construction industry tendering practices

20 January 2005

Natascha Linssen

The Netherlands Competition Authority (NMa) has started an accelerated sanctions procedure for collusive tendering, against approximately 400 construction companies active in the earthworks, roadworks and hydraulic engineering sectors. This procedure has been especially designed to ensure that the imposition of fines occurs adequately and swiftly. The extent of the proceedings and the companies investigated result partly from leniency applications made by a significant proportion of the companies.

The application of this procedure relates to two cases. In the first case, the NMa suspects approximately 400 companies of having infringed the Competition Act between 1998 and 2001 by participating in various combinations of prior consultation in relation to tenders with a view to co-ordinating their bidding behaviour. Of the approximately 400 companies on which a report has now been drawn up, about 140 notified the NMa voluntarily under the leniency programme. From the information which the leniency applicants gave the NMa, evidence has emerged against the other companies. These companies, therefore, did not notify the NMa themselves. In order to reach an adequate and swift settlement of the cases, the NMa will apply an accelerated sanctions procedure to these companies as a group.

In the second case, the NMa accuses two groups of having shared among themselves the market for large infrastructe works in The Netherlands.

This case is the result of an investigation which took two years. The evidence consists of documents which the NMa encountered during unannounced company visits to various construction companies, supplemented by information which companies gave the NMa in their applications for leniency.

The NMa’s investigation focuses on exposing cartel structures. In addition, the NMa aims to bring about a change of culture in the sector through the swift conclusion of its investigations into the construction sector and a quick sanctions procedure.

The NMa will apply an accelerated sanctions procedure to all construction companies on which a report is drawn up. In the accelerated sanctions procedure, the companies designate a representative who, on behalf of all the companies acting jointly, presents generic arguments which are relevant to the imposition of the sanction. Mr J.C. Blankert, former Chairman of VNO-NCW, the umbrella organisation of employers, has accepted this task. The NMa has opted for such representation to ensure that the NMa and the sector are not involved in procedures which drag on for years.

To provide companies with an incentive to opt for this accelerated sanctions procedure, the NMa will grant companies a 15% reduction in their fines for this far-reaching co-operation. After the NMa has received the joint opinion of the construction companies, the Director General of the NMa will take a decision on the sanctions to be imposed on individual companies on the basis of the reports and the companies' joint opinion.

It is the NMa's aim to settle all current cases in the construction industry in a manageable procedure and within a foreseeable term. The NMa has opted for an approach which focuses on parts of the construction sector: earthworks, roadwork and hydraulic engineering sector, civil and utility engineering, installation engineering and other sectors (such as cement production and cement products, traffic systems, and the laying of underground cables, pipes and pipelines). The reports on the installation engineering sector are expected in January 2005, the reports on the civil and utility sector in April/May 2005, and the reports on the 'other' categories from January 2005 onwards.

Source: NMa website (www.nmanet.nl), press release of 14-10-2004