Quality schemes, quality marks and accreditation measures (hereafter: quality schemes) are common in many industries. Quality marks are used for all kinds of quality or safety standards. Consider the environment, working conditions, sustainable production or the use of certain materials. Well-known examples are Fairtrade, CE certification, BOVAG, OPP and GOTS.
Quality schemes are often drafted through a cooperation of competitors and must therefore comply with competition rules, more specifically with the cartel prohibition of Article 6 of the Dutch Competition Act (“Mw”) and Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). This is also the case when the quality scheme is drawn up and managed by a trade association or foundation of which competitors are members.
Does the quality scheme restrict competition?
A quality scheme often brings several benefits. For instance, quality schemes create confidence among consumers and buyers of products or services, they are more likely to buy them and are often willing to pay more for them. Therefore, having a quality mark or certification usually means an economic advantage for companies.
Despite its many benefits, quality schemes do have downsides. Companies without the relevant quality scheme may find it more difficult to compete. If the object or effect of a quality scheme is to exclude (potential) competitors, it infringes competition law. This is because the cartel prohibition bans agreements that restrict competition either by object or effect.
What are the requirements for a quality scheme?
The Netherlands Consumers & Markets Authority (“ACM”)[1] provides guidance in its Guidance on cooperation between competitors (the “Guidance”) for assessing whether or not a quality scheme possibly infringes the cartel prohibition. To be in line with competition law, a quality scheme must:
- be of an open nature;
- set requirements that are objective, non-discriminatory and clear in advance;
- have a transparent qualification procedure, and
- have an (independent) procedure for admission that provides for an independent decision about the admission on the initial assessment, or after admission has been refused, on appeal.
Open nature
Open nature means that the quality scheme is accessible to any party meeting the quality requirements. In this regard, a quality scheme must recognise diplomas or required certificates of comparable level if they are relevant to the determination of whether the quality requirements are met.
Set requirements that are objective, non-discriminatory and clear in advance;
A quality scheme is objective when its requirements contribute to the aim of the scheme. Examples are requirements that see to possession of certain diplomas of personnel or the non-use of certain raw materials. Requirements that see to a certain turnover, or number of customers usually do not suffice, as they may aim to unjustifiably exclude small companies. The quality requirements must be the same for every member also if these requirements are amended in the future (non-discriminatory). Additional requirements cannot be set for new members if they do not also apply to current members. In case a quality scheme is managed by a trade association, it is not allowed to make membership of the trade association a requirement for admission to the quality scheme. However, it may be justified to make a distinction in the contribution to a quality scheme for members and non-members of an trade organisation. This must however be in a reasonable proportion.
The admission procedure of quality scheme is clear if it is clear in advance to (potential) members or other parties what the requirements for membership are. This can be done, for instance, by making the quality requirements available on the administrator’s website or by making the quality requirements available on request.
A transparent qualification procedure
A quality scheme is transparent if the procedures for admission, suspension and withdrawal are available and are also easy to consult. It must be clear to (potential) members what requirements they have to meet and what the procedures for admission, suspension and withdrawal. These requirements and procedures are often set out in a consultable document such as a regulation.
Have independent procedures (admission, suspension, withdrawal)
Since mostly competitors are (indirectly) involved in the establishment and management of the quality scheme, it is important that the procedures for decision-making on admission, suspension and withdrawal are carried out in an independent manner. This may be at the initial assessment, or secondarily at reassessment. Many quality schemes therefore make use of independent committees or at least a board that operates independently of its members.
Questions?
Quality schemes offer companies a great opportunity to showcase the quality of their products or services and help consumers to choose a product or service with certain qualities. Nevertheless, quality schemes can sometimes unintentionally lead to unjustifiable exclusion of competitors or encompass the prohibited exchange of competitive information within the institutions of the collaborative organisation.
SOLV has extensive experience in drafting and advising on quality schemes and quality marks. It also regularly drafts information exchange protocols for and provides training to managers of quality schemes. For questions, please feel free to contact Kim van Haastrecht and Jelle van den Biggelaar.
[1] The ACM enforces competition rules in the Netherlands.
