Franchise argument in laundry cartel won't wash with the NMa
The NMa imposed a fine of EUR 18 million on four industrial laundries operating a franchise under the brand name Rentex. Surprisingly, the NMa ruled that the franchise in fact constituted a system of horizontal market-sharing arrangements between the franchise members and thus did not fall within the scope of the EU Block Exemption on vertical agreements.
The market-sharing arrangement was part of a wider cooperation between the laundries on joint purchasing and innovation, which they qualified as a "soft franchise". The laundries set up "Rentex Nederland", a jointly controlled subsidiary, to conclude franchise agreements with each of them. The NMa, however, did not regard these franchise agreements as vertical agreements entered into between undertakings at different levels of the production or distribution chain. The NMa considered the agreements to be inextricably linked to the cooperation between the laundries as shareholders of Rentex Nederland. As shareholders, the laundries decided on the admission of new laundries to the Rentex franchise as well as on Rentex Nederland's policy towards the franchisees. In addition, the Rentex franchise agreements focused on joint purchasing and innovation under a single brand name, instead of on the use of a particular business method like – in the NMa's opinion- - "normal" franchise agreements do. As a result, the NMa concluded that the Rentex formula did not constitute an actual franchise but a horizontal agreement. The NMa subsequently qualified the market-sharing arrangement – part of the franchise agreements – as a horizontal agreement with the object to restrict competition which could not be independently justified by efficiencies. The NMa therefore imposed a fine of EUR 18 million in total on the four laundries.
It remains to be seen whether this controversial decision will be upheld in appeal. However, meanwhile franchisees should be aware that, according to the NMa, their influence on the franchisor may imply that the franchise agreement has a horizontal nature. It is not by definition problematic for franchisees to jointly hold shares in an undertaking acting as franchisor. However, being a (franchisee) shareholder carries the risk of "meddling" too much with the franchisor's daily policy-making, which – in the view of the NMa - could be regarded as cooperating too closely with their "competitor" franchisees.
You win some, you lose some: Dutch telecom incumbent KPN
All attacks by the cable companies and KPN's downstream customers against the 2008 conditional first phase approval of the creation by KPN of its glass fibre joint venture Reggefiber were unsuccessful. The Rotterdam District Court recently annulled the NMa's approval decision, but upheld its legal consequences: the setting up of the joint venture. In a 2010 interlocutory ruling, the court found that the NMa based its decision that no second phase investigation into the joint venture was required on insufficient grounds. However, after a further substantiation of the NMa's reasoning, the court was convinced that the bundling of the optical fibre network activities of KPN and Reggefiber in the joint venture was unproblematic. The appeals by downstream customers of KPN against the effectiveness of a number of the remedies in the NMa's 2008 decision were just as unsuccessful. Recently, the NMa also gave unconditional first phase approval to the acquisition of three Reggefiber's subsidiaries by KPN. However, a second phase investigation is required for KPN's plans to acquire four optical fibre providers of Reggeborgh (Edutel, XMS and Concepts ICT, KickXL). The second phase application for the acquisition of cable company CAIW was withdrawn by KPN and CAIW's parent company CIF.
In late 2008, the NMa conditionally cleared the setting up of a joint venture between KPN and Reggefiber regarding their optical fibre network activities in the first phase. The NMa's main concern was likely input foreclosure due to restricted access to the joint venture's optical fibre network. This issue was resolved by offering the (behavioural) remedy of guaranteed third-party access to the network at reasonable tariffs. Both downstream customers of the joint venture and competitors appealed the decision. Even though the court in its interlocutory ruling agreed that the NMa had failed to assess all the competition parameters, it considered that this was sufficiently corrected by the NMa's supplemental reasoning why the parameters quality and innovation would not lead to competition concerns. Thus this led to a pyrrhic victory for KPN's competitors: the NMa's decision was overturned but the joint venture's activities remain unaffected.
The acquisitions of full control over Reggefiber's three units Lijbrandt, Reggefiber Wholesale and Glashart were also considered unproblematic since (i) KPN, as joint owner of Reggefiber, already had joint control over Lijbrandt. The transition from joint control to full control would thus not have a substantial impact on the market structure; (ii) Reggefiber Wholesale is not a competitor for KPN, because it only offers low-quality wholesale broadband access when KPN is unable to do so for technical reasons; (iii) sufficient alternatives were present to conclude that effective competition should not be impeded by the acquisition of Glashart, a provider that bundles and relays broadcast signals.
Not all of KPN's planned acquisitions run so "smoothly". Previously, both telecoms regulator OPTA and the NMa defined retail markets in television, internet and landline telephony as national in scope. In April 2012, however, the NMa indicated that a second phase investigation into KPN's planned acquisition of four of Reggeborgh's optical fibre providers was needed, taking account of the overlap in activities between KPN and one or more of the providers on various regional markets. According to the NMa, a second phase investigation should focus on the potential restriction of consumer choice in regard of television, internet and landline telephony services in these regions. For the same reasons, KPN's planned acquisition of cable company CAIW has been aborted. The NMa informed the parties that, even after an in-depth investigation in second phase, it would have continued concerns about the reduced consumer choices for television services, internet access and landline telephony services.
 See the NMa press release of 13 December 2012.
 Regulation 330/210 on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices; OJ 2010, L102/1.
 See the definition of a "vertical agreement" laid down in article 1(1)(a) of Regulation 330/210 on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices; OJ 2010, L102/1.
 Rotterdam District Court, 26 April 2012, LJN: BW4162.
 Rotterdam District Court, 18 November 2010, LJN: BO4372.
 Rotterdam District Court, 10 May 2012, LJN: BW5475 and LJN: BW5478.
 The third-party access remedy obligation was supplemented in July 2009 to include the undertakings in which the joint venture has exclusive or joint control.
 See the NMa press release of 13 April 2012.
 See the NMa press release of 13 April 2012.