticompetitive conduct is in the Member State on whose territory the alleged damage is said to have occurred, it is to be held that that Member State must be regarded as the place where the damage occurred for the purposes of applying Article 7(2) of Regulation No 1215/2012.

In light of those considerations, the ECJ finds (in paras. 68 et seq.) that – to ensure the full effectiveness of European Union Law – Article 101 TFEU must be interpreted as precluding national legislation which provides for the possibility of imputing a liability for the conduct of one company to another only if that second company controls the first company.

Some observations

Firstly, the Sumal judgment sheds (long awaited) light on the matter of downward liability, and more generally, whether a broad interpretation of the concept of “undertaking” in private enforcement as formulated in the Skanska judgment, is justified. While some argued that Skanska should be interpreted restrictively as applying only to a situation of economic continuity, others argued that it referred to a complete concurrence between public and private enforcement. The Sumal ruling brings the desired clarification on this matter. In the Sumal ruling – which will constitute for sure an important precedent as it was adopted by the Grand Chamber – the ECJ makes explicit that the concept of “undertaking” is of paramount importance, also in the context of private actions for damages. Although with a small nuance in the form of the substantive requirement that the entities which constitute an economic unit are active on the same market, it is the concept of “undertaking” that determines which entities can be held liable for damages resulting from anti-competitive behaviour of that undertaking, irrespective of which exact entity was fined by the Commission.

The ECJ appears to apply a less strict test to establish downward liability than AG Pitruzzella suggested in his Opinion. Whereas the AG explicitly formulated additional requirements on top of the existence of an economic unit, the ECJ incorporates all relevant criteria for the determination of civil liability within the concept of “undertaking”.

The distinction between upward and downward liability which AG Pitruzzella had identified becomes therefore less clear. While in practice, it will likely be easier for a victim to prove the existence of an economic unit and involvement in the same market in the context of upward liability, the legal requirements are in principle similar for upward and downward liability.

Secondly, the Sumal judgment may also be a first insofar as the influence of damages proceedings will also be felt in administrative proceedings. In a brief paragraph (para. 47), the ECJ appears to narrow down the classical concept of an “economic entity” which has been developed over decades. For the first time, the ECJ considers that one parent undertaking can be part of several economic entities. According to the ECJ, this approach stems of the idea that it would be illogical for a subsidiary to be held liable for damages caused by activities that are completely unrelated to its own activities. While this solution seems fair and logic, the practical consequences of this revolutionary approach of the concept of economic entity, merit further exploration and research.

Moreover, since the ECJ reiterates in this ruling its position in its Skanska judgment that the concept of “undertaking” in the context of public and private competition enforcement cannot be different, it  may be interpreted as an indication that the ECJ is likely to also confirm the solution adopted by the General Court in Biogaran. In that case, the General Court considered that the Commission could impose fines on the subsidiary which could be held liable for the infringement of its parent company when it somehow took part in this infringement by, for instance, selling some of the products.

Thirdly, the main practical consequences of the Sumal judgment in relation to bringing an action against subsidiaries of the parent company to which the Commission decision is addressed may be viewed as two-fold. On the one hand, as far as claimants are concerned, it strengthens their access to justice. First, they can sue subsidiaries which are not addressees of the Commission decision under the aforementioned conditions. Second, as pointed out by the AG in his Opinion in particular, it allows claimants to bring actions before the courts in their home jurisdiction rather than before the courts in foreign jurisdictions (both inside or outside the EU) with which they may be less familiar. This prevents possible higher litigation costs, more complex service and enforcement, as well as risks of restructuring or transfers of assets. It also allows claimants to bring actions in more claimant friendly jurisdictions than their home jurisdiction. On the other hand, as far as competition law infringers are concerned, it clearly increases their risks of being sued by claimants which otherwise might not have brought an action against them.


In short, like all the recent rulings adopted by the ECJ over the past few years, the Sumal judgment will certainly be welcomed by the victims of antitrust infringements in so far as it contributes to increasing their access to justice. The question remains, however, to what extent this approach will also be applied to sister companies. In our view it is likely and consistent with the new approach of the concept of an economic unity, as introduced by the ECJ in Sumal, that if a sister company is active on a market related to the one that is the object of a cartel decision and if it is part of the same economic unit as the addressee of the decision, this company could be sued for damages arising of the cartel prohibition as well.

Marc Barennes   Bas Braeken   Jade Versteeg


Competition law and M&A: navigating through a minefield

The (European) supervision of concentrations is in full development. Most notably, the European Commission (“Commission”) has been cracking down on violations of the Merger Regulation in recent years.

If concentrations meet certain turnover thresholds, the companies involved have a notification obligation (Article 4 Merger Regulation). The companies involved may then not implement the concentration until the competent authority has approved the concentration. This is the standstill obligation (Article 7 Merger Regulation).

There is strict enforcement of violations of the notification and standstill obligation – so-called ‘gun-jumping’. It is therefore important to know what is and what is not permitted under competition law in the case of (the preparation of) a concentration. This blog provides an overview of recent legal developments and clarifies what merging parties can do prior to the approval of a transaction to avoid gun-jumping.

Unexpected decisive control?

If a company intends to acquire decisive control of another company, the acquiring party must notify this, provided that the turnover thresholds are met. However, it is not always clear when decisive control exists. For example, in 2012, Norwegian fish farmer Marine Harvest (now Mowi) acquired 48.5% of the shares in its competitor Morpol. This was notified to the Commission with a notice that the voting rights would not be exercised by Marine Harvest until approval was granted by the Commission. Prior to the notification, Marine Harvest made a public offer for the remaining shares in Morpol. This transaction was notified to the Commission, which subsequently found that the notification and standstill obligations had been violated because Marine Harvest had already acquired de facto decisive control in the acquisition of 48.5% of the shares in Morpol. The Commission reached this conclusion by checking the usual attendance of shareholders at previous shareholder meetings. On that basis, the Commission found that Marine Harvest, with 48.5%, constituted a majority among shareholders and could therefore exercise decisive control.

Marine Harvest was subsequently fined €10 million for violating the notification obligation and another €10 million for violating the standstill obligation. Although these appear to be two sides of the same coin, they are two distinguishable obligations for which the Commission can impose separate fines. Thus, there is no violation of the ne bis in idem principle. The Court of Justice of the European Union (“CJEU”) upheld the fines, ruling that in this case it did not matter that Marine Harvest had not exercised the voting rights because de facto sole decisive control had already been acquired prior to the public offer.

Decisive control or customary protection rights?

In February 2015, the telecom company Altice notified a proposed acquisition of PT Portugal, which received conditional approval from the Commission in April 2015. However, it later turned out that Altice could already exercise decisive influence before the acquisition was approved. In fact, the acquisition agreement already gave the telecom company veto rights over the appointment of senior management, pricing policy and several important contracts.

While the acquiring company may protect the value of the (shares in the) target company, it may not exercise decisive control beyond the ordinary course of business before the concentration approval is granted. Factors that are relevant in assessing whether there is a normal course of business are (i) the degree of involvement of the acquiring party in the day-to-day operation of the business, (ii) the nature of the measures in the agreement in favour of the acquiring company, and (iii) the monetary thresholds for exercising a veto with respect to the value of the target or purchase price. When these thresholds are very low, the exercise of decisive control is more likely to occur.

In this case, Altice already exercised decisive control prior to the notification through its involvement in PT Portugal’s negotiation strategy and choice of suppliers and certain TV channels. On that basis, in April 2018 the Commission imposed a fine of €124.5 million on Altice for gun-jumping, whereof €62.25 million for violating the notification obligation of Article 4 Merger Regulation and €62.25 million for violating the standstill obligation of Article 7 Merger Regulation.

On 8 November 2016, Altice was again fined €80 million for gun-jumping, this time by the French competition authority. In 2014, Altice notified the proposed acquisition of two telecom companies, SFR and OTL, by its subsidiary Numericable. The French competition authority had launched an investigation into gun-jumping, which revealed that Altice already had access to strategic information from and could exercise decisive influence over both companies before the concentration was approved. Altice had thus already acquired decisive control prior to any approval of the concentration, thereby engaging in gun-jumping.

Inseparable step for transaction does not necessarily lead to decisive control

An example of a situation where no decisive control was acquired by the purchasing company concerned the proposed concentration of KPMG Denmark and EY. The consultancy firms entered into a merger agreement on 18 November 2013. Since the Danish branch of KMPG still had a cooperation agreement with the KPMG group, this agreement was terminated on the very same day. The Danish competition authority approved the concentration at the end of May 2014, but stated (in December 2014) that unconditionally and irrevocably terminating the cooperation agreement with the KPMG Group before the concentration was approved could be regarded as an act in breach of the standstill obligation. The CJEU disagreed, concluding that the termination of the cooperation agreement does not lead to a change in decisive control of KPMG Denmark, even if this termination is inextricably linked to the concentration and may constitute a preparatory or side transaction of this concentration. According to the CJEU, transactions that do not lead to a change in decisive control do not fall within Article 7 Merger Regulation.

Transactions consisting of multiple steps

The Commission decision on Canon‘s acquisition of Toshiba Medical Systems Corporation (“TMSC”) shows that the notification and standstill obligation also applies to so-called ‘special purpose vehicles’. Canon intended to acquire TMSC by means of a ‘warehouse construction’. A special purpose vehicle was established which acquired 95% of the shares in TMSC for €800. Canon then acquired 5% of the shares for €5.28 billion and obtained a stock option on the remaining shares. The proposed acquisition was then notified to the Commission on 12 August 2016. After the Commission’s approval, the remaining 95% of the shares were acquired. The Commission launched an investigation into this construction in July 2017. It concluded that a transaction in which an interim buyer – the special purpose vehicle – acquires decisive control until the company will be sold to the ultimate seller, can be seen as the first step of the (final) transaction. After all, the preparatory step as such contributed to Canon’s acquisition of decisive control over TMSC, so that prior to this first step, notification was already required. As this was not done, the Commission imposed a fine of €28 million on Canon.

Another type of two-stage rocket was used by the French company Veolia. Veolia, active in the water, waste treatment and energy sectors, wanted to acquire decisive control of Suez through two steps. First, it obtained 29.9% of the shares in Suez from energy company ENGIE on 6 October 2020. The second step involved making a public offer for the remaining shares in Suez. Suez believed that these two steps should be considered as one transaction and that therefore Veolia should have notified the transaction before acquiring the shares. The Commission agreed that this was one transaction and that the two steps were interdependent; the public offer would never have happened without the previous acquisition of ENGIE shares. However, the Commission argued that both steps fell within the exception Article 7(2) Merger Regulation.

Article 7(2) Merger Regulation provides an exception to this standstill obligation for two types of transactions: a public bid and a series of share transactions where decisive control is acquired from multiple selling parties. However, the concentration must then be notified directly to the Commission and the acquirer may not exercise the voting rights. The Commission considered that the exception of Article 7(2) Merger Regulation regarding the public bid was also applicable to the first step of the concentration – the acquisition of 29.9% of the shares in Suez.

The Commission’s decision is in line with the General Court’s judgment in Marine Harvest. Indeed, the General Court concluded that it is possible for the acquisition of a minority stake, not yet acquiring decisive control of the target company, followed by a public takeover bid, to form part of one concentration falling within the scope of Article 7(2) Merger Regulation.

The difference between Marine Harvest and Veolia/Suez is that in the first situation, de facto decisive control was already obtained at the first step, namely through the acquisition of 48.5% of the shares in Morpol. This was not the case with Veolia with a 29.9% stake. Therefore, the standstill obligation is only violated if the first step already leads to an acquisition of decisive control. Although Suez has filed an appeal against the Commission’s decision, it does not appear to be going forward now that Veolia and Suez have reached a merger agreement on 12 April.

Lessons for the future

The aforementioned case law shows that the following points are important in the preparation of mergers:

  • De facto acquisition of decisive control also triggers a notification and standstill obligation.
  • This also applies to special purpose vehicles that acquire (temporary) decisive control.
  • Always notify preparatory steps to a concentration if they as such contribute to the change of decisive control.
  • Do not exercise decisive control prior to the approval of a concentration, insofar it is not necessary to protect the value of the target company.
  • Decisive control may not relate to the day-to-day operations.
  • In the case of a pre-closing veto right, the monetary threshold for exercising it must not be too low with respect to the transaction values.

Clean Teams

In addition to the notification and standstill obligation for concentrations, the cartel prohibition also still applies in full. In particular, the exchange of competitively sensitive information plays a role in the preparation of mergers. In that context, it is advisable under certain circumstances to set up Clean Teams in order to limit the risk of violating the cartel prohibition. Clean Teams are particularly advisable in transactions between two competitors.

  • The exchange of information should not lead to the situation where the commercial market behaviour of parties could be influenced.
  • Assemble the Clean Team, if possible, from a closed group of individuals who are not (as of that moment) involved (anymore) in the day-to-day operations of the parties.
    • For example, independent consultants or specially appointed employees.
  • Treat information within the Clean Team as strictly confidential.
    • Establish (internal) protocols regarding what information is accessible and to whom.
  • Seek legal advice when in doubt.
  • Have individuals on the Clean Team sign a confidentiality agreement and monitor its compliance.

Finally, it is worth noting that the Commission has introduced a new policy expanding its supervisory role with respect to concentrations. In this regard, please read our blog on Article 22 Merger Regulation.

For all your questions regarding merger control, bureau Brandeis is happy to help. You can reach us through the links below.

Bas Braeken, Jade Versteeg and Timo Hieselaar


Competitor and buyer can now arm themselves against ‘killer acquisitions’

What to do when a dominant competitor takes over a promising start-up

Until recently, competitors and customers were left empty-handed in the case of a so-called ‘killer acquisition’. These are takeovers where a large, established company takes over a smaller, innovative and start-up competitor with the aim or effect of stifling innovation and/or eliminating potential competition. The reason for this was that many of these acquisitions do not have to be notified to a competition authority because the turnover thresholds are not met. Killer acquisitions could therefore not be assessed by the national competition authority or the European Commission. This has now changed.

On 26 March 2021, the Commission published new guidance on the application of the referral mechanism of Article 22 of the European Merger Regulation (“EU Regulation”). In addition to concentrations which are subject to notification to the national authorities, Article 22 of the EU Regulation also allows concentrations which are not subject to notification to be referred to the Commission for assessment.

The Commission is particularly interested in referrals of concentrations where the turnover of the parties does not accurately reflect their current or future potential. In practice, this will especially concern mergers involving new competitors and innovative companies. This will occur, inter alia, in digital, pharmaceutical, biotechnology and certain industrial sectors. The new policy is expected to have less impact on acquisitions in more traditional markets.


On 26 March 2021, the Commission announced a major reform of the EU regulation. One of these major changes is a new policy on the application of Article 22 of the EU Regulation.

Old and new policy Article 22 EU Regulation

Article 22 of the EU Regulation allows one or more national competition authorities to refer a concentration to the Commission for examination when it may significantly affect competition in the internal market. The article dates back to 1989 when many Member States did not yet have a national merger control regime and therefore still had the possibility to have potentially anti-competitive concentrations examined by the Commission. Article 22 is also called the ‘Dutch clause‘ because it was introduced at the request of the Netherlands, which did not have merger control at that time. The article explicitly refers to concentrations that do not require notification. However, after almost all Member States had introduced a merger control regime, the importance of Article 22 significantly declined. It was even the Commission’s policy to discourage referrals of non-notifiable concentrations on the grounds that the concentrations would generally not significantly affect competition in the internal market.

The Commission’s new policy constitutes a major shift in the application of Article 22 of the EU regulation. The Commission now encourages Member States to refer certain concentrations to the Commission, even in cases where the referring Member State does not have jurisdiction to assess the concentration under the turnover thresholds. The Commission is free to decide whether to accept a referral request.

The new policy did not just come out of thin air. There had been a desire for some time by competition authorities to be able to assess killer acquisitions. The discussion was sparked in 2014 by Facebook’s acquisition of Whatsapp. The acquisition was not subject to notification in many member states because of Whatsapp’s low turnover. However, the acquisition was ultimately assessed by the European Commission because the acquisition was notifiable in three member states and was therefore qualified for a referral under Article 4(5) of the EU Regulation. The Commission approved the merger. This case was one of the reasons for Germany and Austria to adopt new laws introducing an additional notification threshold based on the value of the transaction. The Dutch Consumer and Market Authority (“ACM”), the Luxembourg Conseil de la Conucurrence and the Belgian Competition Authority (“BMA”) wrote a Benelux memorandum on the supervision of competition in the digital sector. This memorandum argued for a change in the notification thresholds, for example by introducing an additional threshold based on market power and/or the value of the transaction.

Test case: Illumina-Grail

Shortly after the Commission’s communication on the reforms of the EU merger control regime, it became known that the acquisition of Grail by Illumina was a test case for the application of the Commission’s new policy. For the first time since 1999, an Article 22 request was made without any of the expanding Member States having jurisdiction to assess the merger.

Illumina is one of the largest players in the world in the field of gene sequencing. Grail is a young company developing a blood test to detect about 50 types of cancer at an early stage by DNA sequencing. The company has no turnover in the EU, which means that, in principle, the concentration does not need to be notified to the Commission or the national authorities of the EU Member States. However, the acquisition had to be notified to the US Federal Trade Commission and is under attack there.

In February, the Commission expressed concerns about the potentially anti-competitive effects of the proposed merger in the field of cancer tests and encouraged national competition authorities to file a referral request in line with the new policy. The French Autorité de la concurrence has responded to the call and the ACM, BMA, and Greece Competition Commission supported the request. The acquisition was not subject to notification in any of those Member States. The Commission has accepted the request and will assess the proposed acquisition.

The referral request has caused quite a stir. Illumina brought lawsuits against the request in the Netherlands and France, but lost both cases. The case will undoubtedly be contested before the Court of Justice of the European Union. The new policy leads to much legal uncertainty in mergers and acquisitions in which a dominant competitor takes over a promising start-up. It is therefore important to take this into account during the (contract)negotiations of the acquisition. For example, when drafting the suspensive conditions in the contract, one should take into account the possibility of a referral to the Commission, even if the competition authorities in the Member States concerned do not have the power to assess the concentration themselves. On the other hand, the new policy also provides more opportunities for third-party stakeholders, such as competitors and purchasers, to complain.

What to do in case of a killer acquisition

Is a dominant competitor or supplier of yours taking over a promising start-up? Then take the following actions.

  1. Consider whether the turnover of the start-up gives an accurate view of its current or future potential. It may be that a start-up has little or no turnover yet, but is of great importance to the competition in the market or will become so in the near future. This can, among others, occur in the following situations:
    • the target is an important innovator or conducts potentially important research
    • the target is an important (potential) competitor
    • the target has access to important assets (such as raw materials, infrastructure, data or intellectual property rights)
  1. Contact as soon as possible the ACM and/or other Member States where the dominant competitor is active. The competition authority has a period of 15 working days to refer a concentration to the European Commission after the transaction has been ‘made known to the Member State concerned’. The period only begins to run when sufficient information is provided tot he Member State to make a preliminary assessment as to whether the criteria of Article 22 of the EU Regulation are met. Member States seem to have a fairly wide discretion in determining when the deadline starts running.
  1. Explain why the concentration affects trade between Member States. This is, for instance, the case if the dominant competitor is active in several Member States and/or (potential) customers are located in different Member States.
  1. Explain also why there is a real risk that the concentration will significantly impede competition within the territory of the Member State(s) concerned. A real risk exists where, as a result of the acquisition:
    • an important (potential) competitor is eliminated;
    • there is a merger between two important innovative companies;
    • competitors have fewer incentives or opportunities to compete because, among other things, market entry or expansion becomes difficult or even impossible;
    • there is an incentive or possibility for a strong market position in one market to be leveraged into another market through tying, bundling or other exclusionary practices.
  1. Contact the Commission. The Commission may encourage Member States to refer the acquisition.

Bas Braeken, Lara Elzas and Jade Versteeg


Competition law in vertical relationships: killjoy or life preserver?

In almost every supply chain, agreements are concluded between suppliers and buyers to make the cooperation more efficient. Although vertical agreements are in many cases exempted by the Vertical Block Exemption Regulation (“VBER”) from the cartel prohibition under Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and Article 6 of the Dutch Competition Act (“Mw”), not every restriction is permitted. After all, the VBER does not apply to a number of hardcore restrictions of competition, or where market shares exceed 30%. The distinction between permitted and prohibited restrictions is not always clear to companies. This is evident, for example, from a survey conducted by the Benelux Secretariat in which at least 89% of the companies questioned indicated that they had been confronted with prohibited territorial restrictions. This blog provides an overview of enforcement and case law from 2019 and 2020, and discusses the most recent developments.

Enforcement by ACM

In September 2020, the Authority for Consumers and Markets (“ACM”) announced that it had completed its investigation into drug manufacturer AbbVie. From the end of 2018, AbbVie offered significant discounts to hospitals for the rheumatology drug Humira. The patent on the active substance in Humira expired in October 2018, allowing other manufacturers to market a generic product. To prevent its market position from declining as a result thereof, Abbvie gave discounts to hospitals if they purchased Humira for all their patients. ACM considered that AbbVie thereby factually imposed an exclusive purchasing obligation on hospitals which limited competition for new products. AbbVie agreed not to include exclusive purchasing clauses in its agreements with hospitals anymore.

Case law on vertical agreements

In March 2019, the Court of Appeal of Arnhem-Leeuwarden ruled on the legality of an exit scheme of Avebe. The articles of association of Avebe, a cooperative of farmers, stipulated that if members wished to transfer the shares to Avebe upon termination of their membership, they had to pay an amount of €681 per share to the cooperative. Six arable farmers did not agree with this withdrawal arrangement. The Court of Appeal agreed with the lower court and ruled that although the exit scheme was a restriction of competition, the scheme did not divide the market or impose price restrictions or other hardcore restrictions and was therefore allowed.

At the end of 2019, the Amsterdam Court of Appeal ruled in an (as yet unpublished) interlocutory judgment in the case between Prijsvrij and Corendon that the termination of an agreement can be an instrument to achieve resale price maintenance. Customers could book trips of Corendon through Prijsvrij, which used discounts on its website on trips of Corendon. The tour operator did not want Prijsvrij to apply such discounts and eventually terminated the agency agreement. Prijsvrij held that this termination should be regarded as a form of prohibited resale price maintenance. The Court of Appeal agreed and considered it proven (for the moment) that the termination of the agreement with Prijsvrij was particularly caused by the discounts offered by Prijsvrij to consumers.*

On 12 June 2020, Advocate General Drijber concluded – with reference to the appeal in cassation against a judgment of the Court of Appeal of The Hague – that a settlement agreement regarding a patent did not violate competition law. Jet Set and Brielle Industrie Services (“BIS“) in this case, both active in the field of cleaning techniques for oil tanks, had reached a settlement which, according to BIS, included a non-compete and non-challenge clause. BIS considered this to be a licence agreement with hardcore restrictions within the meaning of the Technology Transfer Block Exemption Regulation (“TTBER“). However, Advocate General Drijber concluded that it was neither a licence agreement nor a non-compete clause. A prohibition to use Jet Set’s technology follows directly from the patent on that technology. There was therefore no need to review the TTBER or Article 6(3) Mw. Although a non-challenge clause does not generally fall under the TTBER, there was no such clause in this case either. BIS had in fact (successfully) contested the patent. The Supreme Court did not reach a substantive judgment.

A case that did involve vertical licensing agreements concerned a dispute between Dromenjager, the company behind the well-known Woezel & Pip children’s figures, and toy manufacturer International Bon Ton Toys (“IBTT“). IBTT produces and sells toys for which it is allowed to use the Woezel & Pip (figurative) trademark. The licence agreement included a provision requiring approval from Dromenjager for sales by the licensees to a certain number of retailers, including Kruidvat. IBTT wanted to sell its remaining stock of Woezel & Pip products to Kruidvat and complained that the required approval was contrary to competition law. The President of the court reached the provisional conclusion that the approval provision in the licence agreement is a hardcore restriction of competition law. The judgment in summary proceedings has been appealed.**

Vertical agreements also often play an important role in the pharmaceutical market. In its judgment of 8 June 2020, the district court of Midden-Nederland ruled that health insurer Zilveren Kruis was allowed to use a ‘discount policy’ to encourage hospitals to purchase medicines from a manufacturer that was cheaper for Zilveren Kruis. Together with other health insurers, Zilveren Kruis entered into an agreement with Janssen-Cilag, the producer of a medicine for leukaemia (named Imbruvica). On the basis of this agreement, Janssen-Cilag supplied Imbruvica to the hospitals, after which the health insurers received discounts (based on subsequent calculation). Zilveren Kruis applied a mark-up of 49% if hospitals purchased Imbruvica from suppliers other than Janssen-Cilag. Eureco-Pharma, a competitor of Janssen-Cilag, argued that Zilveren Kruis was channelling the Imbruvica offer to Janssen-Cilag through its discount policy. The judge, however, concluded that Zilveren Kruis’ policy is aimed at always paying the lowest price. A competitive company is able to pursue this aim. Moreover, Eureco-Pharma was able to conclude a similar agreement with Zilveren Kruis. Therefore, there was no prohibited vertical restraint.

Finally, at the end of 2020, the Amsterdam District Court ruled that Trek Benelux – supplier of fast, lightweight bicycles – had to continue an agreement with its distributor. Trek Benelux terminated the agreement when the distributor applied a discount on top of the recommended retail price. According to Trek Benelux, such discounts harmed its brand image. The agreement also included an obligation to deliver assembled bicycles to customers. The distributor argued that the recommended retail price is in fact a minimum price and that the obligation to deliver assembled bicycles limits its passive (online) sales. The judge in preliminary relief proceedings ruled in line with the VBER that forcing distributors to adhere to the recommended retail price constitutes a hardcore restriction of competition law. Moreover, no justification had been put forward by Trek Benelux. Therefore, the agreement had to be continued. Trek Benelux was, however, able to demonstrate that the obligation to deliver assembled bicycles was necessary to protect the quality of the bicycles, which requires accurate assembly and adjustment. This provision was not contrary to competition law.

Evaluation of the VBER

The current Regulation, which has been in force since 2010, expires on 31 May 2022. The European Commission (“Commission“) intends to amend the Regulation. In this context, the Commission conducted a review, the findings of which were published on 8 September 2020.

The review shows that the VBER, albeit still relevant, is no longer adequate for application to online sales. After all, the retail sector has changed tremendously in recent years, particularly as a result of digitalisation and the subsequent increase in e-commerce (e-tailing). Entirely new types of restrictions on online sales have been imposed on buyers the past few years, such as a ban on the use of Google AdWords by Guess or the (re)sale of products on online marketplaces by Coty. The Commission has also imposed fines on, amongst others, Asus, Philips and Pioneer for imposing resale price maintenance on their online retailers. The interpretation of the rules on online sales restrictions varies widely in Europe. The new VBER will have to provide clarification. According to the Commission, there is still too much uncertainty about the use and lawfulness of ‘across-platforms parity agreements‘ (APPAs) as well. For the background and recent developments regarding APPAs, please read our earlier blog.

In addition, the collection and use of data has become crucial to the business operations of (online) companies in recent years. In this context, the Commission has also launched an investigation into Amazon. The American company is said to use data of sellers on Amazon – which it obtained in its capacity as a platform – to benefit its sales channel on the same platform. For this ‘self-preferencing’, the Commission previously imposed a fine of more than €2.4 billion on Google, which put its own services above those of competitors in Google’s search results.


Vertical agreements can often benefit from the exemption from the cartel prohibition, but not every restriction can be imposed. Dutch and European case law over the past two years confirms this. It is therefore essential to know what may and may not be included in a vertical relationship. It is, in this regard, of great importance what the new VBER will entail, especially with regard to online sales. However, the clarifications that the Commission seems to have in mind will only apply after May 2022. In any case, both civil and administrative enforcement of competition law in respect of vertical relationships has increased dramatically in recent years. It is likely that this trend will continue in the coming years.

* Bas Braeken and Jade Versteeg assist Prijsvrij in these proceedings.

** Bas Braeken and Timo Hieselaar have (first) become involved on appeal as Dromenjager’s lawyers.