NMa Completes First Tranche of Construction Industry Cases in the Accelerated Procedure

The Netherlands Competition Authority (NMa) has determined the definitive principles to be applied in calculating individual fines for companies in the civil engineering and infrastructure sector (GWW sector). After earlier imposing fines totalling approximately EUR 100 million in this sector, NMa has now imposed fines amounting to approximately EUR 135 million on 344 construction companies. The new fines vary from several thousand to many millions of euros per company.

The fines have been imposed for the participation by the companies in the cartel structure in the civil engineering and infrastructure sector. In addition, a number of companies were fined separately due to the fact that they entered into agreements to divide markets amongst themselves in relation to large infrastructural projects, such as the southern high-speed railway link, HSL-Zuid.

In determining the fines, the accelerated procedure created especially for this purpose has come to an end. This procedure was aimed at settling a large number of cases in a transparent and efficient manner, which NMa has been processing since its appeal to the construction sector and the appeal by politicians to "come clean". According to NMa, this implies a break with its previous method of operation, including the payment of fines for infringements. In the accelerated procedure, in which the construction companies relinquished their right to defend themselves individually, general opinions were presented by Mr J. Blankert, the representative of all the construction companies.

In determining the principles, NMa has taken into account the nature and seriousness of the infringements and a number of other circumstances. In particular, NMa reduced the fines slightly due to two circumstances. The first was that, in NMa's opinion, it cannot be assumed that cartel agreements were made in relation to (almost) all tenders in the civil engineering and infrastructure sector. Secondly, it was found that in certain cases public authorities supposedly favoured cartel formation.

The fines to be imposed also take account of the reduction granted on the grounds of leniency to each company, the generic reduction in the fine for participation in the accelerated procedure and an additional reduction in the fine for companies with a turnover of less than EUR 10 million per year.

Cases involving companies which did not opt for the accelerated procedure and companies which did not appear to meet the conditions for participating in this procedure will be dealt with by NMa in individual procedures in the usual manner.

NMa attaches importance to the fact that 'coming clean' is not limited to paying fines, but also applies to the relationship with customers. NMa offers the construction sector an 'incentive' by promising a 10% reduction in the fines imposed if the construction companies manage to reach a general agreement with public authorities at the latest by 15 February 2005 on a financial settlement of civil law claims.

Earlier, in December 2003, NMa imposed fines on 22 companies in the civil engineering and infrastructure sector. Subject to conditions, NMa is willing to reconsider the level of these fines since the civil engineering and infrastructure sector has indicated that it wishes to 'come clean' completely. In this regard, NMa is of the opinion that the construction sector has shown that it has, in fact, made changes to its method of operation by cooperating in the accelerated procedure and paying the fines imposed within this framework. In this regard, it is also important that the construction sector has 'come clean' in its relationship with customers. If the construction sector manages to reach a general agreement with public authorities at the latest by 15 February 2005, 10 percent of the amount paid by the company involved as part of the financial settlement with public authorities will be deducted from the fines imposed in 2003. NMa will reduce the remaining amounts of the fines by 45 percent.

"A settlement in this form is unique and is only motivated by the very exceptional circumstances of this case," Pieter Kalbfleisch, the Director-General of NMa, declares. "NMa enforces the law; our fines must be realistic. Through our method of settlement it is possible for the construction sector to continue along its chosen path of "coming clean" in relation to NMa and society. This also takes into account the economic circumstances of this moment and makes a contribution to the recovery of relationships between the construction sector and public authorities, without burdening these relationships with many procedures which would drag on for years."

NMa is active in various subsectors of the construction industry. In February 2005, it will complete an investigation into the installation branch, which will also be followed by an accelerated sanctions procedure. The investigation into the civil engineering and utility sectors will be completed in May. Investigations into other subsectors of the construction industry will be completed in the first six months of this year. More than one fine may be imposed on companies active in various sectors.