Dutch Parliament Approves New Rules to Prevent Public Bodies Unfairly Competing With Private Businesses
The Hague, Tuesday 13 October 2026
On 13 October 2026, Dutch MPs voted to permanently reform fair competition laws, preventing municipal authorities from undercutting local private firms while allowing exceptions for public health and open-source software.
A Permanent Framework for Public-Private Parity
The Dutch House of Representatives (Tweede Kamer) approved crucial amendments on 13 October 2026 to the Market and Government Act (Wet markt en overheid), making the legislation permanent rather than temporary [1]. Proposed by Minister of Economic Affairs and Climate Heleen Herbert, the legislative update aims to deliver regulatory certainty and prevent public bodies—such as municipal governments—from using public funds to undercut private enterprises, particularly small and medium-sized enterprises (SMEs) [1]. Public authorities frequently engage in market activities across various sectors, including commercial waste collection, real estate leasing, camper site operations, marina management, and municipal sports facilities [1].
Tightening ‘General Interest’ Exemptions and Unlocking Open-Source Code
Under the revised statutory framework, public authorities face stricter justification requirements if they intend to undertake economic activities based on the ‘general interest’ (algemeen belang) clause [1]. Historically, public entities could bypass cost-recovery requirements by declaring a commercial activity to be in the public interest [1][2]. The new rules demand more rigorous economic and policy justification before a municipality can offer services below integral cost prices, preventing unfair market distortion against private competitors operating in the same domain [1].
Unlocking Civic Tech and Software Innovation
In a pivotal shift for the digital economy, SaaS developers, and civic software ecosystems, the amended law eliminates compulsory full-cost recovery for public sector software [1]. Previously, public bodies were legally required to charge interested third parties at least the full cost price for self-developed applications, such as municipal parking apps [1]. Under the new legislation, public entities can freely release the source code of self-developed open-source software to society, ensuring software created with public funds can be scaled, adapted, and utilized across the digital economy without artificial financial barriers [1].
Local Execution and the Economics of Municipal Subsidies
The practical friction between market regulation and public service delivery is clearly illustrated at the municipal level [2]. To comply with the Market and Government Act, the municipality of Súdwest-Fryslân commissioned the Mulier Institute to calculate the true integral cost price of its facilities [2]. In 2023, the municipality spent €1.6 million on indoor sports venues, where full hourly cost prices were established at €83.81 for sports halls, €38.91 for exercise rooms, and €35.67 for gymnasiums [2]. Outdoor sports facilities required an additional €2.5 million in total expenditure in 2023, with individual pitch costs averaging €21,314 for natural grass, €61,917 for artificial turf, and €12,668 for traditional kaats courts, alongside €654,032 spent on operating the Vitaloo swimming pool [2].
Implementation Timelines and Formal Appeal Avenues
To justify charging fees below these calculated integral costs, Súdwest-Fryslân invoked Article 25h of the Competition Law (Mededingingswet), arguing that non-profit sports clubs could not absorb full cost pricing without steep fee increases that would undermine its health objective of getting 75% of residents to meet activity guidelines by 2040 [2]. Following approval by the House of Representatives on 13 October 2026, the amended Market and Government Act now moves to the Senate (Eerste Kamer) for final consideration [1]. Upon Senate approval, the permanent legislation will formally take effect on 1 July 2027, introducing mandatory five-year evaluation cycles for municipal general interest decisions [1][2].