What You Need to Know
Key takeaway #1
The Belgian Competition Authority (BCA) has imposed its highest ever fine in connection with cartel practices in the private security services sector.
Key takeaway #2
This is the first time that the BCA has penalized companies for a "no poach" agreement, i.e., an agreement not to solicit another company's employees or to fix wages or other terms of employment. In a novel approach, the BCA defined such an agreement as a by object infringement.
Key takeaway #3
Companies who have purchased security services during the cartel period (2008 to 2020) will now be entitled to claim compensation from the cartel participants for any damages they have incurred.
On July 2, 2024, the Belgian Competition Authority (BCA) found that three security companies, Seris, G4S and Securitas, had participated in serious cartel practices within the private security services sector from 2008 to 2020. The practices consisted of price-fixing, bid rigging, and no poach agreements. This decision is important for two reasons: because the fines imposed by the BCA amount to a substantial EUR 47 million and because this is the first time that the BCA has fined companies for a no poach arrangement.
I. Companies involved: G4S, Securitas and Seris
The BCA adopted a settlement decision in connection with the following companies and their affiliates for their involvement in various cartel practices from January 1, 2008 until April 8, 2020:
- G4S Secure Solutions NV,
- Securitas NV and
- Seris Security NV
All the companies acknowledged their participation in the infringement, and G4S and Seris received a fine reduction in return. Nonetheless, the BCA imposed a fine of EUR 36 million on G4S and a fine of EUR 11 million on Seris. Although Securitas was found to be equally liable, it was not fined because it was the first to submit evidence of the illegal practices to the BCA. 11 individuals also obtained immunity from prosecution. Proceedings remain pending with respect to one individual.
II. Practices relate to private security services
The BCA's decision relates to private security services including, among others:
- manned guarding services, which includes the provision of uniformed on-site guards and retail guards, mobile guards, project security, and event security and crowd management;
- alarm monitoring and response services;
- electronic guarding services (i.e., alarm installation and maintenance); and
- aviation security services.
III. Infringements include price-fixing, bid rigging and no poach agreements
The parties acknowledged their participation in three separate but related infringements.
- Minimum hourly rates for security guards. The three companies applied minimum hourly rates for security guards based on a cost index model. The model was established within the framework of the "Beroepsvereniging van Bewakingsondernemingen" (the "Professional Association of Surveillance Companies"), an association to which the companies all belonged. By using the established minimum hourly rates, the companies aimed to ensure that the contracts stayed with the incumbent supplier while providing a certain profit margin.
- Coordination in public procurement and other contracts. The parties exchanged information concerning their intention to participate in tenders and the price at which they would participate in such tenders. For example, the parties agreed to respect each other's incumbent positions on certain contracts; they agreed not to bid below a specified price level; they agreed which contracts would go to which competitor; they informed each other that they were not interested in certain contracts; they exchanged and coordinated precise hourly price information; and they agreed on price ranges for specific contracts.
- No poach agreements. The parties agreed not to poach each other's employees. During settlement discussions, G4S indicated that the security companies did in fact enforce a ban on active recruitment against each other. The parties were guilty of invoking this ban in direct bilateral contacts when they discovered that active recruitment was taking place.
IV. Implications
With this decision the BCA has fined the major players in the Belgian security sector for participating in serious cartel practices over a period of 12 years. These practices limited competition to the detriment of the companies' customers and the economy as a whole. These types of practices constitute some of the most serious breaches of the competition rules. As a result, the BCA imposed its highest ever cartel fine on G4S.
This decision also marks the first time that the BCA has fined companies for no poach agreements. In a novel approach, the BCA defined such agreements as "by object" infringements – i.e., infringements that by their very nature were liable to restrict competition. This sets an important precedent for future cases.
Companies who purchased security services from one of these companies during the cartel period have the right to claim compensation from the cartel participants for any damages they have incurred.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.