Trade associations are finding it increasing difficult to convince their (prospective) members of the added value of membership of their association. Many companies no longer consider such membership a matter of course. To retain their appeal some trade associations have decided to broaden their range of services. In most cases that obviously does not give rise to any problems; in some cases, however, competition law may impose restrictions on those services, as apparent from a recent judgment of the Dutch Supreme Court.
The Supreme Court judgment centred around an exclusive purchase obligation that the NVM (Netherlands Association of Real Estate Brokers and Property Experts) had imposed on its members. An exclusive purchase obligation (also known as a non-compete clause) obligates customers to purchase most of their products from one and the same supplier. Such obligations can restrict competition on the market on which the supplier operates. Competitors of the supplier may consequently have difficulty selling their products: the more customers that are already bound to one specific supplier, the fewer the remaining sales opportunities. But third parties that wish to invoke the nullity or unlawfulness of a non-compete clause will have to come prepared. The burden of proof that an exclusive purchase obligation significantly restricts competition is on the party relying on that argument.
The trustee of the former software company HPC, a company involved in the development and sale of software products to estate agents, also came prepared. That trustee argued in legal proceedings that the NVM was acting unlawfully by on the one hand obligating its members to use certain software, while on the other hand failing to provide HPC in a timely manner with certain technical information. Since 2000 the NVM had been developing its own software, which could be used to exchange information on houses. Despite repeated requests from HPC, a great deal of time expired before the NVM supplied the technical information required to allow its software to communicate with that of HPC (interoperability). In the trustee’s opinion this policy of the NVM ultimately led to HPC’s bankruptcy.
The proceedings instituted by the trustee were eventually brought before the Supreme Court. The Supreme Court first of all found that the ban on cartels under Section 6 of the Competition Act also applies to resolutions that relate to markets other than that on which the association’s members (in this case the estate agents) operate. The European Court of Justice had previously issued a similar judgment regarding a permanent education system adopted by the Portuguese order of accountants (OTOC), which in particular advantaged the OTOC’s own courses. The Supreme Court thereby implicitly confirmed the judgment passed by the Amsterdam Court of Appeal that the obligation to use certain software imposed by the NVM restricted competition.
This judgment has opened the way to an action for damages of the trustee against the NVM. The Supreme Court judgment is therefore an important signal to trade associations: overzealous broadening of the range of services provided to the members may actually deter rather than attract (prospective) members.