On 3 July 2017, the Dutch Trade and Industry Appeals Tribunal (CBb) annulled the fines imposed on real estate traders active on the market for the sale of houses under execution.
In 2011 and 2013 the Dutch Authority for Consumers and Market (ACM) imposed fines on the real estate traders for their involvement in a system of illicit cartel agreements [see our October 2013 Newsletter]. These decisions were mostly upheld by the District Court of Rotterdam in 2014 and 2016 [see our January 2015 Newsletter]. However, the appeal before the CBb led to an annulment of the fine as the CBb found that the ACM had failed to provide evidence of a single and continuous infringement.
The ACM found that 83 real estate traders participated in a single and continuous infringement concerning the sale of houses at execution auctions. According to the ACM, the real estate traders had the common goal to lower the prices at the official auctions.
These auctions had two phases. The first phase was an ascending price auction, after which the price for the second phase would be determined by the highest bid (the entry price). The second phase was a descending price auction, which would start with a price above the entry price, while the entry price itself served as a price floor. To incentivize bidding during the first phase, the highest bidder would receive 1% of the entry price. According to the ACM the real estate traders would collude during the first and second phase to lower the price. The ACM submitted evidence showing that after the official auctions, the real estate traders would sometimes organize secret follow-up auctions amongst themselves. The winner of the secret auction would then compensate the other participants.
The CBb agreed that where follow-up auctions were held, the real estate traders' conduct was anti-competitive. However, the ACM only proved this for 215 of 2,328 auctions under investigation. Auctions that were not followed by a subsequent auction could not – according to the CBb – be considered to be part of a single and continuous infringement. For these auctions the ACM failed to prove that the conduct of the real estate traders was intended to lower the price at the official auctions. Alternative explanations were available and could not be dismissed without further investigation according to the CBb. As regards the 215 auctions that were deemed to be anticompetitive, the CBb found that the ACM could not establish a single and continuous infringement without an additional analysis by, as this finding (including the duration, scope and number of involved traders) had previously been based on the total number of 2,328 auctions.
Under Dutch law, the CBb has a discretionary power to refer cases back to the ACM, allowing it to review and amend the deficiencies in its decisions. However, in this case, it refused to do so due to the fundamental nature of the defects found in the evidence. Moreover, if a single and continuous infringement could be established based on the existing evidence, the CBb ruled any new decision would fundamentally alter the scope of the infringement as defined in the decisions subject to appeal. The CBb also considered that the ACM had sufficient opportunities to remedy the defects of its analysis, as the ACM's appeal advisory committee found, on two occasions, that the underlying evidence was insufficient. Finally, the CBb considered that any further analysis would require a substantial amount of time, which would negatively impact the addressee's right to a fair trial within a reasonable time.
This article was published in the Competition Law Newsletter of August 2017. Other articles in this newsletter:
1. Court of Justice dismisses Toshiba's appeal against the gas-insulated switchgear fine
2. Recent enforcement action demonstrates an increasing focus on compliance with procedural EU merger rules
3. District Court of Rotterdam upheld ACM's decision to clear lottery merger
4. ACM closes probe into Fox over live-soccer TV rights due to lack of evidence of consumer harm
5. District Court of The Hague rules on ACM's powers to select and inspect digital data