NMa Draws up a Report on Bicycle Manufacturers and Branch Organisations
Following an investigation, the Netherlands Competition Authority (NMa) has drawn up a report on four bicycle manufacturers due to a reasonable suspicion that they had entered into price agreements and exchanged sensitive competitive information. A report was also drawn up on two branch organisations. According to NMa, these associations strongly urged their members, the bicycle retailers, not to do business with two large suppliers of company bicycles.
According to NMa, Koninklijke Gazelle B.V., Accell Group N.V. (Batavus B.V., Koga B.V., Sparta B.V.) and Giant Europe B.V., which represent 70 to 80 percent of the Dutch market, entered into price agreements with each other in relation to the sale of bicycles. In addition, Gazelle, Accell, Giant and Union B.V. each participated in a system involving the exchange of sensitive competitive information. These agreements relate to the period from 1998 up to the present.
The price agreements related, for instance, to increases in the retail prices of bicycles. Price is one of the factors in relation to which bicycle manufacturers compete with each other. Due to the agreements which the bicycle manufacturers entered into with each other, price competition decreased. The agreements between the three bicycle manufacturers are to the disadvantage of consumers.
The system of exchanging information keeps bicycle manufacturers informed every two months of, for instance, the development of market shares, prices and market trends. As a result, the bicycle manufacturers were continuously informed of the market position and the marketing strategies of their competitors. The bicycle manufacturers also determine who may or may not participate of the in the system. Coordination between companies, which deliberately eliminates the risk of competition between competitors and replaces this by de facto co-operation is an infringement of the Competition Act.
A report has also been drawn up on the branch organisations, Bovag and Nederlandse Christelijke Bond van Rijwiel- en Motorhandelaren (NCBRM) [Netherlands Christian Association of Bicycle and Motorcycle Retailers] in relation to their infringement of the Competition Act. These associations strongly urged their members, the bicycle retailers, not to do business with two large suppliers of company bicycles. According to Bovag and NCBRM, the profit margin which these two suppliers give retailers on the sale of company bicycles was too low. In addition, Bovag and NCBRM have given their members advice on various occasions regarding the prices and tariffs to be charged to customers, for instance for service and maintenance. If competitors unite in a (branch) organisation, which then issues recommended prices, they limit competition. Joint recommended prices or price increases make it possible to predict what the pricing policy of competitors will be. This infringes the prohibition on cartels.
The immediate cause for the investigation into the bicycle branch were tips and reports in various media that bicycle prices would increase sharply in the second half of 2000. NMa based its investigation partly on data collected during company visits to bicycle manufacturers and branch organisations. Following the company visits, Gazelle and Bovag drew up guidelines for their employees to ensure compliance with the Competition Act.
NMa draws up a report if it has a reasonable suspicion that the Competition Act has been infringed. The bicycle manufacturers and branch organisations involved may now respond to the report. After this, NMa will take a final decision on whether an infringement has been committed and, if so, whether a fine and/or an order subject to a penalty will be imposed.