ACM: Competition fosters an innovative and resilient society

Various indicators suggest a decrease in competition in the Netherlands over the past decade. That has been revealed in the ‘State of the Market’, a new annual publication of the Netherlands Authority for Consumers and Markets (ACM). A decrease in competition is concerning since competition not only contributes to lower prices and higher quality of products and services, but also to other important public interests. For example, competition promotes the innovation that is necessary for sustaining our broad prosperity, and also contributes to society’s resilience against external shocks. With multiple suppliers, the impact of a shock is smaller if one of them falls out. However, competition is not a goal in and of itself, and must always be viewed within the context of all public interests involved. That is why, in the coming years, ACM will devote special attention to innovation and resilience, next to ACM’s focus areas: the digital economy, the energy transition, and making the economy more sustainable. ACM’s 2026 Agenda, which is also published today, highlights these focus areas.

Martijn Snoep, Chairman of the Board of ACM, comments: “Our society stands on the eve of several major transitions: geopolitical, energy, digital, and environmental. Competition contributes to solutions, but there’s no ‘holy grail’. More is needed to protect public interests. It’s about effective competition that ensures that markets work well for all people and businesses, now and in the future. That’s why innovation and resilience are new focus areas for ACM.”

Competition has decreased

The State of the Market reveals that various key indicators for competition in the Netherlands are moving in an unfavorable direction. The study into the 2011-2023 period shows that, on average, market concentration has increased, entry and exit of businesses have decreased, and businesses are better able at increasing their margins. This is primarily the case in sectors that were already highly concentrated.

Measures

ACM points to a combination of measures for protecting competition and, as such, for boosting innovation and resilience. With new powers, ACM can intervene in problems it currently cannot address, for example, by making it easier for innovative entrants to compete with large companies, and by being able to assess small acquisitions by large businesses if those acquisitions threaten to nip innovation in the bud. In that context, it is important that market authorities in the Netherlands and Europe work together, for example, by removing obstacles for new market entrants, facilitating innovative ecosystems, and lowering barriers to entry for European suppliers of cloud services.

Current developments

In the State of the Market, ACM also zooms in on three current topics: private equity, cloud services, and the ‘attention economy’. These topics are highly relevant for our society, while various public interests are under pressure.

• Private equity may contribute to investments and productivity, but if profit incentives become too strong, they can harm public interests in situations with market power or information asymmetry, for example, between vets and pet owners. This calls for proportionate, sector-specific measures.
• With regard to cloud services, Dutch businesses and the government, including ACM, depend on a few large non-European suppliers. This creates market power, and also strategic and security risks. Active government involvement, both at the national and European level, combined with competition enforcement and sector-specific measures, is needed for reducing that dependence.
• In the attention economy (the ‘commercialization’ of attention), addictive designs and deceptive techniques used by businesses harm the wellbeing of users. Social media platforms and gaming companies compete for attention, and try to hold that attention as long as possible. This brings harm to society, for example, through loneliness and polarization among youth. With regard to the attention economy, a combination of actions is needed: raising awareness through education, legislative protection, and coordinated enforcement of European rules.