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Small and medium-sized businesses know too little about illegal anticompetitive arrangements

01-10-2019

Many businesses have too little knowledge about what illegal cartel agreements are. This has been one of the findings of a survey conducted by the Netherlands Authority for Consumers and Markets (ACM). ACM has therefore launched an awareness campaign called ‘Stop cartels. Prevent a fine.’ With this campaign, ACM aims to increase awareness, particularly among small and medium-sized businesses (SMBs, also known as SMEs), about what types of arrangements are considered illegal.

Cartels distort competition. Businesses that are part of a cartel secretly make arrangements or share competition-sensitive information about customers, bids, or prices that they plan to charge. In this way, they restrict mutual competition. Examples of distortion of competition are arrangements about charging higher prices or about sharing contracts among each other.

Martijn Snoep, Chairman of the Board of ACM, explains: ‘Such illegal arrangements distort the competitive process. Businesses make less of an effort to offer quality products for fair prices. Their customers, both people and companies, should be able to trust that markets work well. The harm caused by this distortion of competition amounts to millions of euros a year. ACM detects cartels and imposes fines for illegal arrangements.’

ACM’s awareness campaign: stop cartels, prevent a fine

ACM’s awareness campaign ‘Stop cartels. Prevent a fine’ is about the rules for fair competition between businesses, and about what ACM does to tackle cartels. The survey has revealed that 83% of businesses are willing to comply with the rules. In addition, over 80% of businesses have indicated that they denounce cartel behavior, even if they do not know exactly what kind of behavior is illegal. The survey has also revealed that businesses have insufficient knowledge about what is illegal. For example, only 40% of businesses know that it is illegal to share customers among each other. In order to prevent unintentional violations, it is critical that businesses know the rules.

The campaign focuses on informing SMBs, since these represent the group with the largest gap in knowledge. Several SMBs are under the impression that competition rules only apply to multinationals. That is a misconception. The competition rules apply to all businesses.

SMBs are of vital importance to the Dutch economy. More than 98% of the businesses in the Netherlands is an SMB. They are responsible for approximately two-thirds of the entire Dutch economy.

The campaign can primarily be seen on the Internet and on social media. On these channels, ACM presents several examples of illegal cartel behavior. In addition, ACM informs businesses on its dedicated website: www.acm.nl/kartels (in Dutch).

What action does ACM take against cartels?

ACM detects cartels, stops illegal arrangements, and it can impose substantial fines on the businesses in question as well as on individuals. The fines can be as high as 40% of the business’s total annual turnover. Moreover, individuals are liable to personal fines of up to 900,000 euros.

A way out

For businesses that have been involved in illegal cartel behavior, ACM offers a way out. They can apply for leniency. By reporting its involvement in anticompetitive arrangements to ACM, a business may escape a fine altogether (full immunity) or it may be granted a fine reduction. The level of the leniency reduction in a given case depends on the timing of the leniency applications.

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