NMa is investigating foreclosure auctions

This week, the Netherlands Competition Authority (NMa) carried out unannounced searches at the private homes of ten Dutch real-estate agents, which doubled as their offices. These agents trade in properties, including homes and office space, through foreclosure auctions. In addition, various individuals were heard by the NMa. The investigation had been triggered by information the NMa had collected, which led to the suspicion that these real-estate agents had entered into cartel agreements. Because of these agreements, properties that are auctioned may end up with a lower sales price than anticipated. Should the NMa investigation reveal that cartel agreements had been concluded, it would mean that consumers, those who had been forced to sell their homes, may have gotten the short end of the stick since they are left with unnecessary mortgage debt outstanding.

The NMa carries out dawn raids when it suspects the Dutch Competition Act is violated, for example, by price-fixing agreements, or by market-sharing agreements. Purpose of these dawn raids is to collect information in order to determine whether or not the Act is indeed violated. Some 65 NMa officials were involved in the aforementioned raids. The fact that the NMa has carried out these unannounced dawn raids does not automatically mean that the companies concerned are guilty of anti-competitive behavior, and therefore does not prejudge the possible outcome of the investigation. Apart from examining the undertakings' conduct, the investigation also looks into the possible involvement of private individuals in possible violations of the Competition Act.

The investigation's procedure is as follows: should the NMa's investigation lead to the conclusion that it can indeed be reasonably presumed that the Competition Act is or has been violated, the NMa will draw up a report against the undertakings involved and/or the natural persons involved. In that case, the undertaking or natural person has the opportunity to defend itself/himself, both in writing or orally (in a hearing). Once the parties involved have been heard, the NMa decides whether the presumed violation can be established as fact, and, if so, what sanction should be imposed on the undertakings or natural persons involved. These sanctions can be as high as ten per cent of the global turnover for undertakings, or €450,000 for natural persons.

The NMa cannot comment on the estimated length of the current investigation. In general, the length of an investigation depends on various factors, such as the complexity of the case, as well as the level of cooperation of the undertakings involved.

Private individuals that are no longer able to pay their monthly mortgage payments risk their homes being foreclosed on by the bank. Foreclosed homes are then auctioned at foreclosure auctions, where other private individuals and businesses may bid on these foreclosed homes. A bank will turn to foreclosing on a home only as a last resort. The number of foreclosures in the Netherlands has risen from 362 properties in 1998 to 1,779 properties in 2008. A sharp increase in the number of foreclosures is expected to be seen in the next few years, in part because of the current economic crisis.

Apply for leniency
Under the NMa's leniency program, cartel participants may be eligible for fine reduction. In addition, cartel facilitators or natural persons that have been involved in a cartel can also apply for leniency. More information on the NMa's leniency program can be found online at: ACM.nl.

Indications and tip-offs
Indications and tip-offs that the NMa receives from individuals and undertakings concerning possible violations of the Dutch Competition Act, and preferably accompanied by supporting evidence, are highly appreciated. It is these indications and tip-offs that enable the NMa to increase its knowledge of a certain industry, and to track down possible violations. The NMa annually receives approximately 4,000 indications concerning possible violations of the Competition Act. Should you have any business queries, please contact the NMa Information Line, at +31-70-330-1306. Should you have any consumer queries, of if you wish to submit a tip-off or indication, please contact consumer information portal ConsuWijzer, which is jointly operated by the Netherlands Competition Authority, the Independent Regulator of Post and Electronic Communications in the Netherlands OPTA, and the Dutch Consumer Authority. When in the Netherlands, you can reach ConsuWijzer (national rate) by calling 088-0707070.