Individual Exemption Applications and Their Assessment: Lessons from the Competition Law Change in the Netherlands during the 1990s

Abstract

One of the most distinctive features of the European competition law was the availability of individual exemptions to agreements or concerted practices which restricted competition, but nevertheless served the generals interests of the European Community. However, established by Regulation 17/62, the individual exemption regime was dismantled by Regulation 1/2003 in an attempt to modernize the European Union (EU) competition law. Prior to the annulment, one country in Europe -the Netherlands, which was famous for its “cartels”- used individual exemptions to provide legal certainty during a period when national competition policy was radically changed. Following the introduction of the Competition Act of 1998, undertakings were allowed to apply for exemption for agreements that were already in existence and that had begun under the superseded Economic Competition Act of 1956. Accordingly, the Netherlands Competition Authority (NMa) received and assessed hundreds of exemption requests, and gave verdicts on the pro-competitiveness of the agreements contained in these applications. This study uses information from 346 decisions of the NMa on exemption applications. It first reports insightful summary statistics concerning the nature of the agreements in the applications, number of parties involved, and duration and scale of the agreements. Then an ordered choice model is estimated to examine how the pro-competitiveness perception of the NMa changes with the nature of agreements and over time conditional on exemption application. The econometric findings are linked to legislative background and administrative implementation, thereby providing an historical overview that summarizes the NMa’s work in exemption applications.