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1. SEVERAL MOBILE OPERATORS FINED FOR ABUSE OF
COLLECTIVE AND INDIVIDUAL DOMINANT POSITION REGARDING SHORT MESSAGE
SERVICEs (SMS)
On 19 December 2012, the Spanish National Competition Commission (“CNC”)
fined three Spanish mobile operators for abuse of dominant position in
the wholesale markets of short message origination and termination
services (“SMS”).
The CNC concluded that these operators would have a collective
dominant position in the SMS origination market. Additionally, each of
the operators would have a monopoly of the SMS termination services in
its network.
As regards message origination, this is one of the few cases
in which the CNC declared the existence of a collective dominant
position after conducting an analysis of the markets, which include the
following characteristics, among others:
(i) high barriers to entry;
(ii) homogeneous services;
(iii) high supply
concentration;
(iv) stability in market
shares;
(v) comparable degree of
vertical integration;
(vi) similar commercial
practices;
(vii) transparency in the
market; and
(viii) limited
countervailing power on the demand side (consumers).
The decision also took into account the existence of incentives to
align their commercial practices and the reprisals taken against those
that did not follow the common strategy. The CNC also stated that the
prices charged for the origination of SMS by these operators were
excessive after comparing them to the costs of each operator and to the
prices charged for similar services in other countries. Consequently,
the CNC concluded that these excessive prices constituted abuse and
exploitation of consumers.
As regards the message termination, the fined operators would
have set prices for the termination of short messages freely and
autonomously, during the period analysed, as the market was not subject
to regulation by the Telecommunications Market Commission (“CMT”).
These prices were considered by the CNC to be too high.
These high prices contributed to increase the price charged to
consumers sending short messages. In spite of that, the position of the
dominant operators was not threatened by actual or potential competition.
This would have allowed them to yield a supra-competitive profit in the
respective markets where they are providers.
This is the second time that the CNC analyses this market. In 2005,
it rejected a complaint of an alleged agreement to fix retail prices of
short messages, against the same operators (Case 2550/04).
It is significant that the report issued by the CMT on this case,
questioned the market definition applied by the CNC stating that it was
too narrow. This was decisive to conclude that each of the operators had
exerted dominant positions.
This kind of discrepancies could be avoided in the future if the
Spanish legislator creates, as it is foreseen, a National Markets and
Competition Commission which will merge industry regulators and the
competition authority in a single agency.
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2. FIRST PHASE COMMITMENTS ACCEPTED TO AUTHORISE A
MERGER IN THE LIFT SECTOR
On 29 November 2012, the Spanish National Competition Commission (“CNC”),
authorised the acquisition of a company in the lift industry in first
phase. The approval was subject to certain commitments offered by the
parties.
The transaction affected the lift manufacturing, commercialisation,
installation, maintenance and repair markets, in which both companies
are active. The acquirer provides its services in the entire national
territory, while the target is a competitor with a significant presence
in some Spanish provinces.
The CNC made its approval subject to some time-limited undertakings,
which allow the customers affected by the transaction to terminate their
maintenance contracts in force without any penalty, and limit the
possibility of the target, or any other company of the same group, to
make counteroffers to customers who decided to terminate their contracts.
This decision is another example of the CNC’s willingness to accept
undertakings adapted to the circumstances of the case in order to avoid
the initiation of a second phase.
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3. FINES IN THE STATIONERY SECTOR FOR PRICE FIXING
AND CUSTOMER SHARING
On 21 November 2012, the Spanish National Competition Commission (“CNC”)
fined several companies declaring their participation in anticompetitive
practices in the stationery market. Such practices would have consisted
in price-fixing and customer-sharing. The total amount of the fines,
before applying leniency and collaboration reductions, was EUR 9 million.
The fined companies reached agreements concerning price increase
rates, the setting of minimum prices for the best sold products, or the
joint forwarding of certain costs increases.
Additionally, the decision highlights the prohibition to carry out
commercial promotions on specific dates and the allocation of customers
for the production of distributor-branded products.
Most of the meetings that the CNC considered proven took place at the
headquarters of the industry association. However, despite the fact that
some of the its employees provided assistance to the fined companies
during the meetings, the CNC excluded the responsibility of this
association since the meetings in which the anticompetitive agreements
were reached did not coincide with those held by the governing bodies of
the association.
The company that made the first leniency request was totally exempted
from the fine. Another company obtained a 50% reduction, for being the
second leniency applicant and providing information that led to the
disclosure of new facts that that were not reported in the leniency
application.
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4. FINE IN THE MOTOR VEHICLE DISTRIBUTION MARKET
On 16 November 2012, the Spanish National Competition Commission (“CNC”)
decided on a complaint against a vehicle importer. The CNC held that the
importer had treated independent repairers differently from its network
of official repairers in the context of the guarantee period for its
vehicles. This difference had the effect of preventing independent
repairers from providing maintenance or repair services during the
guarantee period, thus limiting the vehicle owners’ freedom to choose a
repairer of their preference.
This case is a clear example of the CNC’s interest in analysing the
behaviour of companies in secondary markets, such as the repair and
maintenance market.
The CNC stated that a set of clauses and different behaviours arising
from an agreement between the importer and its repair services,
constituted a single and continuous infringement that restricted
competition by preventing independent repairers from providing repair
and maintenance services for importers’ vehicles.
Among the restrictive behaviours considered, the CNC mentioned the
confusing wording of the terms of the guarantee offered by the importer,
the independent repairers’ lack of access to the technical information
needed to perform the repairs, the difficulty to acquire spare parts, or
the requirement of some additional conditions to validate the warranty
coverage.
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5. HIGH COURT OF JUSTICE OF VALENCIA UPHOLDS CNC’S
APPEAL AGAINST PLAN FOR ROAD PUBLIC TRANSPORT CONCESSIONS
On 22 November 2012, the High Court of Justice of Valencia (“HCJV”)
delivered a judgment upholding the appeal filed by the Spanish National
Competition Commission (“CNC”) against a “Plan for the
modernisation of concessions for regular permanent public road passenger
transport” (the “Plan”).
The CNC filed the appeal claiming its standing, by virtue of Article
13.2 of Spanish Competition Law, to challenge the acts of public
authorities before the competent jurisdiction, subject to administrative
law and general regulations, which preclude maintaining effective
competition in the markets.
In summary, the HCJV upheld the appeal on two grounds:
- Infringement of the European rules on maximum term of the
extensions of concessions; and
- Lack of public interest to extend the contracts instead of
allowing them to expire and opening the service to more competition.
These factors would contribute to a distortion of competition in the
road transport markets that is not justified under EU or domestic law.
The CNC’s standing to file this type of appeal was introduced by the
2007 reform of the Spanish competition rules. It was aimed at
strengthening the powers of the Spanish competition authority against
the breach of competition rules resulting from actions of the public
authorities.
This is the first judgment responding to an action of this nature
brought by the CNC. In 2010 the CNC made use of this power for the first
time. It is important to mention that the CNC filed an action against a
rule approved by the central government concerning regulatory issues in
the energy sector for the first time in 2012.
These actions are coherent with the statements made by CNC officials
regarding their willingness to file actions at the same time as issuing
reports concerning draft legislation.
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1.
SEVERAL MOBILE OPERATORS FINED FOR ABUSE OF COLLECTIVE AND INDIVIDUAL
DOMINANT POSITION REGARDING SHORT MESSAGE SERVICEs (SMS)