June 2016
COMPETITION LAW
CNMC SANCTIONS FOR THE FIRST TIME SEVERAL INDIVIDUALS FOR THEIR INVOLVEMENT IN A COMPETITION INFRINGEMENT
In a recent decision, the CNMC has sanctioned for the first time individuals for their involvement in an anticompetitive agreement.
The Spanish Competition Act entitles the CNMC to impose sanctions up to 60,000 euro on legal representatives or directors of companies liable for competition infringements provided that they have participated in the restrictive conduct. However, since the adoption of this Act, the CNMC had not made use of this faculty.
The CNMC considered the following elements in order to determine the individual liability of each of the directors: (i) they were authorized to take decisions on behalf of the company they represented; (ii) they exercised real control and organization powers in their respective companies; (iii) they were allocated functions of particular responsibility that they carried out autonomously; (iv) they had a direct involvement in the infringement conduct.
It is expected that the CNMC will use more often this faculty in the future, as announced by its President.
NATIONAL COURT CONFIRMS ABUSE OF DOMINANT POSITION OF A COMPANY IN THE POSTAL SECTOR
The National Court restated the criteria for finding an abuse of dominant position: (i) the existence of a dominant position that allows a company to act independently of its competitors, clients and consumers; (ii) abusive conduct, understood objectively regardless of the intention of the party; (iii) no justification for the abusive conduct; and (iv) the effect of impeding access to the market of a competitor.
In this case, the National Court held that access to the public postal network is essential for the provision of administrative notification services, given the unique and economically unsustainable character of the network. Given the essential nature of the system, the refusal of the owner to continue to provide wholesale services in order to access the public postal network for administrative notification services, amounted to an abuse of a dominant position.
The dominant position in the wholesale market entails the obligation to make an offer to the private operators to access the network (to be paid at cost price and without losses).
NATIONAL MARKETS AND COMPETITION COMMISSION (“CNMC”) IMPOSES A FINE FOR BREACH OF COMMITMENTS ADOPTED IN A MERGER
The CNMC imposed a fine for failure to comply with the commitments to which a merger control clearance was subject. It is the second fine imposed by the CNMC on the same company for failing to comply with its commitments.
This decision is another example of the CNMC’s monitoring of compliance with the commitments assumed by companies within the framework of merger control cases.
As regards the amount of the fine, the CNMC’s board applied the new case law from the Supreme Court and held 10% of the total turnover of the offender to be the maximum limit on the penalty scale.
The CNMC took into account the duration of the infringement and the reoccurrence of the offence when considering the amount of the fine, as well as the fact that the fined company adopted measures during the investigation to put an end to the infringement as mitigating circumstance of the fine.
MADRID REGIONAL COURT DECLARES PRICE FIXING SYSTEM OF PHARMACEUTICAL COMPANIES COMPLIANT WITH COMPETITION RULES
The Madrid Regional Court held that the agreements entered into by pharmaceutical laboratories with drug distributors, according to which prices vary depending on their destination (national or abroad) cannot be automatically considered as the application of a dual pricing policy contrary to competition rules.
The Judgement reaffirmed the freedom of laboratories to set prices for their products. It also restated that the issues analysed affect an intervened market in which, under certain circumstances, the freedom of laboratories to set their prices is legally restricted for public interest reasons. The laboratory is considered free to set the price of the products it produces, without it being considered as establishing a dual pricing policy. The Judgement also stated that the legal obligations imposed upon the pharmaceutical laboratories to ensure the supply of pharmaceutical products could justify the adoption of measures in order to streamline the supply.
CNMC FINES A COMPANY FOR GUN JUMPING
The CNMC fined a company active in the telecommunication sector for executing a merger transaction without obtaining the required authorisation. In this case, the obligation to notify arose from the market share threshold being exceeded. The fined company argued that there were doubts regarding which was the relevant market, but this argument was not accepted by the CNMC.
In gun jumping cases, the maximum fine that can be imposed is 5% of the turnover of the company that acquires control. However, the CNMC imposed a fine of approximately EUR 40,000, equivalent to 0.05% of the fined company’s turnover. To calculate the amount of the fine, the CNMC took into consideration the following factors: (i) short duration of the infringement (less than six months); (ii) lack of negative effects on the market derived from the absence of notification, since the transaction did not raise any substantive competition concern; and (iii) the fact that the fined company informed the CNMC of the existence of the merger and voluntarily notified it.
This decision confirms the strict position of the CNMC in relation to compliance with the obligation to notify in merger cases.
CNMC FINES INTELLECTUAL PROPERTY RIGHTS COLLECTIVE MANAGEMENT ENTITIES FOR APPLYING UNFAIR TARIFFS
The CNMC declared that the authorised intellectual property rights collective management entities in Spain hold a dominant position. It fined three intellectual property rights collective management entities for abuse of dominant position that consisted of applying unfair and discriminatory tariffs to users.
SUPREME COURT DECLARES CNMC’S REQUESTS FOR INFORMATION SUBJECT TO JUDICIAL CONTROL
The Supreme Court restated that requests for information from competition authorities in the framework of sanctioning or monitoring proceedings can be challenged, even if they are prior acts, if they are likely to cause irreparable harm. This issue is particularly relevant where requests for information are issued in the execution of commitments to authorise a merger, since in such cases there are no subsequent administrative proceedings to question the possible excesses by the authority. Consequently, it is necessary to monitor these requests for information.
NATIONAL COURT ANNULS FINE IMPOSED ON COMPANY BY COMPETITION AUTHORITY AS DECISION TO IMPOSE FINE WAS BASED ON EVIDENCE OBTAINED IN ILLEGAL DAWN RAID
The National Court annulled the fine imposed on a company for its alleged participation in a restrictive agreement because the decision to impose the fine was based on documents obtained in a CNMC dawn raid declared illegal by the Supreme Court. As a result, the documents obtained in that dawn raid could not be used as evidence of the infringement.
The National Court took the view that once the evidence obtained in the dawn raid had been removed from the file, the remaining evidence mentioned in the decision was not sufficient to prove the existence of an infringement. This conclusion was based on the fact that the decision did not distinguish between the evidence obtained illicitly and other evidence in the file. In this situation, the National Court declared that the principle of presumption of innocence must prevail.
NATIONAL COURT ANNULS FINE IMPOSED ON SEVERAL COMPANIES BECAUSE IT CONSIDERED THAT THE PROCEEDINGS were time-baRRed
The National Court declared void a decision of the CNMC to impose a fine based on a collusive agreement between companies that operate in the Port of Valencia, as it held that the decision was notified to the companies once the proceedings were time-barred. The National Court applied the Supreme Court’s case law and considered that the CNMC cannot suspend the proceedings once the maximum initial 18-month time limit established in Article 36.1 of the Competition Law had elapsed.
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