NMa Determines the Basis for Fines in the Installation Engineering Sector
The Netherlands Competition Authority (NMa) has determined the basis for fines to be imposed on installation companies which have opted for the accelerated sanctions procedure. The fines will be imposed on undertakings which participated in a cartel structure in the period from 1998 up to and including 2001. NMa expects the total amount of the fines to be imposed in this sector to be in the order of magnitude of EUR 35 million to EUR 45 million.
In determining the basis for the fines, the end of the sanctions procedure is now in sight for the companies involved. The bases make it possible for the companies to calculate the fines themselves. In the coming weeks, NMa will draw up the individual decisions imposing fines, in which the specific circumstances of each company are assessed. The fines per undertaking and the total amount of the fine depends, for instance, on the definitive turnover figures, on the basis of which the fine is calculated. In October NMa expects to announce the majority of decisions imposing fines on the undertakings involved.
In April 2005 NMa concluded its report on the investigation into infringements of the prohibition on cartels in the installation engineering sector (the construction and maintenance of, for instance, mechanical engineering, electrical engineering, and sprinkler installation projects). The installation companies and the parts of these companies involved entered into prior consultation in groups of varying composition before subscribing to tenders. The aim of this system was to divide contracts amongst themselves and to coordinate their bidding behaviour.
The accelerated sanctions procedure for the installation engineering sector is the same as the procedure used earlier in the civil engineering and infrastructure sector. The procedure aims to settle in a transparent and efficient manner a number of cases which NMa has been processing since its own appeal and that of the Cabinet for companies to "come clean".
Approximately 90% of the 180 installation companies involved in the sanctions procedure have participated in the accelerated procedure. These undertakings relinquish their right to present an individual defence and are represented by Mr J.C. Blankert. On conclusion of the accelerated sanctions procedure, the regular sanctions procedure for undertakings which have not opted for the accelerated procedure will start.
In determining the bases for setting fines, NMa has taken into account the nature and seriousness of the infringements and a number of other circumstances. NMa did not impose the maximum percentage fine, mainly because it was not established that cartel agreements were entered into in relation to (almost) all tenders in the installation engineering sector. The basic amount for the fine is not 12% but 10.5% of the turnover from tenders in 2001.
Several specific circumstances are grounds for a reduction in the fine. For instance, a generic reduction in the fine is applied in the case of companies which participated in the accelerated procedure and a reduction is granted to undertakings which have applied for leniency. Small undertakings with a turnover for the entire concern of less than EUR 10 million in 2001 are also granted an additional reduction of their fine amounting to 15% on the ultimate fine. By this means, NMa wishes to avoid a situation where small undertakings find themselves in financial problems and for this reason do not opt to "come clean" through this accelerated procedure.
In 2005 NMa gave priority to the construction industry, as announced in NMa's Agenda 2005. NMa expects to announce the results of the investigation into cartel agreements in the civil engineering & utility construction sector in September. In the autumn NMa will announce the outcome of its investigations into other subsectors of the construction industry (including the laying of cables and pipelines and the production of concrete products).