Dutch government: change competition policy and merger thresholds for better digital economy

The Dutch government considers permanent market dominance by digital platforms undesirable. It makes it difficult for new companies to enter the market, restricts the online competitiveness for businesses and consumer’s freedom of choice. Today Mona Keijzer, State Secretary for Economic Affairs and Climate Policy of The Netherlands, submitted a policy letter to the House of Representatives setting out three measures to tackle this issue.

The government wants to see stricter supervision of digital platforms and ex ante intervention where necessary, as well as the appropriate application of competition rules (for example by taking the role of data into account), and revision of the criteria for reporting a merger or acquisition (merger control), so that they include the transaction value as well as turnover, for example. This will make it more difficult for digital platforms to buy up companies like small startups that could become rivals in the future.

Mona Keijzer: “Digital platforms have become indispensable, offering us convenience and economic opportunities. But we’re concerned about permanent market dominance, obstacles to market entry for SME’s and startups, and the resulting lack of competition. This is currently the case for app stores, where providers are dependent on Apple and Google. We need to be able to intervene at an earlier stage and in a more targeted manner. That’s why I’ve set out three specific proposals for adapting our competition policy to the demands of the digital age.”  

Give competition authorities power to tackle online market dominance earlier

The responsible competition authority must be given the power to take ex ante action if a platform risks gaining a position where it becomes impossible for businesses or consumers to avoid it. For example, it should be possible to impose obligations on a platform to share data with other companies or force it to stop manipulating search results. 

The government also proposes amending the guidance documents that set out how competition rules should be applied, for example by taking the role of data into account when assessing platform-related competition issues.

Make transaction value part of merger thresholds

Larger companies planning a merger must notify the competition authority if their turnover exceeds a certain value. However, this merger threshold does not prevent major platforms from buying up small companies especially innovative tech startups that could become rivals in the future. For example, a few years ago even the merger between WhatsApp and Facebook did not exceed the merger threshold. 

That is why the Dutch government wants to see more appropriate criteria for reporting a merger besides turnover, such as transaction value.

Change competition policy at EU level

The state secretary proposes taking three measures at European level. Because large digital platforms are active across the EU, the problem cannot be effectively tackled through national rules in each country. An EU-level approach is necessary. This will also prevent a platform from being subjected to stricter rules in one member state than in another. 

Ms Keijzer is already discussing the matter with other member states and is pressing for these changes in Brussels. The new European Commission that will take office after May 2019 will have a key role to play in realising these ambitions.