The Netherlands Authority for Consumers and Markets (ACM) has launched an investigation into irregularities in tender processes in the civil-engineering sector in the municipality of Amsterdam.
ACM has received tip-offs suggesting that, in a number of tender processes that the government had organized, illegal agreements were made between several building contractors about prices, and about who should get the contracts. If these allegations are true, it will mean that competition was distorted, and that this could lead to higher prices, lower quality or less innovation. The tender processes were held for projects ranging between 100,000 euros and 2 million euros. Last month, ACM conducted dawn raids at several companies.
Distortion of competition in tender processes
Every year, the Dutch government spends billions of euros through tender processes. In tender processes, a public body like a municipality, a province or the national government announces that it wants to have a project carried out. Businesses compete with each other for this project. The business that offers the best price and quality, wins the contract.
Sometimes, businesses distort competition. For example, they agree in secret on who gets to carry out what project. Martijn Snoep, Chairman of the Board of ACM, explains: ‘Secret price-fixing agreements between businesses in a tender process distort competition, and lead to higher project costs for the government. The Dutch Competition Act prohibits agreements that distort competition. At the end of the day, taxpayers foot the higher bill. ACM ensures fair competition in public procurement.’
What are the next steps in the investigation?
Over the next few weeks, ACM will investigate whether the Dutch Competition Act has been violated. ACM may reach the conclusion that no violation occurred. If ACM comes to the conclusion that a violation did occur, ACM can impose a sanction, for example a fine. Fines can be as high as 10% of the annual turnover of the business involved. Executives can receive a personal fine.
Submit a tip-off or report about any distortion of competition
Do you have any indications that businesses distort competition? Or would you like to know whether certain conduct is allowed? Submit your tip-off or question to ACM by filling out the ‘tip off’ form on our website.