On 5 June 2013 the Official State Journal published Act 3/2013 on the creation of the Spanish Markets and Competition Commission (the "Act") which will create a body called the Comisión Nacional de los Mercados y la Competencia (the "CNMC" or Spanish Markets and Competition Commission). This new institution will take on all the duties related to ensuring the correct operation of the markets and sectors formerly supervised by the Spanish Competition Commission and several sector regulators (the Energy Commission, the Telecommunications Market Commission, the Railway Regulatory Committee, the Postal Commission, the Airport Financial Regulatory Commission and the State Audio-visual Media Commission).

The new authority will become operational in four months and will bring together the former antitrust authority and several sector regulators, with the declared aim of cutting costs and enhancing coordination and consistency in enforcement and decision- making. The change is one of several taking place currently in Europe as regards the structure and functions of competition and regulatory authorities, although the resulting model (one "super-regulator" formed in fact by two separate bodies, the antitrust authority on the one hand and the former sector regulatory authorities on the other) is almost unique.

  1. Institutional aspects

Introduction

The Act creates the CNMC with the aim of guaranteeing, preserving and fostering the correct operation, transparency and effective competition in all Spain's productive sectors and markets. The CNMC will be attached to the Ministry of the Economy and Competition – which has overall control over the CNMC's activities –, although enjoying complete institutional and functional independence in exercising its authority.

On passing through Spanish parliament, the bill on the creation of the CNMC suffered substantial changes from the standpoint of the institution's structure and its authority. All these aspects are studied below. However, it should be borne in mind from the outset that the Act does not change (or makes only minimal changes to) the substantive and procedural provisions affecting the different areas comprising its scope (the Competition Act 15/2007, of 3 July, The General Telecommunications Act 32/2003, of 3 November, The Electricity Act 54/1997, of 27 November, the Hydrocarbons Sector Act 34/1998, of 7 October, etc.).

Internal structure

The CNMC has a pyramid structure: at the top, the chairperson of the CNMC, the body's ultimate representative and director; below the chairperson, the CNMC Council, (a collective board that runs the institution operating either in plenary or in two separate chambers); there are then four directorates (the Competition Directorate, the Telecommunications and Audio-visual Sector Directorate, the Energy Directorate and the Transport and Postal Sector Directorate).

Although the final wording of the Act is somewhat unfortunate as regards the process for appointing the directors to head up of each one of the directorates1, it should nevertheless be understood that they will be proposed by the chairperson and then appointed by a plenary session of the CNMC Council. The persons holding those positions shall be chosen by public process according to the principles of equality, merit and capacity.

The CNMC Council is composed of ten members (including the chairperson). They will all be proposed by the Economy and Competition Minister and appointed by the Spanish Government for non-re-electable terms of six years. The CNMC Council will operate through a plenary and two chambers, depending on the issue being addressed. Plenary sessions will be understood to be validly assembled when attended by five members and the chairperson. The Council will also have two chambers – one will handle competition issues and will be presided by the chairperson of the CNMC; the other will handle regulatory supervision issues and will be chaired by the vice-chairperson of the CNMC. Resolutions at meetings of both the plenary and the chambers shall be adopted by simple majority; the person chairing the meeting will have the casting vote.

Finally, the chairperson sits at the top of the CNMC as its representative and senior director.

  1. Duties of the CNMC

The objectives of the CNMC

As well as the CNMC's sector-specific duties that are described in the following paragraphs, that body also acts a consultative body2 on issues related to ensuring effective competition and the proper operation of the markets and economic sectors.

Electronic communications market

The CNMC will supervise the correct functioning of the electronic communications markets. Its main role will include:

  • Defining and analysing the relevant markets to establish, as and when necessary, the specific obligations applicable to operators holding significant market power in accordance with the Spanish General Telecommunications Act 32/2003, of 3 November3.
  • Identifying the operator or operators that hold significant market power when, after analysing the relevant markets, it comes to light that their activities are not performed in an environment of effective competition.

Electricity and natural gas markets

The CNMC will perform a large part of the role formerly carried out by the Spanish Energy Commission. Its primary duty will be to supervise and control the correct operation of the electricity and natural gas markets. The CNMC's main role in connection with these markets will include:

  • Issuing circulars in relation to:
    • The electricity sector: (i) access tolls to the electricity networks in respect of transmission and distribution costs; (ii) access to cross-border infrastructure; and (iii) the rendering of services to balance the systems managed by different system operators in order to encourage the system's users to balance the energy they produce and consume.
    • The natural gas market: (i) tolls and levies payable for basic access to natural gas installations; (ii) the rendering of balancing services that offer suitable incentives for the system's users to balance the gas they take off and feed into the system; and (iii) access to cross-border infrastructure.
    • The development and enforcement of rules in the context of energy legislation.
  • Supervising (i) the obligations imposed on the players in the electricity and natural gas markets under prevailing legislation, as well as the relationships among them; (ii) the fulfilment by the players in the electricity and natural gas markets of their obligations; (iii) the proper operation of the energy system (network capacity, storage, the fulfilment of safety and reliability rules, etc.); (iv) functional and effective unbundling of activities in the energy sector; (v) competition, transparency and contractual freedom in those sectors; (vi) tariffs, prices and conditions of supply; (vii) the investment plans of the transmission system managers and the investments made by the different operators in the electricity system; and (viii) energy auctions.
  • Consumer protection (i) ensuring customer access to their consumption data; (ii) conducting electricity and gas supply price comparisons on the basis of offers made by traders; and (iii) adjusting prices offered to end consumers, according to the last resort tariff existing both in the natural gas and electricity markets.
  • Managing (i) the deficit generated from regulated activities and its financing mechanisms; (ii) guarantees as to the source of the electricity produced; (iii) standard models and their wording; and (iv) data exchange systems in regional markets.
  • Approving and issuing of (i) contracts between the owner of the installations and independent system operators; (ii) reports and proposals for authorisations to trade natural gas; and (iii) reports in relation to procedures to authorise, modify or close installations.
  • Processing applications for exemptions for third party access to gas infrastructures.

Postal market

The CNMC will perform a series of duties in relation to the postal market, in particular guaranteeing and controlling the universal postal service. As well as this basic premise, the CNMC will also have the following role in this sector:

  • Controlling the accounts of the postal service and managing the fund to finance the universal postal service and other public services.
  • Issuing circulars in relation to the postal sector and status reports on how the universal postal service is operating.
  • Supervising and monitoring the application of prevailing regulations to access the network, other infrastructures and postal services, as well as managing and controlling the use of the advertising census.

Audio-visual broadcasting market

The CNMC will supervise and control the audio-visual broadcasting sector, including:

  • Monitoring and supervising: the obligations related to broadcasting and audio-visual content (regarding both European works and events in the general public interest broadcast by a Spanish or international service provider); the rights of the public to which they are targeted (in particular safeguarding the rights of minors and the handicapped); the limits to exercising the right to audio-visual commercial broadcasting and the sale and purchase of exclusive rights to broadcast regular Spanish football competitions.
  • Monitoring the fulfilment of the public service entrusted to State-wide audio-visual broadcasting providers, as well as the suitable use of the public funds allocated for that purpose.
  • Protecting compliance with Spanish legislation, adopting any measures as may be necessary with regards to televised audio-visual broadcasting providers established in other European Union member States (to elude stricter Spanish regulations) and whose services are entirely or primarily targeted at Spanish territory.

Airport tariffs

In relation to airport tariffs, the CNMC's primary duty is to supervise compliance with the disclosure and consultation process conducted by the incumbent airport operator and to reject proposals for tariff modifications or tariff adjustments themselves when this process has not been followed. Proposals for tariff modifications or tariff adjustments must comply with the provisions of the Spanish Air Safety Act 21/2003, of 7 July.

Railway sector

The CNMC's main role in connection with this market will include:

  • Safeguarding competition in the services rendered over the General Interest Railway Network and the areas covered by railway services and access to the railway services market.
  • Supervising duties and tariffs, ensuring that they comply with the Spanish Railway Sector Act 39/2003, of 17 November.
  • In the context of international rail passenger services, determine the purpose and the economic balance of those services.
  • Notifying resolution proposals when requested to do so by the Spanish Development Ministry in the context of applications for authorisations to render railway transport services of public interest.

Dispute resolution

The CNMC will resolve any disputes arising in connection with the following:

  • In the electronic communications markets: any disputes in relation to the obligations contained in the Spanish General Telecommunications Act 32/2003, of 3 November, and its implementing regulations arising among operators or between operators and other entities that benefit from access and interconnection obligations.
  • In the electricity and gas markets: any disputes in relation to (i) contracts related to the access of third parties to the transmission and, as appropriate, the distribution systems, and (ii) the economic and technical management of the system and transmission, including connections between the different installations.
  • In relation to airport tariffs: appeals against the decisions of entities holding airport concessions related to changes to the system or the level of airport tariffs lodged by associations or organisations of companies that use the respective airports or by individual companies that use the airport.
  • In the postal market: at the request of an operator, the establishment of the conditions of access to the postal network if negotiations between the holders of individual licences and the incumbent operator do not result in the signing of a contract, and disputes (i) between the incumbent operator responsible for providing the universal postal service and other postal operators that provide services in the context of that universal postal service related to access to the postal network and other infrastructure and postal services; and (ii) between the postal operators not appointed to provide services in the context of the universal postal service.
  • In the audio-visual broadcasting market: the disputes that arise (i) among the different agents in the audio-visual broadcasting market in relation to matters over which the CNMC has authority; (ii) in relation to the assignment of radio or television channels; and (iii) in relation to access by the providers of audio-visual radio-phonic broadcasting services to stadiums and other sports venues.
  • In the railway sector: claims lodged by rail companies and bidders in relation to the conduct of the railway infrastructure operator, rail companies and other bidders in relation to (i) the granting and use of the safety certificate and compliance with the obligations imposed; (ii) the application of the criteria contained in network statements; (iii) processes to award capacity and the results of the same; (iv) the amount, structure or application of the duties or tariffs imposed; (v) any other discriminatory treatment in accessing the infrastructure or services linked to them arising out of actions performed by other rail companies or bidders; and (vi) the services provided over the international rail freight corridors.
  1. Powers relinquished to the Government

One of the Act's fundamental elements establishes the return of certain powers held by regulatory bodies, which have now been merged into the CNMC, to several Government ministries. In this regard:

The authority held by the Ministry of Industry, Energy and Tourism (the "IndustryMinistry") in audio-visual matters

The Industry Ministry will have authority in relation to the following areas:

  • Monitoring and logging the providers of audio-visual broadcasting and audio-visual radio-phonic services and their business;
  • Decisions as to issues or incidents that affect the holders of audio-visual broadcasting service authorisations; and
  • Monitoring compliance with the rules to ensure a competitive, transparent and plural market, in the context of restricting the acquisition of equity interests in audio-visual broadcasting service operators.

The authorities held by the Industry Ministry in relation to energy

The Industry Ministry will have the following responsibilities in relation to the energy sector:

  • Inspecting compliance with the legal, technical and economic conditions of the installations and the entities operating in the electricity sector;
  • Opening and pursuing disciplinary proceedings when they fall within the scope of its authority;
  • The settlement of the costs of the transmission and distribution of electricity, the permanent system costs and any other allocated costs, and sending to the CNMC the information necessary to devise tolling methodologies;
  • Information related to rights, legislation and dispute resolution, and receiving and responding to claims lodged by electricity consumers;
  • Providing information to the CNMC as to actions taken; and
  • Supervising the Office for Supplier Change.

The Industry Ministry will have the following responsibilities in relation to the hydrocarbons sector:

  • Inspecting compliance with the legal, technical and economic conditions of the installations and the entities operating in the gas sector;
  • Opening and pursuing disciplinary proceedings when they fall within the scope of its authority;
  • The settlement of revenues from tolls and duties for the use of the basic network and the secondary transmission and distribution networks;
  • The authorities attributed to the Spanish Energy Commission in relation to liquid hydrocarbons;
  • The issue and management of certificates regarding the consumption and sale of biofuels;
  • Information related to rights, legislation and dispute resolution, and receiving and responding to claims lodged by natural gas consumers;
  • Providing information to the CNMC as to actions taken; and
  • Supervising the Office for Supplier Change.

Finally, it should be noted that what was previously known as "Function 14" will be taken over by the Industry Ministry in both the electricity and hydrocarbons sectors. As such, the Industry Ministry must be notified within 15 days of: (i) the acquisition of shareholding interests in or by companies that perform regulated activities in the energy sectors, (ii) the acquisition of shareholding interests in or by companies that own strategic assets in the energy sector4, and (iii) the acquisition of strategic assets.

Furthermore, any changes that, in isolation or in aggregate, could also entail a substantial change in their shareholding interest must also be notified.

Finally, if the Industry Ministry believes that a real and sufficiently serious threat exists to the supply of electricity, gas and/or hydrocarbons, it may establish conditions and obligations to secure the supply.

Authority in relation to gambling held by the Directorate General for Gaming of the Ministry of the Exchequer and the Public Administrations

The Directorate General for Gaming of the Ministry of the Exchequer and the Public Administrations will hold the authorities previously held by the National Gaming Commission, attributed by Act 13/2011, of 27 May.

Authority held by the Development Ministry in relation to the postal sector

The Development Ministry will have authority in relation to the following areas:

  • Informing users as to their rights in relation to postal services;
  • Hearing disputes, complaints and claims between users and the operators of the universal postal service;
  • Inspections and sanctions;
  • Granting authorisations and managing the register of companies that provide postal services; and
  • Sending the National Consumers Institute a report including information related to consumer claims.

Authority held by the PresidencyMinistry in relation to the audio-visual sector

The Presidency Ministry will approve the catalogue of events that are of general public interest to society5, such as the Olympic Games, official matches played by the Spanish national football team, etc.

  1. Next milestones

According to the Act, the institutional implementation of the CNMC is due to be completed within four months of the Act entering into force. In the meantime, the following milestones will take place:

  • The Spanish Council of Ministers will approve the CNMC's Statute by royal decree within two months of the Act entering into force;
  • Appointment of the members of the Council;
  • Establishment of the CNMC;
  • Appointment of the executive officers;
  • Adoption of the CNMC's internal rules and regulations;
  • Integration of personal and material resources required for the operation of the CNMC.