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1. SPANISH
CONGRESS ADOPTS BILL TO CREATE NATIONAL MARKETS AND COMPETITION
COMMISSION
On 4 April 2013, the Spanish Congress passed and submitted to the
Senate the Bill to create the National Markets and Competition
Commission (“NMCC”). This
new macro-regulatory body will assume the role of the National
Competition Commission under Competition Law 15/2007 of 3 July and that
of the regulators of the telecommunications, electricity, natural gas,
postal, audiovisual communication, airport and rail transport sectors.
This bill has been under discussion for the last six months and
foresees that the NMCC will be governed by a council made up of ten
members. In a break with the current structure, the council will be
divided into two committees; one will exclusively hear competition cases
and the other will deal with regulatory oversight. The two committees
will be closely linked as their members will rotate (no member will be
exclusively assigned to just one committee) and reports will be drafted
by a committee
on proceedings being handled by the other committee but that relate to
matters that fall under its competence.
The bill has been submitted to the Senate. It is expected to be
passed in July 2013 and that the NMCC will be up and running by the
beginning of 2014.
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2. FIVE YEARS OF
COLLABORATION BETWEEN THE NCC AND THE REGIONAL COMPETITION AUTHORITIES
The National Competition Commission (“NCC”)
has made public a report in which it carries out an in-depth analysis of
the outcome of the coordination of competences of the NCC and Spain’s
regional competition authorities.
The Spanish competition system is decentralised. Autonomous regions
can therefore create their own regional competition authorities whose
scope of power is limited to their particular region.
In its report, the NCC observes that the five years since Competition
Law 15/2007 of 3 July (“Law 15/2007”)
entered into force have been characterised by a disparity in the levels
of activity of the various regional authorities and by the close
collaboration between the regional authorities and the NCC.
In fact, 62% of a total of 107 regional proceedings were initiated by just
three authorities: Andalusia (26 cases), the Basque Country (23
cases) and Madrid (18 cases)[1].
On the other hand, the collaborative mechanisms to determine the
competent authority to hear a case have proven effective. Despite the
NCC’s weight in the adoption of decisions on disputes, 82% of these
cases have been assigned to regional authorities.
The results for dawn raids or unannounced inspections are mixed. The
NCC has requested the assistance of regional authorities in 25 dawn
raids, whilst only the Catalan regional authority has requested the NCC’s
collaboration to carry out a dawn raid.
Finally, the report highlights that the NCC has intervened as an
interested party and submitted observations in a total of 76 proceedings
initiated by regional authorities. The NCC has also appealed decisions
of regional authorities on two occasions. The first was against a
decision of the Andalusian regional authority on the grounds of an
incorrect interpretation of Article 1 of Law 15/2007, and the second was
against a decision of the Madrid regional authority on the grounds of an
incongruous misapplication and failure to give adequate reasons for
applying Article 1 of Law 15/2007.
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3. THE SPANISH
NATIONAL COURT QUESTIONS THE NCC COMMUNICATION ON THE QUANTIFICATION OF
SANCTIONS
The decision of the Council of the National Competition Commission (“NCC”)
of 28 July 2010, which was adopted in case S/0091/08, Vinos finos de
Jerez (the “Decision”),
imposed fines on a group of Jerez fino wine producers for their
involvement in a cartel that fixed prices and controlled production in
the buyer’s own brand market (Jerez wine exported to countries such as
Belgium or the Netherlands under the distributor’s own brand).
The judgment of 7 March 2013, rendered by Section Six of the
Contentious-Administrative Chamber of the Spanish National Court (“NC”),
ruled on the appeal lodged by a winery against the Decision and
clarified certain issues relating to the quantification of sanctions for
competition law infringements.
In its judgment, the NC confirmed the main findings of the Decision,
particularly those regarding the fact that there was a single and
continuous infringement. The NC also maintained, as did the Decision,
that the involvement of the Jerez Wine Regulatory Council was
insufficient to completely exonerate the wineries. However, it did
consider that this entity created a situation of legal uncertainty,
which reduced the culpability of the appellant to a mere wrong-doing or
negligence.
When considering the proportionality of the sanctions that the
Decision imposed on the appellant, the judgment of the NC contains a
series of novel declarations that, if confirmed by subsequent judgments,
would call into question the NCC communication on the quantification of
sanctions dated 6 February 2009 (the “Communication”).
In particular, the NC considers that the maximum limit for the fines
contemplated in Article 63 of Competition Law 15/2007 of 3 July (“Law
15/2007”) must be the criterion used to quantify the
fine. This means that the fine must be quantified only on the basis of
the turnover of the undertaking concerned (i) in the market affected by
the infringement; and (ii) in the financial year immediately preceding
that in which the fine is imposed.
The fine may be for up to 10% of the turnover and the specific
percentage applied will depend on the circumstances of the case
and must be adjusted in line with the seriousness of the conduct (duration,
degree of culpability, mitigating circumstances, etc.).
As regards the appellant, the NC considered that the fine should be
equivalent to just 5% of its sales of Jerez wine in the buyer’s own
brand market in 2009, bearing in mind that: (i) there was no intent to
deceive, only negligence; (ii) the duration of the infringement; and (iii)
the appellant’s cooperation with the NCC by providing information on the
infringement, which was considered as a mitigating circumstance, even
though it did not comply with the requirements to benefit from the
leniency program.
The existence of a dissenting vote against the judgment brings to
light that this is a matter that has been the subject of much debate
amongst the judges of Section Six. However, the NC has confirmed this
interpretation in other judgments of 8 March 2013 and 21 March 2013.
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4. THE NCC
PERMANENTLY STAYS TWO PROCEEDINGS ON AN ALLEGED ABUSE OF A DOMINANT
POSITION IN THE NEW TECHNOLOGIES SECTOR
The National Competition Commission (“NCC”)
has permanently stayed two cases concerning the alleged abuse of a
dominant position by two new technology companies owing to a lack of
evidence. Being all too aware of the damage that could be caused to
companies that operate in these markets and make large investments in
the research and development of new products, the Council of the NCC
took a cautious stance in both cases.
The Council’s decision of 26 February 2013 (case S/0354/11) sets out
some guidelines that will no doubt prove helpful for the analysis of
future cases in the IT databases sector. The complainant (a company)
criticises the decision of another company, operating in the software
and database development market, to stop manufacturing products that
were compatible with its own. The complainant argued that, considering
the other company’s position in the database market, such refusal to
supply would mean it would be forced out of the enterprise server market.
In its decision, the Council stated that it had not been proved that
the accused company had a dominant position in the market. The Council
stated that the definition of the relevant market must be particularly
well-founded in an abuse of dominant position case. In these cases,
excessively narrow markets cannot be defined without fully justifying
this definition. In relation to the existence of a dominant position,
the Council also stressed that holding a high market share is not
sufficient to conclude that a company has a dominant position. Other
factors, such as the existence of entry barriers to the market that
prevent other operators from attacking the position of the alleged
dominant company, must be demonstrated. In this case, the Council proved
to be particularly demanding with the required standard to prove that an
undertaking has a dominant position.
The Council also reiterated that the general rule is that companies
have the freedom to contract, including companies that have a dominant
position. Only under certain circumstances will it be possible to force
an undertaking to contract. In cases where supply is denied it must be
demonstrated that (i) the refused input is essential to compete; (ii)
the refusal will probably eliminate effective competition in the market;
and (iii) the refusal is likely to cause significant harm to consumers.
In this case, the NCC was very strict when analysing the fulfilment of
the requirements, stating that a conduct could only be considered
abusive if the refused product or service was absolutely essential to
operate in the market.
On the other hand, in its decision of 14 March 2013 (Case S/0322/11),
the NCC analysed if the licensing system applied by a software
manufacturer and, in particular, the restrictions on the subsequent
transfer of licences granted to users could be considered as an abuse of
a dominant position. The NCC analysed how these restrictions could
foreclose the creation of a second-hand market for these products. In
this decision, the Council of the NCC considered that these restrictions
were proportionate and justified by the objective to combat
counterfeiting and piracy.
Additionally, the Council stated that even when it holds a dominant
position, a company must be free to design a distribution system that
can be adapted to the different needs of each customer. However, the
existence of different channels for marketing different products cannot
be considered as a discriminatory measure and is therefore not abusive.
Both decisions seem to imply that the Council of the NCC has adopted
a more rigorous approach towards the requirements for declaring the
existence of a dominant position and its abuse, at least in markets
where innovation and large investments play an important role.
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5. PHASE II
APPROVAL OF A JOINT VENTURE IN THE AVIATION FUEL SECTOR
The Council of the National Competition Commission (“NCC”)
has given conditional clearance to Disa Corporación Petrolífera S.A.’s
(“DISA”) acquisition of
control over Shell Aviation España, SL (“SAE”),
a subsidiary of Shell that supplies aviation fuel in Spain. As a result
of this transaction, DISA and Shell will have joint control over SAE.
In its analysis, the NCC confirmed that in relation to the aviation
fuel storage and logistics markets, DISA is the only company that can
provide access to some Spanish islands, given that it is the only
logistics operator with a boat fleet to transport fuel between islands.
Additionally, in some islands, DISA’s infrastructure is also necessary
to gain access to airports as there are no alternatives.
The Council of the NCC has authorised the transaction on the basis of
three commitments. The first two address DISA’s conduct in relation to
third party access to its infrastructure (the first being fixed
transport installations and fuel storage in the Canary Islands and the
second being maritime transport services for aviation fuel between
islands). These two commitments will be carried out through the
publication on DISA’s webpage of the necessary information to ensure
access and to hire transport from these infrastructures, such as
methodology, tariffs and access systems. The purpose of these
commitments is to provide access under transparent, objective and non-discriminatory
conditions.
The third commitment is to prevent further structural links between
competitors in the aviation fuel supply market. The NCC forces DISA and
Shell to exclude their shares in CMD Aeropuertos Canarios S.L.[2]
and Spanish Intoplane Services S.L.[3] (which render
into-plane services) from the joint venture.
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6. APPROVAL WITH
BEHAVIOURAL COMMITMENTS OF A MERGER IN THE OLIVE OIL SECTOR
The Council of the National Competition Commission (“NCC”)
has conditionally cleared Deoleo S.A.’s acquisition of exclusive control
over the packaging and distribution of the extra virgin olive oil sold
under the brand name “Hojiblanca”, which belongs to Hojiblanca SCA.
The Council of the NCC has authorised the transaction subject to four
commitments relating to potential coordinated effects in the market.
The first commitment consists of removing the contractual clause
stating that after the expiry of the three-year non-compete clause,
Hojiblanca will lose the right to appoint two members of Deoleo S.A.’s
board of directors if it has more than a 2% market share, thus
preventing Hojiblanca SCA (Deoleo S.A.’s competitor) from accessing
sensitive commercial information on the acquired business.
The second commitment establishes that Hojiblanca’s two
representatives on Deoleo S.A.’s board of directors will not have access
to sensitive information on the wholesale market, and Deoleo S.A. will
not be able to request information from Hojiblanca about this market.
The third and fourth commitments relate to fulfilling and monitoring
compliance with the first two commitments. The third commitment
establishes a review clause for the first two commitments after three
years. The fourth requires that the secretary to Deoleo S.A.’s board of
directors sign a confidentiality agreement and that the parties
regularly submit information to the NCC.
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[1] Law 6/2011 of 28 December on tax and
administrative measures abolished the Competition Court of the
Autonomous Region of Madrid.
[2] Galp Disa Aviacion S.A. has a 30% shareholding
and Shell has 10%.
[3] Shell has a 50% shareholding.
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1.
SPANISH CONGRESS ADOPTS BILL TO CREATE NATIONAL MARKETS AND COMPETITION
COMMISSION