Dutch Trade and Industry Appeals Tribunal rules in sanction procedures under Dutch Competition Act

On August 30, 2011, the Dutch Trade and Industry Appeals Tribunal (CBb) ruled in one of the ongoing cases in the so-called construction industry fraud. This ruling primarily concerned the formal course of the proceedings in sanction cases.

The pivotal question was whether or not the department of the NMa that is charged with the preparatory work for the decision-making process regarding sanction decisions (which is the NMa’s Legal Department) was still allowed to ask a third party for additional information in order to verify a meritorious defense of the alleged violator. The Legal Department did so in this case, and it notified the construction company in question, ETB Vos B.V., of its actions. ETB Vos was of the opinion that the Legal Department’s actions violated the requirement laid down in the Dutch Competition Act that investigation and decision-making should be carried out separately (separation of duties under Section 54a of Dutch Competition Act).

In its ruling of April 28, 2009 (LJN BI3337), the District Court of Rotterdam ruled in favor of the construction company, and thus annulled the NMa’s fining decision. The fact that this ruling touched upon the interpretation of a fundamental and official requirement laid down in the Dutch Competition Act, the NMa found it necessary that the Dutch Trade and Industry Appeals Tribunal, being the highest Dutch court in administrative antitrust cases, should rule on this matter. The CBb has upheld the court’s ruling. As a result, the violation and the thereto-related fine of EUR 191,665 that had been imposed on the construction company have been definitively annulled.

The NMa found the CBb’s ruling somewhat surprising, because it believed it had in fact acted carefully in this case. However, the CBb’s ruling does clarify better the exact implications of the statutory requirement of separation of duties. According to the CBb, investigation and oversight on the one hand and the preparatory work for the fining decisions on the other must be entrusted to different departments in order to promote a decision-making process that is objective and unbiased.

Evidenced by the way it has organized itself, the NMa meets that requirement. Casehandlers of the Legal Department were not involved in the investigation nor in the drawing up of the report. However, the CBb goes one step further, and states that the requirement of separation of duties also implies that the Legal Department is not allowed to, of its own accord, gather any new or additional information that helps in the assessment of whether or not a violation has been committed. This has been the case in this particular instance. As a result, the NMa has conveyed a semblance of prejudice, according to the CBb.

In the eyes of the CBb, the fact that the information that was sought was aimed at verifying the construction company’s argument (which just as easily could have favored the company) does not take away that semblance. The entire assessment of the evidence by the Legal Department has thus been blemished. Therefore, the NMa’s fining decision cannot be judicially maintained.

The consequences of this ruling for the NMa are limited, because the collection of information as it took place in this particular case is not common practice. This ruling therefore does not prompt any changes to the NMa’s sanction procedures. The NMa will respect the restrictions that apply to the decision-making phase with regard to the collection of information by the Legal Department.

Additional information
The complete CBb ruling (in Dutch) can be found on www.rechtspraak.nl (external website) under reference number LJN BR6737.

An unofficial English translation of the essential parts of the CBb ruling can be found here. Please note that this translation is for informational purposes only.