NMa Imposes a Fine on Broadcast Partners and Nozema

The Netherlands Competition Authority (NMa) has fined Broadcast Partners and Nozema Services a total of more than EUR 1 million for entering into agreements in relation to the submission of bids for commercial FM radio frequencies auctioned by the government.

NMa is of the opinion that it has been proven that the companies involved, the only parties in the Netherlands which broadcast radio and TV signals on behalf of broadcasting companies through their broadcasting network, restricted competition between themselves. They agreed beforehand which of them would broadcast the commercial frequency ranges acquired by Holland Media Groep (HMG, now RTL Nederland).

They signed a letter of intent on 27 May 2003 to this effect, 1 day after day the government had reallocated the national commercial radio frequencies to the broadcasting companies. In accordance with this letter of intent, Nozema would not make bids or enter into contracts for a period of 24 hours with HMG with regard to the frequency ranges acquired by HMG. In the 24 hours after the letter of intent was signed, Broadcast Partners acquired HMG as a customer. As a result of the prohibited agreement, competition was distorted and HMG, as a customer, was placed at a disadvantage.

Bidrigging is a very grave infringement of the Competition Act. Once again, it appears in the present case that agreements of this type may also occur in sectors other than the construction industry. The auctioning of radio frequencies only occurs once in a lengthy period. This is precisely the moment at which parties are able to compete with each other. By issuing a tender, the customer looks for the party which submits an offer with the best price/quality ratio. It is important that the parties which submit bids do not have contact with each other about the contract in question, as this significantly restricts and may even eliminate competition between the parties.

In setting the level of the fine, NMa applied its Guidelines for the Setting of Fines [Richtsnoeren Boetetoemeting]. In determining the level of the fine, NMa took into account, amongst other things, the role of the Dutch government. The government had urged the parties to resolve their mutual differences with regard to the shared use of each other's broadcasting networks.

In addition, they were required to complete the necessary preparations as quickly as possible, so that the reallocated frequency ranges could become operational immediately. Although both parties apparently experienced considerable pressure to 'enter into consultations' with each other, this does not justify an infringement of the Competition Act. Under certain circumstances, a situation such as this may be a factor which has to be taken into account when determining the level of the fine.

It is possible to file an administrative or judicial appeal against this decision by NMa.