New Spanish Antitrust Law
Summer 2007 International Antitrust Bulletin
On July 3, 2007 the Spanish Parliament adopted the long-awaited new antitrust law (the “New Law”) which come into force on September 1, 2007. This law has been adopted after decades of experience in enforcing EU and national antitrust rules in Spain and is generally perceived by commentators as a valuable instrument to guarantee effective competition in the markets by reinforcing the mechanisms already existing and rendering more consistent the Spanish system with the EU legislation.
The New Law creates new bodies for the application and enforcement of antitrust rules. It grants jurisdiction to Spanish courts for the application of these rules and introduces a system of legal exemption for agreements and concerted practices, thus mirroring the EU system. Other innovations are the setting up of a leniency system and the limitation of powers of the Government in merger control proceedings.
The New Enforcement Bodies
The New Law has created a unified new body, the Comisión Nacional de la Competencia (“CNC”), in contrast with the previous system where enforcement tasks were divided between two different institutions (the Servicio de Defensa de la Competencia, in charge of the enquiry system, and the Tribunal de Defensa de la Competencia, with decision-making powers).
The CNC is the authority primarily responsible for enforcing Spanish and EU competition law. It is also entrusted with duties such as the cooperation with the European Commission and the national competition authorities of other Member States. It will also have the power to appear as amicus curiae before Spanish courts in antitrust proceedings.
The CNC’s main bodies will be the Council and the Investigations Directorate. The members of the Council and its President will be appointed for a non-renewable six-year term by the Government.
The Council will take the final decisions in proceedings for restrictive agreements and abuses of dominant position. As for merger control, the Council will be competent to take the final decision in most second phase cases, and the Government will see its competences restricted to exceptional cases (while in the former regime it was the only one responsible to adopt second phase decisions) in which it may intervene to amend a Council’s decision.
The CNC has increased powers also in relation to surveillance of competition in relation to the activities of the Government. This, it is empowered to challenge before the Courts any orders or actions by the public administrations which might be contrary to the maintenance of an effective competition in the markets.
The transparency and accountability of the competition authority is also increased by the duty to render public all its decisions and the obligation to submit regularly to the Parliament and to the Minister of the Treasury reports on its activities. Moreover, the President will appear regularly before the Parliament to explain the CNC activities, objectives and priorities.
Another relevant feature of the new system is that Commercial courts will also have jurisdiction to apply the provisions concerning restrictive agreements and abuses of dominance, in line with the EU regulations. Accordingly, said Courts may declare null and void agreements infringing national or EU provisions and grant compensation for damages.
The CNC and regional competition authorities will also be empowered to act as amicus curiae in judicial proceedings concerning the application of Spanish provisions on restrictive agreements or abuses of dominance. The Courts will also have the possibility to stay proceedings when a case is pending before the CNC to await its decision.
The New Law maintains both a turnover and a market share threshold. The turnover threshold remains virtually unchanged (combined turnover in Spain of all the undertakings concerned of € 240 million and an individual turnover in Spain of at least two of the undertakings concerned of € 60 million) whereas the market share threshold has been increased from 25% to 30%. The obligation to notify is extended also to cooperative joint ventures, which were previously excluded and analysed exclusively under the restrictive practices perspective.
The obligation to suspend the completion of a merger until clearance is obtained remains the general rule. However, derogation from this obligation may be requested at any time of the proceedings. Also, the standstill obligation will not apply to public take over bids, provided that the acquisition of the voting rights inherent to the shares concerned are not exercised or, upon the granting of a derogation by the securities regulator, are only exercised for purely conservative purposes. The deadline for the filing of national take-over bids remains 5 days after the bid is submitted to the Spanish securities regulator.
The New Law provides for the possibility to submit in certain cases a simplified notification form. Mergers qualifying for the simplified form will also benefit from a reduced filing fee.
The procedure in Phase I does not suffer any substantial alterations. In this phase, the Council may basically decide to authorise the concentration with or without commitments offered by the notifying parties or to initiate a Phase II procedure if it considers that the merger may hinder the maintenance of an effective competition. The deadline in Phase I remains one month. As in the previous system, the transaction is deemed to have been approved in case no formal decision is rendered by the CNC at the end of the one-month period.
The Council may take the following decisions in Phase II: (i) authorise the concentration; (ii) authorise the concentration subject to conditions or commitments offered by the notifying parties; (iii) prohibit the concentration; or (iv) close the file. The Council must take its decision within two months from the opening of Phase II.
If the Council decides to authorise the merger without conditions, its decision will be final without the possibility for the Government to review it. On the contrary, if the concentration has been prohibited or authorised by the Council but subject to commitments or conditions, the Minister of Treasury may decide, within 15 days, to confirm such decision or to refer the file to the Government. The Government may then analyse the concentration on the basis of general interest grounds other than the defence of competition and may decide (i) to confirm the decision of the CNC; or (ii) to authorise the merger with or without conditions. The deadline for the Government to take a decision is one month. Consequently, mergers authorised without conditions by the CNC will not be subject to review by the Government. Moreover, the Government will not have the power to prohibit transactions which have been authorised with conditions by the CNC.
Finally, the New Law also introduces the possibility for the notifying parties to propose voluntarily commitments at any phase of the proceedings. The submission of commitments will extend the deadlines by 10 additional days in Phase I and 15 days in Phase II.
The New Law introduces, in relation to restrictive agreements, an individual assessment system, thus mirroring the EU rules in force. Consequently, the parties must not notify agreements, and formal decisions granting individual exemptions are abolished. The parties must instead assess individually, with the assistance of their legal counsel, if the agreement qualifies for a legal exemption. The criteria for the exemption are those provided at EU level. The New Law declares applicable the EU block exemption regulations to restrictive agreements which do not have an impact on intra-community trade, and are therefore to be assessed at national level.
The CNC will also have the possibility of adopting a declaration of inapplicability of the prohibition set by the Law in relation to a specific agreement (not to an abuse of dominance) where the public interest is to be protected.
De minimis restrictive agreements and abuses of dominance, that is, those having only a negligible effect on competition, shall not be caught by the prohibitions provided by the New Law.
As far as the procedure is concerned, the total maximum duration of infringement proceedings has been reduced from 24 to 18 months, with the possibility to suspend the deadline in certain circumstances. The expiration of the 18 months will cause the termination of the proceedings.
Particularly noteworthy is the introduction of a leniency programme, basically in line with the one in force at EU level. Applicants for leniency will benefit from immunity, in case (i) the applicant is the first to submit evidence which may enable the CNC to order an investigation; or (ii) the applicant is the first to submit evidence which may enable the CNC to establish an infringement.
Reductions of the fine will also be granted to applicants providing evidence which represents significant added value to the information already held by the CNC. The level of reduction of the amount of the fine available is 30-50% for the first undertaking providing such evidence; 20-30% for the second; and up to 20% for subsequent undertakings.
The New Law introduces as well a new classification of infringements according to their gravity. The amount of the fines may range from 1 to 10% of the total turnover realized by the undertaking concerned in the preceding business year. The specific amount of the fine will depend on the seriousness of the infringement.
In addition, fines for individuals (legal representatives of undertakings or members of the administrative bodies) having participated in the infringement is raised from € 30,000 to € 60,000. Finally, higher periodic penalties are foreseen (up to € 12,000 per day) for failure to comply with CNC’s decisions on mergers, restrictive practices or interim measures. However, no criminal sanctions are foreseen.