Articles

District Court of Rotterdam reduced fines imposed by the ACM for "cover pricing" in tender procedures

District Court of Rotterdam reduced fines imposed by the ACM for "cover pricing" in tender procedures

District Court of Rotterdam reduced fines imposed by the ACM for "cover pricing" in tender procedures

05.01.2016 NL law

On 26 November 2015, the District Court of Rotterdam ("District Court") reduced the fines imposed by the Netherlands Authority for Consumers and Markets ("ACM") on two undertakings which infringed the cartel prohibition through "cover pricing" in several tender procedures for demolition contracts.

Cover pricing, a form of bid-rigging, occurs when one or more invited bidders in a tender procedure have no intention of winning but want to stay in favour with those involved in arranging contracts. Not submitting a (realistic) bid would entail the risk of not being considered for future tenders. In these instances, an undertaking asks a competitor for the value of its bid and subsequently submits a credible but higher bid.

In 2012 and 2013, the ACM rendered several decisions in which it concluded that these exchanges of commercially sensitive information gave rise to a concerted practice having as its object the restriction of competition, thus resulting in a breach of Article 6 of the Dutch Competition Act ("DCA"). According to the ACM, the undertakings created a misleading impression of a competitive bidding process. It imposed fines on a number of undertakings, varying from EUR 2,000 to EUR 69,000.

On appeal, the District Court confirmed that the exchange of commercially sensitive information through cover pricing restricts competition by object under Article 6 DCA. The argument that the concerted practice of cover pricing pursued the legitimate objective of remaining on tender lists was rejected. Furthermore, the parties argued that competition was not distorted because the given "cover price" was clearly non-competitive. The District Court also rejected this argument and stated that the undertakings distorted competition by not submitting prices independently from each other.

The District Court agreed with the ACM that cover pricing constitutes a "very serious" infringement. However, with regard to the applied gravity factor, it decided that the ACM inadequately expressed the difference in severity between "bid rigging" and "cover pricing". Cover pricing is to be regarded as less serious than bid-rigging, which eliminates competition among tender participants. The District Court therefore reduced the "gravity factor" from 1.75 to 1.5 and lowered the fines accordingly.

This article was published in the Competition Law Newsletter of January 2016. Other articles in this newsletter:

Team

Related news

08.08.2019 BE law
Regulating online platforms: piece of the puzzle

Articles - The new Regulation no. 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services, applicable as of 12 July 2020, is another piece of the puzzle regulating online platforms, this time focussing on the supply side of the platforms.

Read more

01.08.2019 NL law
Call of duty: Commission must state reasons when straying from its guidelines

Short Reads - The European Commission has lost a second battle concerning its EUR 15 million fine imposed upon interdealer broker ICAP, this time before the European Court of Justice. The Court upheld the previous judgment of the General Court on the basis of the Commission's failure to state reasons concerning its fining methodology of cartel facilitator ICAP. This may lead to more reasoned Commission decisions in the future - deterrence of cartel behaviour does not justify keeping the methodology for setting the fines as a 'black box'.

Read more

01.08.2019 NL law
General court dismisses all five appeals in the optical disk drives cartel

Short Reads - The General Court recently upheld a Commission decision finding that suppliers of optical disk drives colluded in bids for sales to Dell and HP by engaging in a network of parallel bilateral contacts over a multi-year period. The General Court rejected applicants' arguments regarding the Commission's fining methodology, including that the Commission ought to have provided reasons for not departing from the general methodology set out in its 2006 Guidelines.

Read more

22.07.2019 NL law
HagaZiekenhuis beboet voor datalek

Short Reads - Enkele maanden geleden vierden we de eerste verjaardag van de Algemene Verordening Gegevensbescherming (AVG) met een uitgebreide beschouwing  over de belangrijkste  ontwikkelingen uit  het eerste jaar van de verordening. We concludeerden daarin onder meer dat de door sommigen voorspelde hoge bestuurlijke boetes voor overtredingen van de AVG tot dan toe  - zowel in Nederland als in de andere EU-lidstaten - grotendeels waren uitgebleven.

Read more

01.08.2019 NL law
Brand owners beware: Commission tough on cross-border sales restrictions

Short Reads - The European Commission recently imposed a EUR 6.2 million fine on Hello Kitty owner Sanrio for preventing its licensees from selling licensed merchandising products across the entire EEA. Sanrio is the second licensor (after Nike) to be fined for imposing territorial sales restrictions on its non-exclusive licensees for licensed merchandise. A third investigation into allegedly similar practices by Universal Studios is ongoing. The case confirms the Commission's determination to tackle these practices, regardless of type or form.

Read more

17.07.2019 BE law
EU Single-Use Plastics Directive is now in force: brief recap

Articles - Plastic is a significant and growing global concern. A recent study commissioned by WWF and carried out by the University of Newcastle, Australia, suggests that people are consuming around 2,000 tiny pieces of plastic every week (which is approximately 5 grams of plastic, the weight of a credit card).  In this context, the EU adopted a new directive aiming at tackling marine litter generated from 10 single-use plastic products and from abandoned fishing gear and oxo-degradable plastics. This is called the Single-Use Plastics Directive and has entered into force this month, on 2 July 2019.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring