The Public Enterprises (Market Activities) Act was introduced some time ago but did not take fully effect until 1 July 2014. The act wishes to promote fair competition between the government and companies in economic activities. To create a level playing field the act provides for some rules of conduct to be observed by the government with the exception of activities in the public interest.
To avoid unfair competition the Public Enterprises (Market Activities) Act lays down four rules of conduct:
- Authorities should (at least) charge on the integral cost price of economic activities.
- Authorities may not favour public-sector companies over competing businesses.
- Authorities may not re-use data already in their possession for other activities if other parties do not have access to those same data.
- The government should ensure that duties are segregated; if an authority plays an administrative part in an economic activity and is responsible also for carrying out that activity, not the same persons may be involved.
Of the rules of conduct the charging on of the integral costs will present the biggest challenge to local authorities. All the relevant costs related to economic activities will be passed on in their rates.
Local authorities can declare certain economic activities to be of public interest to avoid having to passing on the integral cost price. However, this is subject to strict rules as well. Besides allowing the public to participate, file objections and appeals the authorities should give well-founded grounds for declaring activities to be of public interest. Eventually a municipal council resolution is required to determine whether an exception to the Public Enterprises (Market Activities) Act is required and proportional. Key are the implications for third parties such as entrepreneurs.
Effective from 1 July 2014 the ACM (Authority for Consumers and Markets) started actively enforcing the rules of conduct. This means the ACM may pay surprise visits to municipalities to enforce compliance.
Silvia Dominguez Sainza
dominguez@slangen-advocaten.nl
9 September 2014
