The American Andrew Mellon may not have been as famous as his compatriot and oil magnate John Rockefeller, but he was equally powerful at the end of the nineteenth century. With his companies he had a dominant position in several markets in the United States. His bank Mellon National Bank, for example, was dominant in the area of the then important industrial city of Pittsburgh. Mellon also controlled aluminum group Alcoa and steel factory US Steel and made electrical appliances under the name Westinghouse.
The market power of Mellon (and later also of Rockefeller and his Standard Oil) led in the US, the land of infinite possibilities, to the idea that too large an accumulation of power is also not good. If you wanted to protect the position of consumers and employees, government intervention was necessary. It led to the launch of the so-called ‘Sherman Act’ in 1890. Senator John Sherman saw the industrialists of the time as “economic monarchs.” His law basically prohibits agreements that restrict competition. The aim: to stimulate market forces in a way that is favorable to consumers.
The Sherman Act has been a household name in the US for over a century. But the legislation did not find direct imitation in the Netherlands. On the contrary: in the Netherlands monopolies were able to survive well into the twentieth century, journalist Roy op het Veld outlines in Fair competitionabout the Dutch struggle against market power.
One of the largest cartels that existed in the Netherlands for decades was one in the construction world. Through the Association of Collaborative Price Regulating Organizations in the Construction Industry (SPO) assignments were distributed among affiliated contractors for many years. Contractors were able to sign up for tenders that were in the pipeline through meetings. Whoever offered the lowest price was put forward. The client was not allowed to work with a party other than the designated company. About seven thousand Dutch construction companies and 150 foreign construction companies were given assignments for years.
The SPO was not secret. In fact, the cartel was simply listed in a register of the Ministry of Economic Affairs. The idea behind allowing it: the sector would suffer if clients started to play contractors against each other on price. In the same way, there were also agreements among, for example, bakers or brokers.
In a European context, the Netherlands was out of step. Where one country after another adopted international anti-cartel legislation, the Dutch government continued to refuse. In 1992, this led to a fine of 52 million guilders from the European Commission. Under pressure from the European Union, the Netherlands continued to work on competition policy in subsequent years. On January 1, 1998, the Netherlands Competition Authority (NMA) was launched.
Lots of details
In 199 pages, Op het Veld describes how the Netherlands became one of the forerunners in the field of competition in 25 years from a cartel paradise. The book was published at the request of the Stichting Ontwikkelingen Mededingingsrecht (Foundation for Developments in Competition Law) because of the 25th anniversary of the NMA and its later successor ACM (Authority for Consumers and Markets). According to Op het Veld, many books have been written on the subject ‘aimed at a small audience of specialists’. Fair competition therefore focuses on ‘the wider public’.
The question is whether the subject lends itself to that at all. The book is a valiant attempt to outline the history of Dutch competition law, but gets bogged down in an excess of details. For example, the author of the various main characters provides extensive biographical details. But whether, for example, it is necessary to make an extensive biographical sketch of the then professor Henk de Jong, who also started the discussion about Dutch competition policy in economic circles with a ‘notorious article’?
The same applies to various chairmen of the NMA and ACM, such as Chris Fonteijn, Pieter Kalbfleisch and Anne Willem Kist, about whom Op het Veld also provides a lot of background information. Interesting for insiders, but the general public will be especially interested in the high profile cases that the regulators have tackled. How did they work? What conflicts did that lead to?
That’s where one of the other shortcomings comes from Fair competition look around the corner. The book was written on commission and therefore remains close to those involved from the NMA and ACM. Parties that came up against the supervisor hardly ever get a chance to speak. As a result, the image remains somewhat one-sided and less exciting.
What does not help in organizing the many details is that the history of market surveillance is mainly written chronologically. Exciting matters are discussed the moment they present themselves in the course of time and, for example, do not have their own chapter in which everyone involved looks back.
The view towards the future at the end of the book is pleasant. Because the previously acclaimed Sherman Act no longer functions so well. By focusing mainly on the short term, regulators in the US have lost sight of the larger structures that have emerged in the meantime. This refers in particular to the increasing power of large tech companies. Supervision will therefore have to be different. The market watchdog needs to become more activist to curb Big Tech’s grip on society, says one of the interviewees.
It is a tantalizing observation that shows that nowadays supervision is to a large extent also cross-border. It’s what could have made the book more compelling: a broader perspective on how different regulators work internationally and what groundbreaking things that has spawned. Then the book would also have been interesting for a larger audience, now it remains too much in details and too close to events that are especially fun for those involved to read back.
A version of this article also appeared in the newspaper of November 5, 2022