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NMa imposes fine on two cartels and cartel facilitator in Dutch painting industry

The Netherlands Competition Authority (NMa) fines two cartels in the Dutch painting industry. A facilitator of the cartels has been fined as well. The painting companies involved, nine in total and based in the area of the southern Dutch city of Eindhoven, have been imposed a fine of €164,000. And, for the first time ever, the NMa has also imposed a fine of €17,000 on a cost engineering firm that facilitated the two cartels. The NMa considers proven that these undertakings formed two cartels in April 2005 in order to harmonize their bids for two closed tenders of the Dutch Ministry of Defense. The NMa currently has more cases in the painting industry.

Prior to submitting their individual bids in two separate tenders, the painting undertakings, of which three participated in both cartels, had harmonized their bid prices, had divided the work, and had reached agreement on a compensation scheme. Participants in both cartels had been actively facilitated in this process by cost engineering firm Calculatiebureau Coöperatieve Vereniging Spegelt. U.A., which had organized a meeting at its offices to discuss the tender, was present during that meeting, drew up documents listing the agreements made, and which managed these agreements. Spegelt has thus been actively involved in establishing these cartels.

Bid rigging constitutes an extremely severe violation of the Dutch Competition Act. A tender is the one moment when undertakings are able to, and should, compete with one another. 'It is very unfortunate that the painting undertakings that submitted an offer for one or for both tenders had actually had contact with each other discussing these tenders, because this has completely eliminated mutual competition. This form of cartel behavior is very damaging to our economy, and the clients are directly disadvantaged because of it', says Pieter Kalbfleisch, chairman of the Board of the NMa. He continues: 'These undertakings' CEOs knew perfectly well that their behavior was illegal, and they had even called in a cost engineering firm to make sure the cartel would function well. It is a good thing that the European courts have confirmed that the NMa can impose fines on cartel facilitators.'

The following cartel participants have been fined for their involvement in both tenders: Coöperatieve Vereniging Spegelt U.A. domiciled in Helmond (€10,000 and €7,000), Rendon Eindhoven B.V., formerly Schilderwerken Eindhoven B.V. (€28,000 and €7,000), Schildersbedrijf Metim B.V., domiciled in Eindhoven (€10,000 and €7,000) and Schildersbedrijf Van de Looij B.V., domiciled in Veldhoven (€10,000 and €7,000).

The following undertakings have been fined because of their involvement in one tender: Van Tour Eindhoven B.V. (€28,000), Ernis Schilderwerken B.V domiciled in Maasdonk (€37,000), Dusol Schilderwerken B.V., domiciled in Helmond (€6,000), Van Aarle Coolen Schilderwerken B.V. domiciled in Tilburg (€10,000), Buysen Schilders B.V. domiciled in Eindhoven (€7,000) and Gevelinvest Vastgoedschilders B.V., formerly I & ES B.V domiciled in Erp (€7,000).

Dusol filed a leniency request after the NMa had already launched the investigation. This means that this undertaking has voluntarily disclosed everything about the cartel which it had been involved in. Under the Leniency Guidelines, Dusol will thus be offered a fine reduction of 60 per cent. Only the first undertaking to file a request before the NMa has launched an investigation can completely escape the fine, including a cartel facilitator. For more information on leniency, please go to: Leniency (in Dutch).

These fine decisions have been issued based on the report that the NMa has drawn up after the investigation, having taken into account the undertakings' opinions thereon. The undertakings can file a complaint with the NMa against these decisions, or they can request the NMa to agree to a direct appeal with the District Court of Rotterdam.