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Municipality of Heumen distorts competition between sports centers

The eastern Dutch municipality of Heumen does not charge the operator of its sports centers all of the costs. By failing to charge all costs, the municipality violates the Dutch law on competitive neutrality, the Dutch Act on Government and Free Markets. This has been established by the Netherlands Authority for Consumers and Markets (ACM). As the municipality does not include all costs of its sports centers, the rent that operator Laco should pay is too low. As a result thereof, Laco competes unfairly with other owners and operators of sports centers.

After ACM had established the violation, the municipality issued a decision designating a service of general economic interest. This decision renders the Dutch Act on Government and Free Markets unapplicable. However, this does not alter the fact that, in ACM’s view, the municipality had been in violation up until the moment that the decision designating a service of general economic interest was issued.

What is the issue?

Until July 2019, the municipality of Heumen had allowed  operator and former owner Laco use sports center De Veldschuur for free. After De Veldschuur’s closure in July 2019, Laco rented the new sports center (Sportcentrum Malden) from the municipality. When letting properties, municipalities are required to charge rents that at least cover the costs. ACM’s investigation showed that the municipality of Heumen had failed to do so with both sports centers.

Operating contribution

The municipality of Heumen not only charges too low a rent (which does not even cover the costs), it also pays Laco an amount that seeks to enable local schools and sports clubs to use the sports center. Such an operating contribution in itself is not illegal, but municipalities cannot use operating contributions to lower the rents for operators. Since the municipality of Heumen does so anyway, it thus fails to pass on all costs to the lessee, thereby creating an uneven playing field between sports centers. This is a violation of the Dutch Act on Government and Free Markets.

Governments must compete fairly vis-à-vis commercial businesses

There are special rules in place for governments that engage in commercial activities. These rules are laid down in the Dutch law on competitive neutrality, the Dutch Act on Government and Free Markets, which is part of the Dutch Competition Act. These rules ensure that governments do not compete unfairly with commercial businesses. ACM enforces compliance with these rules.

See also:

27-09-2019 Municipality of Heumen violates the Dutch rules on competitive neutrality with respect to the operation of sports centers (in Dutch)