The Rotterdam District Court overturns the NMa's decision to impose fines on two supervisory board members. The Court held that supervisory directors cannot be held personally liable for competition law infringements, save in exceptional circumstances.
Similar to authorities in other EU Member States, the Dutch competition authority (NMa) has had the power since 2007 to impose fines on executives who have given instructions to violate competition rules or have exercised de facto leadership over a violation of competition rules. Personal fines can reach a maximum of EUR 450,000. In one of the first cases in which the NMa imposed fines on individuals, the Rotterdam District Court has now overturned the NMa's decision: supervisory directors cannot be held personally liable for competition law infringements, save in exceptional circumstances.1
The case concerned compliance with a merger remedy. Wegener, a newspaper publisher, acquired another publishing company in 2000. To remedy a strong position resulting from the acquisition on the newspaper market in a local area of the Netherlands, the NMa imposed a behavioral remedy on Wegener, requiring it to ensure the mutual independence of two regional newspapers distributed in that area. The remedy also required Wegener to create a supervisory board for each of the two newspapers in which supervisory directors had to monitor compliance with the remedy to ensure the continued independence of these newspapers. However, in subsequent years the editorial boards of both newspapers started to work together and were ultimately merged into one editorial board. The NMa imposed fines of approximately EUR 20 million in total on Wegener and three executives. It also imposed fines of EUR 250,000 each on two independent supervisory directors which had been appointed to monitor compliance with the remedy.
The Court held that for an individual to be personally liable he must have had a management position (the Court mentioned directors, managers, department heads). Such individual can be held liable if he refrained from taking measures to prevent anti-competitive behaviour from occurring – while having the powers to do so – and deliberately took the chance that the behaviour would occur. For personal liability it is not necessary that he was aware of any specific infringing activity for which fines are imposed; it is sufficient that he was generally aware that such type of activities were occurring within the company. The Court held that a supervisory director can only be held liable in exceptional circumstances, since his powers and influence are generally restricted to supervision of the company. For a supervisory director to be held liable he must have had an atypical role within the company. According to the Court, the supervisory directors in this case did not have such atypical role, despite their having been appointed specifically to monitor compliance with the remedy. In a comment on the judgment, the NMa stated it agreed with the principle that supervisory directors are not personally liable, save in exceptional circumstances, but that it is of the opinion that such exceptional circumstances were present in this case (implicitly referring to the fact that the directors had been appointed specifically for monitoring the remedy).
Regarding the calculation of the fine for Wegener, the Court held that the fining guidelines applied by the NMa resulted in a disproportionate fine in this case. According to the guidelines, fines for infringements of merger remedies are based on a percentage of the company's total group turnover without reference to any relevant turnover achieved with the products with which the remedy is concerned. The Court referred to the fact that the amount of fine that could have been imposed for the most serious type of infringement of competition law – a cartel infringement – would have been much lower than the amount that the NMa had imposed because of the relatively modest amount of turnover achieved with the regional newspapers covered by the remedy. The Court reduced the fines on Wegener and the executives from approximately EUR 20 million to EUR 2 million and made clear that the NMa cannot limit itself to a mechanical application of the fining guidelines but that it will have to assess whether the result is reasonable and proportionate.
Footnotes
1. Rotterdam District Court, 27 September 2012, LJN: BX8528.
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