SUPREME COURT UPHOLDS COMPENSATION fOR damages due to infringement of competition RULES In the electricity sector
The Supreme Court has upheld the decision ordering an electricity distributor with a dominant position to compensate the damage caused to Centrica, an electricity marketer.
In 2009, the Spanish Competition Authority (“CNC”) initiated proceedings against five electricity distributors for alleged abuses of dominant position, consisting of the refusal to supply information to several marketers following the liberalisation of the electricity market. The proceedings originated from a complaint filed by Centrica with the Spanish Competition Authority.
Following the CNC’s declaration of the existence of an infringement, the marketer filed a claim requesting compensation for damages suffered due to the refusal to supply information and loss of earnings from customers it was unable to capture due to the lack of information. Centrica’s claim was upheld in first instance and on appeal; the electricity distributor was ordered to pay compensation. The Supreme Court upheld the decision as to the amount of compensation awarded.
To date, this judgment is one of the few examples of private enforcement of competition law applied in Spain. Court rulings favourable to this type of claim, together with the future transposition of the EU Directive on Antitrust Damages Actions are intended to make it easier to obtain compensation, possibly indicating future increases in these types of claims.
National court REDUCES SANCTION IMPOSED ON ASSOCIATION OF UNDERTAKINGS BY 50% FOR WILLINGNESS TO END THE INFRINGEMENT
On 28 May 2014, the National Court partially accepted the appeal of an association of undertakings, STANPA, which had been sanctioned by the Spanish Competition Authority (“CNC”) for its participation in exchanges of commercially sensitive information in the cosmetics sector.
The Court held that the sanction imposed by the CNC, which was the legal maximum allowed, was disproportionate. The Court stated that when the CNC determined the amount of the sanction, it failed to take into account that, prior to the initiation of the infringement proceedings, the appellant had carried out an internal audit of the information exchanges and these were suspended as a precautionary measure. The results of this internal audit were presented to the association’s governing bodies and were relevant when analysing whether to put an end to the infringement. For this reason, the Court held that the sanction imposed should be reduced by 50 per cent.
NATIONAL COURT ANNULS SANCTIONS IMPOSED BY THE SPANISH COMPETITION AUTHORITY ON UNDERTAKINGS THAT PARTICIPATED IN THE CREATION OF A JOINT VENTURE FOR EXPORT OF PAPER ENVELOPES
The National Court has issued judgments annulling a decision of the Spanish Competition Authority (“CNC”) imposing sanctions on several companies for participating in an alleged cartel in the paper envelope market. The parties established a joint venture to export the shareholders’ production to markets in the Middle East. The Court considered that the creation of the joint venture did not constitute a restrictive practice under competition law and therefore annulled the sanctions imposed.
In 1980, Spanish manufacturers of paper envelopes signed an agreement to create a joint venture, Hispapel, a company which was created to export their products to the Middle East. The undertaking acted as a mere sales agent for its shareholders. The CNC considered that, as the joint venture was allocating purchase orders between its shareholders and was in charge of price fixing, both the creation of Hispapel and the agreements adopted by its Executive Committee formed part of a single, continued infringement classified as a cartel.
The Court reiterated the need to analise the objective necessity for manufacturers of paper envelopes to establish the central sales system in order to export their products to the Middle East and whether they would be able to enter the market individually. The Court held that the central sales system was the only mechanism available for manufacturers to gain access to the specific markets and, therefore, the objective of restricting competition was not clear. The Court ruled that the agreements on prices and quotas for each manufacturer, as well as the other commercial conditions of Hispapel operations, were ancillary and necessary to ensure the proper operation of the entity. On that basis, they were not considered restrictive of competition.
The Court also held that the agreement had no restrictive effects, given Hispapel’s limited market share in the corresponding markets. The agreement could have benefitted customers as it increased the supply of paper envelopes in the Middle East.
SPANISH COMPETITION AUTHORITY AND GENERAL MOTORS AGREE ON COMMITMENTS CONCERNING SPECIFIC CLAUSES OF CONCESSION AGREEMENTS AND CONTRACTS FOR AUTHORISED DEALERS IN THE OPEL NETWORK
The Spanish Competition Authority (“CNMC”) and General Motors España, S.L.U. (“GME”) have agreed on commitments in relation to certain clauses included in contracts between GME and its authorised dealers. The clauses consisted of minimum purchase quantities of spare parts. The clauses will be applied to those original Opel spare parts in respect of which GME’s market share is limited.
The case concerns several clauses that GME had set out in the contracts with its authorized dealers. These had not been implemented, however. Under the clauses, GME reserved the option to impose a minimum purchase obligation for original Opel spare parts on members of its network. The execution of these clauses was subject to further implementation in full respect of competition law.
Although GME had never implemented any of the clauses, the CNMC considered that they could create uncertainty for authorized dealers and authorized repairers regarding the acquisition of original spare parts used to repair Opel vehicles.
The CNMC accepted the commitments suggested by GME. These consisted of restricting the application of the minimum purchase obligation to spare parts in respect of which GME’s estimated share did not exceed 30%. Spare parts in respect of which third party competition was not particularly strong fell outside the scope of the commitments and GME remained free to impose obligations.
SPANISH COMPETITION AUTHORITY IMPOSES SANCTION ON SPANISH OPERATOR FOR “GUN JUMPING”
The Spanish Competition Authority (“CNMC”) has imposed a sanction of EUR 5,065 on a company in the ophthalmic sector for acquiring sole control over an entity in which it already held a significant stake and which was engaged in the manufacture of photochromic lenses. The company failed to obtain clearance from the CNMC prior to the acquisition.
ESSILOR INTERNATIONAL (COMPAGNIE GENERALE D'OPTIQUE) S.A. (“ESSILOR”) acquired sole control over POLYCORE OPTICAL (PTE) LTD without notifying the CNMC. ESSILOR subsequently reported the transaction and indicated that it might be subject to the CNMC’s control since, depending on the market definition adopted, the operation could potentially exceed the market share thresholds established in the Spanish Competition Law. ESSILOR stated that the lack of prior notice was due to an error in estimating the market share resulting from the transaction. After analysing the information provided, the CNMC concluded that the transaction reached the notification thresholds and sent ESSILOR an information request. The transaction was notified and authorized in Phase I without commitments.
Once the transaction was authorized, the CNMC initiated proceedings against ESSILOR. The CNMC concluded that ESSILOR had violated the standstill obligation under Spanish Competition Law. However, the CNMC emphasized that ESSILOR had voluntarily acknowledged the existence of the transaction and that the reason why notification had not been made was an error in calculating the market share. The CNMC further emphasized that ESSILOR had reported two transactions in the past “with the greatest care.” In view thereof, a reduced sanction was imposed (equivalent to 0.0001% of ESSILOR’s worldwide turnover).
SPANISH COMPETITION AUTHORITY IMPOSES SANCTION FOR NON-COMPLIANCE WITH OBLIGATIONS IMPOSED UNDER A PREVIOUS RESOLUTION
The Spanish Competition Authority (“CNMC”) has sanctioned Canary Brewing Company (“CERCASA”) for failure to comply with the obligations imposed under a previous resolution.
In 2007 the Competition Court (Tribunal de Defensa de la Competencia) found that CERCASA had infringed competition rules and imposed the removal from its distribution contracts of some clauses consisting of minimum purchase obligations.
The CNMC held that CERCASA continued to execute contracts including minimum purchase obligations and that it therefore failed to comply with the prior resolution. The CNMC classified the conduct as a serious offence and imposed a sanction of EUR 50,000.
NATIONAL COURT reduces sanctions imposed by THE spanish competition authority ON TWO undertakings in the asphalt sector
In June 2014 the National Court upheld the appeals of two companies sanctioned by the Spanish Competition Authority for participating in a cartel consisting of public bid rigging in the asphalt sector in the region of Cantabria, Spain. The Court held that the sanction imposed was disproportionate since it amounted to 10% of the undertakings’ turnover in the affected market in the year preceding the imposition of the sanction.
The Court stated that the maximum limit for sanctions imposed under competition law is 10% of an undertaking’s turnover in the affected market the year prior to the imposition of the sanction. Nevertheless, the percentage must be adapted to the gravity of the alleged conduct and the undertaking’s participation.
In this case, the Court held that imposing a maximum sanction was disproportionate, taking into account the limited participation of the undertakings in the infringement as well as the limited market size. Therefore, it reduced the fines to 5% and 8% of the appellants’ turnover, respectively.
SPANISH COMPETITION AUTHORITY SANCTIONS ASSOCIATION FOR ABUSE OF DOMINANCE
The Spanish Competition Authority (“CNMC”) has sanctioned the National Association of Breeders of Purebred Spanish Horses (Asociación Nacional de Criadores de Caballos de Pura Raza Española, the “ANCCE”) for an abuse of its dominant position regarding the management of the Stud Book of purebred Spanish horses and the determination of the rules of contests in adjacent markets where competition is open for the provision of services of technical secretariat and advertising purebred Spanish horses.
The ANCCE conducted several practices which, according to the CNMC, restricted competition in the two markets where the association is active; either by hindering access to new competitors or placing the association in a more favourable position than other competitors.
With respect to the amount of the sanction, the calculation of the basic amount is of particular interest as it only comprised the revenues of the ANCCE originated by advertising the purebred Spanish horses and membership fees. The turnover of the members of the association was not taken into account.