Published On: Sat, Aug 26th, 2023

Fair Trade Authority-fine for Ernst&Young is justified, court rules

WILLEMSTAD — The Fair Trade Authority Curacao (FTAC) fined accountancy Ernst&Young 400,000 guilders (close to $ 223,500) for failing to report a so-called concentration. The company appealed the decision, but the court in Willemstad ruled that the fine is justified.

The term concentration refers to obtaining control over one or more companies, in this case, Ernst&Young’s competitor KPMG.

In 2018 local media reported about a merger between Ernst&Young Dutch Caribbean and KPMG Dutch Caribbean. On December 31 of that year KPMG International revoked KPMG Dutch Caribbean’s license.

The FTAC started an investigation based on the media reports. Ernst&Young denied to the FTAC that there was a merger.

The national ordinance about competition (LvIC – landsverordening inzake concurrentie) obliges companies to report a concentration if it results in a 30 percent or higher market share before that process is completed.

The FTAC interviewed competitors, directors and clients and concluded that there was a concentration. Ernst&Young should have reported it.

The accountant appealed the fine but the court ruled that all conditions that apply to reporting a concentration were in place. “Ernst&Young made concrete plans to take over staff from KPMG and it made agreements with former KPMG-directors,” the Central Bank states in a press release. The court ruled that these measures resulted in a market share that exceeds 30 percent – a condition for obligatory reporting a concentration.

FTAC issued the fine to three entities: Ernst&Young Participaties, Ernst&Young Accountants and Ernst&Young Caribbean Limited (based in the Cayman Islands). According to the ruling they are all part of the economic entity Ernst&Young Dutch Caribbean.