Competition decreasing in Dutch markets, "extreme dependency" on non-EU players: ACM

The Netherlands Authority for Consumers and Markets (ACM) is concerned about the decline in competition in the Dutch markets over the past decade. Sufficient competition forces companies to keep prices low, improve quality, and continue to innovate, and all that incentive is disappearing. In its State of the Market report on Monday, the regulator also raised concerns about the “extreme Dutch dependence” on several very large, non-European companies and the “commodification” of people’s attention.

Several indicators point to a decline in competition, according to the ACM’s report. The regulator observes an increase in market concentration - large companies are increasingly controlling the market, and it has become more difficult for smaller companies to challenge established players. The watchdog also noted that companies are finding it easier to increase their margins. “That is a worrying development,” said Paul de Bijl, chief economist at the ACM.

A further deterioration appears to be on the horizon, particularly in sectors that are already less competitive. Examples include the beverage industry, telecom providers, and the electrical engineering industry. The regulator stressed that sufficient competition is not only important for the price and quality of products, but also serves other public interests. “Society is on the cusp of a large number of transitions: geopolitics, energy, digital, and climate,” said ACM chairman Martijn Snoep. According to him, competition can force innovation, which can contribute to solutions.

The Dutch parliament is currently debating a bill that will grant the ACM “invocation authority,” allowing the regulator to assess smaller acquisitions by large companies, which it currently cannot do. “Large companies acquire small, innovative players to take them out of the market. Or they acquire multiple small players, creating a regional monopoly. We cannot intervene in that situation now,” Snoep said. He hopes parliament will pass this bill soon.

The ACM also said it is becoming increasingly clear that the Netherlands needs to become less dependent on several large, non-European companies. Dutch companies can become more resilient through innovation, and the regulator sees a role for itself in stimulating this.

As an example, the ACM cited the cloud services market. These services make it easy for companies to use ICT services without having to invest in equipment and software themselves. This market is characterized by a heavy dependence on very large, non-European providers. American companies like Microsoft, Amazon, and Google, in particular, hold a large market share.

These companies have significant market power. This is largely due to what the ACM calls “high switching barriers.” Switching cloud services is expensive, time-consuming, and complex, and as a result, it rarely happens.

This year, the ACM will investigate how this dependency can be reduced, for example, by lowering the barriers to switching providers. “The new European Data Act should make it easier for companies to enter the market and for customers to switch,” said Snoep.

It is not only companies that need to become more resilient, but consumers as well, the ACM added. “In the attention economy - the ‘commodification’ of attention - addictive designs and deceptive techniques used by companies harm users’ well-being,” the regulator said. “Social media and gaming companies compete for attention and try to hold on to it for a slong as possible. This harms society, for example, through loneliness and polarization among young people.”

"We see that the digital world is jeopardizing consumer resilience. Protecting those consumers is also our role," said Snoep. The ACM will put more effort into doing so through combined action, including raising awareness through education, protecting consumers through legislation, and coordinating the enforcement of European regulations.