Compulsory membership of industry-wide pension fund not in breach of competition law

The Court of Appeal of The Hague has confirmed that compulsory membership of an industry-wide pension fund for self-employed persons is not in in breach of the law. The reason for that ruling is a legal action that Zelfstandigen Bouw, an interest group for self-employed persons in the building industry, had instituted against the State and Bpf Schilders. Bpf Schilders is an industry-wide pension fund which members are decorators. The Dutch State made membership of that fund compulsory following a request from an employers’ organisation and two trade unions (the “Social Partners”). That request was based on an agreement between the Social Partners. According to Zelfstandigen Bouw, that agreement is in breach of the cartel prohibition set out in Article 6 Competition Act and Article 101 TFEU. The District Court of The Hague had previously rejected that claim.

With reference to established European case law (the Albany, Brentiens and Drijvende Bokken judgments), the Court of Appeal first of all noted that an agreement that is exclusively entered into between employers’ organisations and trade unions falls outside the scope of Article 101 TFEU. That is different if the negotiations are (co-)conducted on behalf of affiliated independent businesses or by an association of specific professionals (the FNV Kiem and Pavlov judgments). That is the case here, because the members of the Social Partners include self-employed decorators. The agreement between the Social Partners is therefore not purely the result of collective bargaining between employers’ organisations and trade unions.

The Court of Appeal subsequently noted that the agreement between the Social Partners restricts competition because it results in decorating businesses not competing with each other in respect of the costs of supplementary pensions. That does not suffice to conclude that the agreement is prohibited. Supplementary pension schemes primarily have a social function and affect only one of the cost items of decorators. Furthermore, the Court of Appeal found that Bpf Schilders’ administration costs were too small to assume that competition would be appreciably restricted. According to the Court of Appeal, plenty of other relevant cost items remained, such as labour, materials and accounting. Moreover, decorators also compete in the fields of price, service and quality.

The Court of Appeal also ruled ex officio that there was no reason to assume that the prohibition of abuse of a dominant position (Article 102 TFEU) had been breached. Although Bpf Schilders may be deemed to have a dominant position as a result of being granted the exclusive right to manage a supplementary pension scheme, Zelfstandigen Bouw had not sufficiently explained why Bpf Schilders had allegedly abused that position. Although the exclusive right granted to Bpf Schilders might restrict competition because decorators cannot take out a more extensive pension scheme, an industry-wide pension fund may be regarded as an undertaking entrusted with the operation of services of general economic interest (Article 106 TFEU). If an industry-wide pension fund were to lose its exclusive right, it might no longer be able to operate that service on economically acceptable terms. The Court of Appeal therefore upheld the judgment passed by the District Court.

This blog was also published in the Snelrecht section of the Mr. journal. The article can be found here.

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