NMa Fines Road Construction Companies for Cartel Agreement

The Netherlands Competition Authority (NMa) has imposed a fine on four Road construction companies for entering into agreements with each other in relation to private tenders issued by the Municipality of Scheemda in the province of Groningen. NMa has imposed a fine amounting to a total of EUR 1,232,000 (four times EUR 308,000) on the following companies: Koninklijke Wegenbouw Stevin B.V., Ballast Nedam Infra Noord Oost, Gruno Wegenbouw B.V. and Koop Tjuchem B.V. The tender issued by the Municipality of Scheemda related to the maintenance of roads in the municipality in the period from 1998 up to and including 2000. The total amount of the tender for the entire period amounted to EUR 1,400,000.

According to NMa, it has been shown that these four companies exchanged information regarding the tender in advance. They entered into agreements with regard to who should carry out the work, namely KWS. This is an agreement to divide the market and is prohibited under the Competition Act. In addition, the companies agreed on the price at which KWS would subscribe to the tender and that KWS would pay the other three companies a fee in return. By doing so, the construction companies eliminated competition between them and replaced this by de facto mutual cooperation. As a result, competition was distorted to the disadvantage of the principal.

This is a very grave infringement of the Competition Act. The undertakings involved are amongst the largest construction companies in the Netherlands. The companies involved were aware of the fact that the agreements between them were prohibited, which NMa has regarded as an aggravating circumstance. In determining the level of the fine, NMa applied its Guidelines for the Setting of Fines [Richtsnoeren Boetetoemeting].

NMa based this investigation in part on the facts derived from the well-known parallel accounts of the company Koop Tjuchem. NMa took up this tender issued by the Municipality of Scheemda as an investigation because the supplementary evidence encountered during visits to the companies was very specific.

Since it is not able to investigate all the matters described in the administration of Koop Tjuchem, NMa selects cases which have a considerable likelihood of success, considerable economic importance, considerable importance to society and/or consumers and if a serious infringement has been committed and NMa can take effective action. For instance, NMa is investigating a number of structural joint ventures referred to in the parallel accounts which involve large infrastructural projects.

This is the first decision to impose a sanction as part of the investigation into prohibited agreements in the construction sector. Up until now, NMa has drawn up reports in six cases. The sanctions procedures in these cases will be concluded in the coming months. NMa will continue its investigation into infringements in the construction sector.