Dutch Bike Makers Face Huge Fines

THE HAGUE, The Netherlands (December 3) – Dutch Competition Authority NMa published a report, in which the biggest bike makers in Holland are accused of price fixing. The concerned bike makers and associations could be faced with a fine up to € 450,000 each or 10% of their annual turnover. Bike Europe managed to get its hand on the NMa report. According to NMa the four biggest Dutch bike makers Royal Gazelle, Accell Group (Batavus, Koga, Sparta), Union and Giant Holland, representing 70-80% of the Dutch market, participated in a common system to exchange competition-sensitive information, such as market shares, prices and market trends, bi-monthly since 1998. During 2000 the ‘fab four’ met in confidential meetings at highway hotels to discuss an increase of the consumer retail price for the 2001 season by 10-20%. During these meetings discussions took place about margins for IBDs as well as about the so-called winter-order reduction. All makers confirmed this to the NMA. Dutch bike component suppliers Vredestein (tires), AXA Stenman (locks& lighting), Spanninga Metaal (lighting) and Shimano Europe (components) founded SOM-F (Selling-Out Monitor Foundation) by 1998 to control market data of the bicycle sector and maintain a database, in which GfK market research had been contracted to provide SOM-F with the relevant economic market data. The ‘fab four’ bike makers participated in this body as well at executive levels. Coordination between companies, which eliminates risks of mutual competition, while replacing this by actual collaboration, violates the anti-trust law, says NMA. Overall the Dutch manufacturers could be faced with a fine up to 10% of their annual turnover. And this verdict may well become reality at a later stage due to the fact that each bike maker confirmed participation at the so-called confidential hotel meetings in the NMA report. However, use of market data is legal for production planning and pricing policy. And history is still nearby. Only a decade ago Dutch bike association CBR determined on price levels, trends, margins, etc. to the Dutch bicycle sector legally, until the European Commission prohibited this. NMa allows concerned parties to react on its reports within 6 weeks from now. After this NMa will determine whether or not a violation is definite. If yes, a huge fine or penalty will be imposed at the Dutch manufacturers and associations.(FN)