On 8 May 2018, the Trade and Industry Appeals Tribunal (CBb) ruled on appeal on the proportionality of the amount of a fine imposed by the Dutch Authority for Consumers and Markets (ACM). The CBb found that the fine was disproportionate and reduced the fine by more than 80% from EUR 2.5 million to EUR 463.000.
In this case, the ACM initially imposed a fine of EUR 3 million on a Dutch construction company for engaging in cover pricing practices in 2010. Cover pricing consists of sharing sensitive bidding information between bidders to enable one of the bidders to submit an offer that would be considered as serious by the organizing entity, but that at the same time would still be less attractive than the bid of the other firm. By submitting a serious but non-winning bid rather than no bid at all, the bidder hopes to increase the probability that it will be invited for any future tenders organized by the same entity.
The ACM had qualified the cover pricing practices as a restriction of competition by object. It set the fine at EUR 3 million because it was of the opinion that a previous fine imposed on the same company of EUR 1.5 million– for a breach of competition law in a separate case – had apparently not prevented recidivism. Therefore, it decided to bypass the applicable clause in the ACM's fining code that allowed the "fine basis" – which is based on the affected turnover and "the seriousness of the violation" - to be redoubled in case of recidivism, since applying that clause would have amounted to a fine of approximately EUR 540.000. Instead it set the fine at double the EUR 1.5 million fine of the unrelated case.
After the District Court of Rotterdam had reduced the fine to EUR 2.5 million in 2016, the company lodged a further appeal to the CBb.
The CBb agreed with the construction company that the amount of the fine was still disproportionate. According to the CBb, the ACM had failed to provide a convincing explanation why the fine should be higher than the fine in the previous case given that the CBb deemed the recent infringement less serious than the infringement in the previous case. For that reason, the CBb concluded that the increase of the fine for recidivism as set out in the fining code would have been sufficient. The CBb recalculated the fine in accordance with the applicable fining code and set the fine at EUR 463.000.
This article was published in the Competition Law Newsletter of June 2018. Other articles in this newsletter:
European Court of Justice rules EY did not violate stand-still obligation in Danish merger
European Commission must reassess Lufthansa's request to waive merger commitments
District Court of Amsterdam declines jurisdiction in competition law damages case
Belgian Supreme Court confirms illegality of dawn raids due to the lack of a warrant