On 10 December 2013, Law 20/2013 of 9 December on Guaranteeing Market Unity (“LGMU”) was published in the Official State Gazette of the same day (number 295): http://www.boe.es/boe/dias/2013/12/10/pdfs/BOE-A-2013-12888.pdf
All but three of the provisions of the LGMU (articles 20, 26 and paragraphs 2 and 3 of article 21) came into force the day after its publication. The other three provisions, which will enter into force in three months, are related to services not regulated in Law 17/2009 of 23 November on free access to service activities and their performance (“Law 17/2009”).
The LGMU reinforces the regulations on market unity in Spain and modifies Law 29/1998 on the Contentious-Administrative Jurisdiction (“LCAJ”) and Law 12/2012 on urgent measures to liberalise commerce and certain services.
This newsletter summarises the main changes brought about by the LGMU.
1. MARKET UNITY PRINCIPLES AND GUARANTEES
The purpose of the LGMU is to establish the necessary provisions to give effect to the principle of market unity in Spain. To this end, chapter II sets out a number of principles and guarantees (for instance, principles of non-discrimination, cooperation and trust, simplification of administrative burdens, etc.) that are essentially addressed to competent authorities.
Although the principles regulated in chapter II are not new to the Spanish legal system (most of them were introduced by Law 17/2009), the LGMU clarifies their scope and introduces measures to guarantee that they are followed.
Chapters IV and V of the LGMU also set out a number of guarantees and principles to ensure the freedom to perform economic activities throughout Spain. They include a list of actions taken by competent authorities that should be considered contrary to market unity because they limit the freedom of establishment (article 18).
Of particular note is article 20, which makes authorisations, communications and responsible declarations valid throughout all the Spanish territory if they are made before any competent authority and relate to performing an activity or placing a good, product or service on the market. This principle does not apply to authorisations and communications for a specific establishment, the occupation of a specific good of public domain or when the number of economic operators that can provide public services subject to regulatory tariffs in a specific area is limited.
2. THE COUNCIL FOR MARKET UNITY AND ITS SECRETARIAT
The LGMU establishes the Council for Market Unity to monitor the application of this regulation. The Council is chaired by the Minister for Finance and Public Administration and is composed of regional government ministers responsible for these matters, representatives of local authorities and the corresponding state secretaries and undersecretaries. The Council has a number of managerial functions that are directly related to monitoring and fostering the adaptation of other laws to the LGMU.
The Council is assisted by a technical Secretariat that will seek to guarantee and promote the permanent coordination and cooperation between the authorities in charge of applying the LGMU. The Secretariat’s powers range from drawing-up a list of good (and bad) practices affecting market unity to processing claims within the framework of a mechanism to protect economic operators, which is described in section 3.
3. ADMINISTRATIVE mecHANISM TO PROTECT ECONOMIC OPERATORS
Article 26 of the LGMU establishes a procedure to defend the rights and interests of economic operators against acts, provisions or steps of competent authorities that breach the freedoms of establishment and movement that the LGMU protects.
3.1. Challengeable acts
According to this provision, every step taken by competent authorities that could be reviewed under an ordinary administrative appeal may be challenged under article 26, regardless of whether or not the administrative remedies have been exhausted. Article 26 appeals can also be lodged against any action that can be appealed before the contentious-administrative jurisdiction.
Both economic operators that consider their rights and legitimate interests to have been violated and representative organisations of these operators may lodge appeals.
An appeal can be lodged within one month if it is against an express act or provision. Appeals against a factual unlawful conduct (vía de hecho) must be lodged within 20 days from the start of the said conduct.
Once an appeal is lodged, the Secretariat will study it and determine if the actions being appealed are incompatible with market freedom or will directly declare the appeal as inadmissible.
Once the appeal has been admitted, the Secretariat must draw up a report within ten days and send it and the appeal to the competent authority. The authority must notify its resolution and the measures adopted in response to the appeal within 15 days from the date on which the appeal is lodged. If the authority does not issue a resolution within that period, the appeal will be considered to have been rejected by administrative silence.
3.5. Alternative nature and effects
The procedure set forth in article 26 is an alternative mechanism. Consequently, the economic operator could still lodge the ordinary administrative or judicial appeals against an act, provision or step.
If there are reasons to challenge an act, provision or step other than those relating to the breach of market freedom, these must be considered separately through the corresponding appeal. The term to lodge such an appeal starts from the date on which the competent authority declares the article 26 appeal as inadmissible or rejects it.
4. MODIFICATION OF THE LCAJ: THE NMCC’S STANDING TO APPEAL THE PROVISIONS AND ACTS OF COMPETENT AUTHORITIES THAT VIOLATE THE FREEDOM OF MARKET
When economic operators or the organisations that represent them consider that their rights and interests have not been satisfied, they may submit a request to the National Markets and Competition Commission (“NMCC”). In these cases, the NMCC will inform the economic operator in the term of five days as to whether or not the provision or act may be challenged through a contentious-administrative appeal. The term for the economic operators (or the organisations that represent them) to lodge the contentious-administrative appeal will be suspended until the NMCC communicates its decision on the question.
Therefore, the LGMU grants standing to the NMCC, on its own initiative or after a request from the economic operators, their representative organisations or the public in general (Fifth Additional Disposition), to lodge a contentious-administrative appeal against any general provision, act, inactivity or factual unlawful conduct considered contrary to the freedom of establishment or movement.
To regulate the procedure, paragraph three of the First Final Disposition adds a new Chapter IV to Title V of the LCAJ.
4.1. Subject-matter jurisdiction
Paragraph one of the First Final Disposition adds sub-article h) to article 11 of the LCAJ, assigning subject-matter jurisdiction to the Contentious-Administrative Chamber of the National Court (Audiencia Nacional) to hear these appeals.
4.2. Precautionary measures
The new article 127 quater of the LCAJ establishes that the NMCC, in its writ of submission of the contentious-administrative appeal, may request the suspension of the challenged act, provision or resolution, as well as any other precautionary measure to ensure the effectiveness of the judgment.
In that event, the precautionary measure will be granted automatically without the NMCC being required to provide financial guarantees. Nevertheless, after three months from the adoption of the precautionary measure, the appellee authority may request that the measure be lifted by evidencing that its continuation could generate serious negative consequences to the public interest or the interests of third parties.
In general, this procedure follows the proceedings established in the LCAJ, although it receives preferential treatment as the terms for procedural acts are reduced to half of the ordinary duration. Therefore, the term in which the NMCC must submit the lawsuit is ten days from receipt of the administrative file. The Chamber must issue a judgment within five days from the declaration of the conclusion of the procedural actuations.
Likewise, while the procedure remains underway, paragraph 7 of new article 127 ter of the LCAJ establishes that an operator that has a direct interest in the matter may request that it be joined to the proceedings as an appellant. Once joinder is accepted, procedural actuations that had already occurred remain unaffected, although the operator will be considered as a part of the procedure with full effects.
4.4. Effects of the judgment
The judgment ending the appeal must uphold it when the provision or act is a violation of the law on the freedom of establishment or movement, or an abuse of power.
A judgment upholding the appeal will imply the correction of the violating conduct and, most importantly, compensation for damages, including lost profits.
The LGMU also modifies article 110 of the LCAJ, establishing that, in matters of market unity, the effects of an unappealable judgment that recognises individual legal situations in favour of one or more persons may be extended to others.
Lastly, it should be pointed out that the LGMU modifies paragraph 1 of article 2 of Law 12/2012 to increase from 500m2 to 750 m2 the limit on the maximum surface area of retail and service businesses that do not require a licence to carry out their activities.