NETHERLANDS - All Dutch pension funds are to be treated as companies under the Dutch competition legislation known as the ‘Mededingingswet'.

The competition authority NMa has announced rules will be applied to pensions funds as a consequence, which prevent them from forming cartels, abusing their economic power and which make them subject to a ‘check on concentrations' - to prevent too much power from becoming concentrated in a new large company following a merger.

The NMa judges whether real competition is significantly hampered as a result of mergers and takeovers, particularly in situations where any such deal could enhance a company's position of power.

Only recently, industry-wide pension funds and occupational schemes were reclassified as enterprises as termed under the Act known as the Mededingingswet, in line with European jurisprudence, the Nma noted.

In the opinion of the watchdog, pension funds should be considered to be businesses because they are economically-active and because individuals benefit as the result of paid-in contributions and the returns on investment.

As part of its supervision on ‘concentrations', the competition authority will consider the gross premium income earned in a previous year as the pension fund's turnover.

The NMa has decided that pension funds need to report merger plans if their combined gross contributions in the previous year exceed €113.5m, and in situations where an individual scheme within a merger receives over €30m in premiums from Dutch participants.

The NMa expects this duty to report will only be applicable to a limited number of mergers, because such a limited number of players have this high a turnover threshold, while the options for competition between pension funds are also limited at present.

All three pension fund lobbying organisations have expressed disappointment about the NMa's decision, according to Frans Prins director of the Foundation for Company Pension Funds.

"We think that the present Pension Act already provides sufficient safeguards for the rights of workers and pensioners in case of mergers. Moreover, pension funds are task-focused organisations and are not aiming to be competitive," said Prins.

He added the new rules will also increase the administrative burden and costs for pension funds.

In Prins' opinion, the Mededingingswet should be adjusted to make it clear that the competitions rules do not apply to pension schemes.

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