Blog of Martijn Snoep: More competition is not always the best solution

Ten years ago, on 1 April 2013, the Netherlands Authority for Consumers and Markets (ACM) saw the light of day. At the time, it was the first entity in the entire world that combined previously separate authorities for competition, energy, telecom, and consumer protection. One organization, one board, and one vision for the role of markets in the distribution of goods and services, ensuring that markets work well for all people and businesses. ‘Consumers are central’: that was the short yet powerful headline of ACM’s very first press release back in 2013. And that message hasn’t changed over the past ten years, although the thinking about how we are able to protect consumers best has not remained the same in those ten years.

An evolving view on markets

Over the years, society’s view on the role of markets (and, by extension, ACM’s role) has shifted between various extremes: between regulation and liberalization, between nationalization and privatization, between centralization and decentralization, and between competition and cooperation. Such shifts seldom move in a single direction, and are therefore unpredictable. The actual direction is determined by a combination of crises, incidents, and the current political winds that are blowing. That is why I wouldn’t dare to predict what the organization of the energy market, the health care market or the digital markets will look like in the near future. What I can say, though, is that we, as an independent regulator, will continue to give sufficient pushback on ill-conceived initiatives. However, we do know our place within the system: Don Quichots do not achieve anything.

What has been the most important lesson of all of the changes over the past ten years? That there is no one panacea for everything. After all, there is no one consumer or one market. What may work well on one market may result in unintended consequences on another. More competition is certainly not always the best solution. A genuinely free market may only work with genuinely free consumers. And, in most cases, consumers are not genuinely free, for example, because they are locked-in with a supplier vendor or because their biases are subconsciously triggered by the use of sophisticated techniques. In such cases, consumers need protection from the government.

Ten years of market oversight

Much has happened in the Netherlands over the past ten years. The Dutch merger-control system, aimed at preventing market power, has a solid foundation, most recently evidenced by the blocking of the merger between media companies RTL and Talpa. Consumers have thus been spared a price increase. They would have ultimately footed the bill for the price increases that a combined RTL/Talpa could have pushed through vis-à-vis advertisers and telecom companies. Regulation of the telecom sector can be hailed a success, too. The Netherlands has high-quality fixed and mobile networks at competitive prices. Also, consumer protection has started baring its teeth since the creation of ACM. Each year, over 63,000 people contact us over the phone, by email or text message, asking us questions about their rights as consumers. Our websites acm.nl and acmconsuwijzer.nl are visited over five million times per year. And we wouldn’t mind seeing more visits. Our regulation of the energy sector has so far weathered the storm of the energy crisis quite well, and has been preparing itself for a new role in an evolving market following the closure of the Groningen gas field, Russia’s invasion of Ukraine, and the energy transition. And our broad oversight in the digital sector on the basis of new European laws is starting to take shape, in part because of new forms of collaborations with the European Commission and with other national regulatory authorities in the Digital Regulation Cooperation Platform (SDT) that we initiated.

Is everything just peachy, and can nothing be improved upon? Of course not. In several pivotal cases, the Dutch courts gave us a slap on the wrist. That obviously shouldn’t have happened, but it cannot always be avoided. Moreover, a regulator that never loses may invite accusations of playing it safe and not giving everything that is in its powers to ensure that markets work well. ACM’s target is that approximately three in four cases must pass legal muster, but we obviously aim for a higher success rate. In addition, third-party researchers concluded that ACM should have changed its licensing policy for energy suppliers sooner to avoid bankruptcies. Although there was leeway to do so, we didn’t feel that there was. Our takeaways from that experience: anticipating changes sooner, and interpreting rules more flexibly. Hopefully, the courts will agree with this new direction. And, to be fair, there is always room for improvement.

After ten years, ACM is here to stay, with 650 dedicated employees working hard to ensure that markets work well for everyone. It won’t always be smooth sailing, but that’s not necessary as long as the conviction is there, and that we do this for the benefit of all people and businesses, now and in the future. Here’s to ten more years.

Martijn Snoep

Also see:

26-01-2023 Blog: Panta rhei, everything flows