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NMa: Accelerated Sanctions Procedures in Three Sectors

The Netherlands Competition Authority (NMa) has completed investigations into 87 undertakings which carry out cable and pipeline projects, 59 undertakings active in horticultural services and 34 manufacturers of concrete products due to infringements of the prohibition on cartels. To expedite the cases, NMa will apply an accelerated sanctions procedure, as it did earlier in (other) sectors of the construction industry. The investigations arise from information which NMa received after the appeal by NMa and the Cabinet to undertakings in the construction sector to come clean. In addition, evidence was obtained from other sources.

Cable and pipeline construction companies

NMa suspects that 87 undertakings in the construction industry which carry out cable and pipeline projects infringed the Competition Act in the period from 1 January 1998 up to and including December 2001. The 87 undertakings represent a considerable number of the undertakings which construct, connect, replace and maintain subterrestrial and terrestrial cables and pipelines. Gases, liquids and electricity are transmitted by means of these cables and pipelines and they are also used for the transmission of radio and television signals. In addition, these undertakings also install or replace meters, such as water meters, gas meters and electricity meters. The undertakings involved in the construction industry participated in groups of varying composition in consultation prior to subscribing to tenders for cable and pipeline projects. These consultations were linked to each other and constituted a single system with national coverage. The purpose of this system was to divide projects amongst the participants and to coordinate their bidding behaviour. Evidence was used in the investigation which was submitted to NMa by 22 of the 87 undertakings within the framework of an application for leniency.

Horticultural services

NMa has also started an accelerated sanctions procedure against 59 companies active in the horticultural services sector. NMa suspects that these undertakings infringed the Competition Act in the period from January 1998 until the end of 2001. In groups of varying composition, they participated in prior consultation in relation to tenders for the construction and maintenance of green areas, such as mowing verges, maintaining parks and laying out public gardens or planting trees. NMa suspects that the undertakings involved restricted competition amongst themselves by agreeing prior to the date of the tender which of them would submit the lowest bid. In this case, 13 undertakings applied for leniency.

Manufacturers of concrete products

An investigation conducted by NMa resulted in three cases in three different subsegments of the concrete sector. In the first place, NMa suspects that the 21 manufacturers of concrete paving stones met periodically, at least from 1 January 1998 up to and including mid-2001, to divide the supply of concrete paving stones to their customers amongst themselves. The second case involves nine undertakings which produce prefabricated concrete piles. NMa suspects that these undertakings participated in consultation in the period from January 1998 up to and including December 2001, in which they made agreements with regard to their shares in the production and sales volume of piles. In the third case, NMa suspects that four undertakings which produce concrete floor elements and participated in consultation from January 1998 up to and including March 2003, in which they entered into agreements with regard to each other's sales volumes. More than half of the undertakings involved applied for leniency.

Restricting competition is harmful

Bid-rigging is a very grave infringement of the Competition Act. A customer issues a tender in order to find the party which will submit the best offer on the basis of price and quality. It is important that the parties which submit an offer to not have contact with each other with regard to the contract in question, since this significantly restricts or even eliminates competition between them. Even when undertakings, such as the manufacturers of concrete products, enter into agreements with each other about their sales volumes, competition between these undertakings is restricted considerably. Agreements that restrict competition prejudice buyers and customers, and are prohibited by competition rules.

Accelerated sanctions procedure

NMa has proposed an accelerated procedure to the parties to enable them to 'come clean' quickly. As in earlier cases in the construction industry, Mr J.C. Blankert will present generic arguments which are important in relation to the imposition of sanctions on behalf of the undertakings involved which carry out cable and pipeline projects and produce concrete products. The horticultural service providers will be represented by H.Ph.H. Haverkort, chairman of Vereniging van Hoveniers en Groenvoorzieners (the association of gardeners and horticulturalists). To encourage companies to opt for the accelerated sanctions procedure, NMa will reduce the fines to be imposed on companies which cooperate in this procedure by 15%. The Board of Directors of NMa will then decide on the sanctions imposed on each company. The undertakings involved can now register for the accelerated procedure.

Progress of investigations into the construction industry

In 2005 NMa gave priority to the construction industry, as was announced in NMa's Agenda 2005. To date NMa has sent reports to approximately 1440 undertakings in the construction industry and related sectors setting out its suspicion that the Competition Act had been infringed. Sanctions have already been imposed on approximately 400 of these undertakings (in the construction industry). The fines imposed on undertakings in the civil engineering and utilities construction sector, which cooperated in the accelerated procedure, are expected in the second quarter of next year.