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1. Main areas of the reform
The New Competition Act introduces
important reforms in the following areas:
(i) Institutional, regarding the authorities
responsible for the application of Spanish competition provisions;
(ii) Substantive, in fields such as merger control
thresholds, suspension of public tender offers and de minimis defence
for restrictive practices and abuses;
(iii) Procedural, with the elimination of the
individual-exemption system for restrictive agreements and practices and the
reform of the decision-making process in merger control procedures; and
(iv) Fact-finding, fines and penalties, by widening
the scope of the authority’s investigatory powers, establishing a
classification of the infringements in accordance with their seriousness and
introducing a leniency programme.
2. Institutional Reforms
According to the New Competition Law, the
bodies empowered for the application of the Spanish competition provisions
are the following:
(i) The National Competition Commission (Comisión Nacional de
la Competencia – “CNC”), which is the new administrative authority
primarily responsible for the application of Spanish and EC competition rules
(Articles 81 and 82 of the EC Treaty). It is also empowered to act as amicus
curiae within the framework of the application of both competition
legislations by the Spanish courts. In addition, the CNC is exclusively
responsible for cooperating with the European Commission and the national
competition authorities of other Member States on EC competition matters.
The CNC replaces the current two administrative bodies in
charge of the enquiry and decision-making phases of competition proceedings
(the Servicio de Defensa de la Competencia – “SDC” and the Tribunal
de Defensa de la Competencia – “TDC”, respectively). However, the
maintenance of an adequate separation between both phases of the proceedings
has been ensured by structuring the CNC in two separate departments:
·
The Enquiry Directorate (Dirección de Investigación),
which will deal with the enquiry phase of infringement proceedings and the
first phase of merger control proceedings, and
·
The Council (Consejo) acting as a decision-making
body in both fields.
The CNC will be chaired by a President, who will direct
and represent the institution and preside over the Council. The Enquiry
Directorate will be headed by a Director (Director de Investigación).
The decisions
adopted by the CNC are subject to appeal before the Audiencia Nacional.
(ii) A set of specialised civil judges: the so-called
Commercial Courts or Juzgados de lo Mercantil.
The reform eliminates one of the most criticisable aspects
of the Spanish competition system: current competition legislation and case
law of the Spanish Supreme Court exclude the direct application of domestic
competition rules by civil judges who, on the other hand, are empowered to
apply Articles 81 and 82 in their entirety as per Regulation 1/2003. This has
given rise to inconsistencies in the application of competition rules and has
not been justified by substantive reasons.
Under the new
system, the Commercial Courts may apply both Spanish and EC competition rules
on restrictive practices and abuses, either separately or simultaneously, and
declare agreements infringing these provisions void and, if need be, grant
compensation for damages.
(iii) The regional competition authorities, which have
executive powers for the application of Spanish competition rules
(save merger control rules) in so far as their effects are limited to their
respective territories. They may also intervene as amicus curiae
before the courts on procedures involving Spanish competition rules on
restrictive practices.
The decisions adopted by the regional authorities are
subject to appeal before the Regional Supreme Courts (Tribunales Superiores
de Justicia).
3. Substantive Reforms
The substantive changes introduced by the
new legislation focus on two areas:
(i) Restrictive practices and abuses
The New
Competition Law establishes a de minimis legal exemption for restrictive
practices and abuses of dominant position which, due to their minor
importance, are not capable of appreciably affecting competition. This had
been largely requested by economic and legal operators and is still subject
to regulatory development in order to determine the thresholds for its
application. Although abuses are in principle included within the scope of
the de minimis exemption, there does not seem to be much room for the
application of this rule to abusive behaviour, in so far as the market share
is one of the criteria to be considered in this respect.
(ii) Merger control rules
The New
Competition Law maintains the two alternative thresholds for mandatory
notification, namely:
(a) turnover in Spain; or
(b) market share of any product or service market affected by
the transaction in Spain or a geographical market within Spain. This second
threshold is raised from 25% to 30%.
The regulation
of joint ventures is aligned with the EC merger control parameters, by
eliminating the reference contained in Law 16/1989 to the “coordination of
the parent companies’ competitive behaviour” as an element excluding the
existence of a concentration..
Finally, the
new legislation reforms the treatment of public tender offers, also in line
with the EC rules on this matter. According to the future provisions, it will
be possible to launch a public bid before antitrust clearance, provided that:
(a) the concentration is notified to the CNC within five days; and (b) the
acquirer does not exercise the voting rights attached to the securities in
question or does so only to maintain the full value of its investments based
on a waiver granted by the CNC.
4. Procedural reforms
The New Competition Law introduces
important procedural modifications in the same two areas, the most relevant
of which are the following:
(i) Restrictive practices
The New
Competition Law aligns the Spanish individual exemption system with the
current EC legislation. In this respect, it abolishes the
possibility/obligation to notify restrictive agreements not covered by the
block exemption regulations to the Spanish competition authorities, seeking
for an individual exemption. The old system will be replaced by the principle
of “legal exemption” of restrictive agreements meeting certain conditions
(which basically mirror those contemplated in Article 81(3) of the EC
Treaty). Fulfilment of these conditions must be self-assessed by the affected
undertakings.
Nonetheless,
the Law envisages the possibility of obtaining from the CNC a “declaration of
inapplicability”, limited to cases in which it may be required by the public
interest (a quite abstract concept to be interpreted by the CNC). As
under EC Law, declarations of inapplicability may refer not only to
restrictive agreements or practices, but also to abuses of a dominant
position.
Total duration
of sanctioning proceedings has been reduced from 24 to 18 months (including
both the enquiry and decision-making phases), with the possibility of
extending or suspending them when certain circumstances concur. The
allocation of the term between both phases will be decided by implementing
rules. In addition, the New Competition Law limits the internal
appeals within the CNC (i.e., the former appeals before the TDC against SDC’s
decisions) to those acts causing irreparable harm or breaching the rights of
defence of the parties.
(ii) Merger control
The New
Competition Law establishes a simplified and more objective system for the
adoption of second-phase decisions on concentrations.
As opposed to
the current system, in which the Government ultimately decides upon mergers
giving rise to competition concerns (i.e., second-phase cases), the new
legislation establishes that those decisions will be adopted by the
Council of the CNC. The Government, however, retains a positive
veto right to approve mergers prohibited by the CNC or modify the
commitments in clearance decisions adopted by the CNC. This residual
power is limited to cases affecting certain public interests: public safety
and defence, public health, free movement of goods or services within the
Spanish territory, environmental protection or promotion of R&D.
As a result
thereof, second-phase proceedings will usually have a maximum duration of two
months, instead of the three resulting from the current regulation. The
difference lies in the fact that, under the current merger control rules, the
Government has an additional month (to the two allocated to the TDC for the
analysis of the transaction in second phase) for the adoption of a final
decision on the concentration.
Nonetheless, as
the Government retains a positive veto right, the new Competition Law
establishes that second phase decisions prohibiting the concentration or
subjecting it to conditions will not become effective until the deadline
granted to the Minister of Economy in order to decide whether to submit the
concentration to the Government (additional 15 days) has expired. Should a
submission take place, the Council of Ministers would have one additional
month to decide on the transaction.
In addition,
the New Competition Law establishes a simplified form for the filing
of concentrations unlikely to cause competition concerns (in particular,
those with no or limited horizontal / vertical overlap between the activities
of the undertakings concerned; cases of change from joint to sole control; or
concentrations involving foreign joint ventures with no or marginal activity
in Spain), which is subject to regulatory development. Those transactions
will also benefit of a reduced filing fee, amounting to EUR 1,500.
5. Changes in fact-finding powers, fines and penalties
Finally, the New Competition Law amends
some aspects of the investigatory powers and sanctioning system established
in Law 16/1989:
(i) Fact-finding powers
The new
legislation improves CNC’s fact-finding powers in line with Regulation
1/2003. In particular, it enables the CNC to ask any employee of the
undertaking under investigation for explanations on facts or documents
related to the purpose of the inspection (and to record the answers), as well
as to search private homes of company representatives, managers and other
members of staff with a judicial mandate.
The New
Competition Law has formally removed the obligation for the authority to
indicate in the investigation order the scope of the enquiry.
(ii) Fines and penalties
The New
Competition Law introduces a classification of the infringements in three
different categories depending on their gravity: minor, serious or very
serious. The fines are established as a percentage of the undertaking’s total
turnover from the previous year, which is based on the gravity of the
infringement (up to 1% for minor, up to 5% for serious and up to 10% for very
serious ones). In cases where the calculation of turnover may entail
difficulties, the law establishes fixed fines ranging between a minimum of EUR
100,000 for minor and over EUR 10 million for very serious infringements. The
fines imposed on natural persons (including legal representatives)
participating in the infringement have also increased from EUR 30,000 to EUR
60,000.
Furthermore,
the law establishes some aggravating and mitigating circumstances to be
considered when determining the final amount of the fines (which mainly
mirror those included in the Community Notice on the method of setting
fines).
Finally, the
new provisions will allow the CNC to impose higher periodic penalties – up to
EUR 12,000 per day - for failure to comply with CNC’s decisions on mergers,
restrictive practices or interim measures.
(iii) Introduction of a leniency program
The New
Competition Law introduces a leniency programme for undertakings
participating in restrictive agreements with effects in Spain which cooperate
with the CNC.
The substantive
criteria for the non-imposition or reduction of fines established in the
Spanish leniency provisions are in line with those of the systems already in
force at EC level and in many Member States. Furthermore, the levels of
reduction of fines undertakings will benefit from are the same as those set
forth in the Commission Notice on immunity from fines and reduction of fines
in cartel cases.
The New
Competition Law does not establish the procedure according to which
undertakings wishing to apply for immunity or reduction from fines should
address the CNC, nor the content of these applications (e.g., the minimum
information and evidence to be provided). Therefore, the application of the
leniency provisions has been deferred until an implementing regulation on
such matters is enacted.
As stated above, the New Competition Law
will subsequently be completed in some aspects by developing regulations.
However, until those regulations have been adopted, the provisions
implementing Law 16/1989 will continue in force in so far as they do not
oppose to the content of the New Competition Act: (a) Royal Decree 378/2003,
implementing Law 16/1989 on block exemptions, individual exemptions and the
defence of competition registry; and (b) Royal Decree 1443/2001, implementing
Law 16/1989 on the control of concentrations.
The information contained in this Newsletter is of a
general nature and does not constitute legal advice
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