Article 21
UPRO) or of being excluded from the SPO organization (Article 4 UPR) on the grounds of 'inconsistent conduct' (see reply by the SPO to the formal requests for information sent on 10 August and 14 November 1988). 2. The Code of Honour (12) In the event of infringement of the UPR rules, a series of measures is provided for, in the UPR rules themselves and in the Statutes of the member organizations. In addition, infringement of the UPR rules constitutes an infringement of the Code of Honour (Article 29 UPRR and Article 31 UPRO in conjunction with Article 9 of the Code of Honour), which was adopted by the SPO General Assembly on 3 June 1980. At the same time, by a decision which became effective as from 1 October 1980, the SPO General Assembly made the Code binding on the undertakings participating in the SPO. The Code of Honour contains both material provisions (such as the obligation to notify an intention to tender a price and, in the case of non-simultaneous tenders, to participate in the meeting within the SPO, and also the definition of the protection of the entitled undertaking) and rules concerning sanctions and the procedure in the event of infringements. (13) The Code of Honour is covered by this proceeding in so far as it plays a specific role, on the one hand, in the control of compliance with the obligations deriving from the UPR rules (see recitals 47 and 48 below) and, on the other, in the mutual coordination within the SPO organization in the event of the application of the rules concerning non-simultaneous tenders (see recitals 52 to 54 below). Article 10 of the Code of Honour does not play any role in this context and, for that reason, is outside the scope of this proceeding. 3. Supplementary regulations (14) Subject to approval by the SPO, the member organizations may adopt supplementary regulations additional to the UPR rules as was previously also the case with similar earlier rules and regulations. Some member organizations have adopted such regulations, such as those relating to the destination of a specified part of the price increases, cooperation between members and non-members of the SPO organization, and the notification of intended tenders for foreign building and construction works (the latter two regulations were abolished during 1988). These supplementary regulations are not examined as such in this Decision in so far as their importance remains incidental to the main object of the proceeding. 4. Rules and regulations previous to the UPR rules (15) Before 1 April 1987, when the current UPR rules came into effect, the SPO member organizations applied their own price regulating rules. The implementation of such rules was ensured, directly or indirectly, by each member organization. The first association to adopt rules and regulations of this nature was the Zuid Nederlandse Aannemersvereniging (ZNAV) in 1952. Subsequently, the other sectoral/regional associations introduced similar rules and regulations. In 1969, most of these associations acceded to the SPO. In the period from 1973 to 1979, the associations replaced most of their initial rules and regulations by standard regulations approved by the SPO. (16) The UPR rules adopted by the SPO on 9 October 1986 and effective as from 1 April 1987 replaced such earlier standardized rules and regulations which, consequently, ceased to be applied. (17) Because of the adoption of the UPR rules currently in force, three associations of building and construction undertakings withdrew from the SPO. These were, on the one hand, two associations of undertakings operating in the dredging sector (the UPR rules do not cover this sector), which withdrew on 1 January 1987, and, on the other, the NAC association (Nederlandse Aannemers Combinatie), which had performed, for building and construction undertakings operating on a national scale, certain functions currently dealt with solely by the offices and which withdrew on 1 January 1989. The two associations in the dredging sector apply their own price regulating rules. The NAC was in the process of liquidation when the Statement of Objections was sent. C. THE MARKET AND THE PRODUCT (18) According to the SPO, the number and total value of the contracts put out to tender in the Netherlands in the sectors referred to in recital 6 above and involving coordination within the SPO are as follows: (Hfl million) Year Number Value 1982 24 660 9 932,4 (¹) 1983 28 283 10 191,7 (¹) 1984 28 390 10 723,9 (¹) 1985 29 189 10 785,5 (¹) 1986 29 372 11 263,8 (¹) 1987 27 757 12 784,9 (¹) 1988 30 043 12 177,1 (¹) (¹) According to the notifying parties, in their joint reply to the Statement of Objections, the turnover for building contracts carried out by general contractors (including private contracts, etc.) in the Netherlands was Hfl 35 400 billion in 1987. The information obtained from the SPO shows that the SPO member undertakings applying the UPR rules win the contracts within the abovementioned sectors in more than 90 % of cases. (19) In calculating the share of the market in works put out to tender in the Netherlands held by all the participants in the UPR system, the above figures should be compared with those compiled by the Economisch Instituut voor de Bouwnijverheid (hereinafter referred to as the 'EIB'). (20) According to the EIB, the total amount of the building and construction works put out to tender in the Netherlands in the period 1982 to 1987 was as follows (3): (Hfl million) Year Amount 1982 10 744,8 1983 10 345,6 1984 11 748,1 1985 12 281,9 1986 12 909,8 1987 11 724,2 The figures published by the EIB do not include earthworks and the demolition sector. As from 1984, the figures include the cable laying and pipework sectors. It should be pointed out that the SPO's financial figures show the value of the contracts awarded annually, whereas the EIB's figures show the value of the contracts actually carried out in whole or in part each year (turnover). (21) Comparison of these two categories of financial figures shows that all or virtually all of the contracts put out to tender in the Netherlands and falling within the scope of application of the UPR rules are handled through the SPO, i.e. most of them involve mutual coordination within the SPO. This observation is confirmed by the following findings: (a) According to the information provided by the SPO in its notification of the rules and regulations concerned, the share of the building and construction market in the Netherlands involving tendering and falling within the scope of application of the UPR rules is 41,5 % in value terms and 22,3 % in terms of the total number of building and construction works in the Netherlands (relevant period: 1975 to 1979). In the explanatory memorandum to the Royal Decree of 29 December 1986 (see recital 66 below), the relevant percentages are 41 and 25 (1978, source: SPO). The figures published by the EIB and set out above give a percentage of some 40 (for the period 1982 to 1986; in 1987, the percentage was 35,45). (b) Examination of the information gathered during investigations shows that: - according to some large-scale clients, virtually all the contracts put out to tender by them are 'handled' by the SPO, - all the large and medium-sized Dutch building and construction undertakings are included in the lists of the member undertakings of the SPO member associations. The Dutch building and construction firms not participating in the UPR system in the framework of the SPO are (with a few exceptions) either too small in size to be interested in the contracts put out to tender or so specialized that their output is geared to the construction of standardized units. (c) In its reply to the Statement of Objections, the SPO confirms that the 'lion's share' of the contracts put out to tender in the Netherlands is processed by it. (22) The demand side is made up of a multitude of public and private sector customers who, either through statutory requirement or voluntarily, make use of the tendering system (successive tendering procedures included) so as to bring competition into play between the suppliers operating on the market, with the aim of obtaining the lowest price possible or the economically most advantageous tender for the work required, whose specifications and conditions they themselves determine in the job description and the contract documents. The supply side which meets this demand is made up virtually exclusively of the building and construction undertakings participating in the UPR system. (23) Given the particular characteristics of building and construction as defined in recital 6 above, covering as it does activities varying widely in nature and value and undertakings of very different sizes, a distinction should be made, in determining the relevant geographical market, between relatively simple and routine building and construction work of relatively low value (for example, houses) and heavy, complex or highly specialized work of relatively high value. The geographical market within which supply and demand operate is more restricted in the case of the first type of work than in the case of the second. D. THE OPERATION OF THE UPR SYSTEM (a) Compulsory notification of the intention to submit a price tender (Article 3 UPR) (24) Any contractor which is a member of an SPO member organization must notify the relevant SPO office if it intends to submit a price tender in response to an invitation by a client or even to reply to a consultation and negotiation request relating to a contract or again to carry out a project for its own account and at its own risk. This obligation relates not only to public and private sector tenders and to selection procedures, but also to private contracts (single tendering procedure) and to subcontracting. The notification must contain all the data and information which the office deems useful and/or which are necessary for the implementation of the UPR system. The same obligation is incumbent on any contractor which, though not belonging to an SPO member organization (and, consequently, not bound by the UPR rules), is bound by the Code of Honour by virtue of belonging to an Algemeen Verbond Bouwbedrijf (AVBB) member association. According to the joint reply to the Statement of Objections given by the parties to which this Decision is addressed, the number of building and construction undertakings falling within this category is around 2 000. On request, the office communicates the number of other undertakings that have also notified their intention of tendering a price for the same contract and that will be invited to participate in the prior meeting within the framework of the SPO. This system of compulsory notification allows the SPO, i.e. the relevant office, on the one hand, to apply the mutual coordination procedure in good time and, on the other, to check that the rights and obligations arising from the rules and regulations are being complied with. The office is required to organize a meeting of the undertakings concerned once it has received at least two notifications relating to one and the same contract. The notifying undertakings belonging to the SPO member organizations are required to attend the meeting. Notifying undertakings which are not members of the SPO member organizations and which are the subject of disciplinary proceedings for 'inconsistent conduct' are excluded from the meeting. Any undertaking which has failed to comply with its obligation to attend the meeting is not allowed to tender a price (Article 4 UPR). Any undertaking which has attended the meeting is required to tender a price, unless it withdraws (Article 15 UPRR,