Competition Court Rules Against Positive Administrative Silence
Written by Edurne Navarro y Sergio Baches. Published in International Law OfficeOctober 1, 2004
In May and June 2004 the Competition Court refused to grant three individual exemptions on the basis of positive administrative silence (ie, Intellectual Property Framework, GLP Commercialization and Cinesa-Warner).
The Spanish Administrative Procedure Act provides that public bodies must issue rulings within the timeframes established by corresponding legislation. The previous legislation, the Individual Exemption Procedure Decree (157/1992), did not expressly provide a term within which the Competition Court must rule on applications for individual exemptions. The Spanish Procedure Act provides that where procedural regulations do not provide a term, the term within which the public body must issue its rulings in procedures initiated at the request of an interested party is three months.
However, the new Individual Exemption Procedure Decree (378/2003) provides a term of six months for ruling on applications for individual exemptions.
Under the Spanish Administrative Procedure Act, where a deadline expires before a ruling is issued, the application is automatically granted, unless the applicable Spanish or European regulations provide otherwise. Therefore, administrative silence (ie, failure to issue a ruling within the fixed term) is interpreted as a positive ruling.
However, in the three recent cases the Competition Court held that the applications for individual exemption had not been approved by positive administrative silence on the following unusual grounds: (i) pursuant to a very strict interpretation of certain articles of the Competition Act, the court argued that the act does not provide a deadline for issuing an express ruling on such applications; and (ii) the Administrative Procedure Act establishes an exception to the application of the positive administrative silence 'in proceedings...where the consequence is the transfer of rights related to the public domain or public services' - the court argued that the prerogative of the antitrust authorities to grant individual exemptions belongs in the public domain and therefore an individual exemption granted by positive administrative silence would imply a transfer to the applicants of public prerogatives.
Therefore, the court held that the three notified agreements had not been exempted by positive administrative silence.
The three procedures began when the former Individual Exemption Procedure Decree was still in force. However, the wording of these decisions indicates that the court's refusal to acknowledge positive administrative silence in individual exemption procedures also applies to applications regulated by the new decree.