Municipalities not to make deals about land prices of business parks

The Netherlands Authority for Consumers and Markets (ACM) is warning municipalities that they are not allowed to make agreements among themselves about the prices and the availability of business parks. Several municipalities have been called to account for such agreements.

What was the issue?

ACM has received indications that, in the past, certain municipalities made deals about the sale of land in business parks.

• The municipalities discussed a common calculation method for the prices of land in business parks;
• The municipalities discussed the possibility of exchanging information about companies that were interested in buying land in a business park in one of the municipalities, so that they could coordinate their conduct;
• The municipalities agreed not to negotiate with interested companies, and they also agreed not to offer any discount.

Why are such agreements harmful?

Municipalities develop business parks, and they buy and sell land for such development. Companies such as real estate agencies and property developers buy and sell land, too. As land buyers and sellers, municipalities are thus also market participants. That is why municipalities must comply with the Dutch Competition Act. That means that municipalities are not allowed to make price-fixing agreements or customer-sharing agreements among themselves. Such agreements are harmful to competition and to the economy in general. They drive up land prices, and restrict the business owners’ freedom of establishment.

Warning to municipalities

Having conducted an investigation, ACM has established that these agreements between certain municipalities were made a long time ago. It appears that these municipalities currently comply with the Dutch Competition Act, and that they no longer have any price-fixing and market-sharing agreements with other municipalities. That is why ACM did not continue the investigation.

Collaborations may be allowed under the Dutch Competition Act, but there are limits. ACM is warning municipalities that such price-fixing and market-sharing agreements violate the Dutch Competition Act.