EnforcementComplaints procedure for private parties
Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?
Any private third party (natural or legal person) may file a complaint against an allegedly unlawful vertical agreement before the Competition Directorate of the CNMC or before a regional competition authority (article 49 LDC). The complaint should include the contact details of the complainant, the facts triggering the unlawful conduct (and, as the case may be, evidence of the alleged unlawful conduct), together with the definition and structure of the relevant market. The complainant may only participate as an interested party in the formal investigation that may potentially follow if it is able to show a legitimate interest in the case. According to the CNMC’s Annual Report of 2017, of 11 antitrust proceedings initiated in 2017, five were initiated by a complaint.
Upon receipt of the complaint, the Competition Directorate may start a preliminary inquiry to assess if there are sufficient indicia or reasons to open antitrust proceedings. Once an investigation is formally initiated, the CNMC has 18 months to decide on the case. The procedure is divided into two phases (investigation and resolution), which take place before two different bodies of the CNMC: the investigation phase is led by the Competition Directorate (no later than 12 months), while the resolution is issued by the Council of the CNMC (no later than six months). In its decision, the Council of the CNMC may declare the existence of an infringement and impose fines.
The investigation may be closed without fines if the CNMC considers that there is not sufficient evidence of infringement or when the parties submit appropriate commitments. In practice, it is rare that the CNMC closes proceedings without fines or commitments once the proceedings have been formally initiated.
The decision of the Council amounts to final agency action and may be appealed only before the administrative courts.
There is no settlement procedure foreseen in the LDC. However, the Administrative Procedure Act (article 86 of Act No. 39/2015 on the Common Administrative Procedure for Public Administrations), which applies to antitrust matters in those areas of procedure not regulated by the LDC or its implementing regulations, foresees the possibility that public administrations can terminate punishing proceedings (such as antitrust proceedings) with a settlement decision.
This possibility has, to our knowledge, been used twice by a regional competition authority (Basque Country). In those rare cases, the regional authority terminated the antitrust investigations with a mixed decision agreeing on the amount of the fine with the parties (while the parties acknowledged the infringement), and including commitments consisting, basically, of a cease and not repeat obligation, along with an obligation to publish the decision (decisions of 30 December 2008, Case 03/2008, Asfaltos, and of 20 May 2009, Case 01/2009, HIRU).
There has been some informal talk at CNMC and expert levels about introducing a settlement procedure in the LDC. It is possible, therefore, that a settlement procedure will be inserted in the LDC in the future, although this is not likely to happen in the short term.Regulatory enforcement
How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?
According to the CNMC’s Annual Report of 2017, of nine sanctioning proceedings initiated because of infringements of article 1 LDC, in 2017, none dealt with vertical restraints.
What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?
Article 1.2 LDC provides that all agreements and practices contrary to article 1.1 LDC and non-exempted by articles 1.3, 4 or 5 LDC are null and void.
However, Spanish civil law allows that only the infringing provision be declared void, provided that the rest of the agreement may survive without that provision. This will depend on the facts of the case. The Supreme Court has declared that it is not possible to sever an infringing provision where the agreement itself provides that such provision is an essential element of the agreement, and where it is impossible in practice to make adjustments or modifications that would require the mutual agreement of the parties (see judgments of the Supreme Court of 30 June 2009 (Case 315/2004) and of 26 February 2009 (Case 109/2009)).
May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?
The CNMC may impose penalties for any infringement of the LDC without the permission of or confirmation by another entity or by a court.
Vertical restraints are categorised as a serious infringement of the LDC (article 62.3.a) LDC) that can result in a fine of up to 5 per cent of the turnover of the infringing party in the business year preceding the imposition of the fine (article 63.1.b) LDC). If the turnover cannot be determined, the infringing parties may be exposed to a fine ranging from €500,001 to €10 million (article 63.3.b) LDC). In addition, the CNMC may impose behavioural or structural remedies on the infringing party, although it has not thus far done so.
On the other hand, if the CNMC considers that the agreement would not produce negative effects on competition if it were modified, the CNMC could impose several commitments (ex officio or proposed by the parties) to the parties to the agreement and will monitor that parties comply with those commitments (monitory proceeding). The CNMC has used commitments decisions in the context of vertical relationships dealt with under article 102 TFEU and article 2 LDC (see discussion of the IMS Health case in question 21).
With regard to possible trends, in the past, the CNMC was inclined to fine the supplier only, leaving the buyer unharmed. This is because it was considered that, although both were parties to the vertical agreement, responsibility for the infringement fell on the party with the higher bargaining power, usually the supplier. Notwithstanding the above, in June 2007, the CNMC fined both the supplier and the buyer on the basis that both parties had obtained an unlawful benefit from the agreement and both parties has countervailing bargaining power (see decision of the CNMC of 21 June 2007, Case 612/06, Aceites 2). In 2010, the CNMC ruled that exclusive contracts for acquisition and resale of football broadcasting rights lasting for more than three seasons for Spanish league and cup matches are anticompetitive and fined four buyers (broadcasting operators), but none of the suppliers (football clubs). Two years later, the CNMC fined Suzuki and five of its authorised dealers in Spain for agreeing minimum resale prices for Suzuki motorbikes (ie, the CNMC again fined both the supplier and the buyer) (see the CNMC’s decision in Motocicletas).Investigative powers of the authority
What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?
Broadly speaking, the authorities responsible for enforcing the prohibition of vertical restraints are entitled to:
- conduct inspections at the undertaking’s premises (article 27.2 Law on the creation of the CNMC), which may involve:
- gaining access to any premise, facility or vehicle of the enterprises, and even the entrepreneur’s house;
- checking books, records and documents;
- requiring the production, examination, copying or even seizure of documents relevant to the investigation;
- retaining books, records or documents for a maximum of 10 days;
- sealing filing cabinets or rooms; and
- requiring explanations of relevant documents or practices;
- issue binding letters developing and executing laws, royal-decrees or ministerial orders; and
- address information requests.
To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?
The courts have the authority to declare the existence of an infringement of article 1.1 LDC, as well as to declare an agreement exempt from that prohibition pursuant to article 1.3, always within the boundaries of the petition addressed to the competent court.
In principle, only the parties to the vertical agreement are entitled to seek declaratory judgments or injunctions and bring damages claims (but, theoretically, third parties could seek damages if such parties can prove that they have suffered a loss as a result of the anticompetitive agreements, or even seek an erga omnes declaration of nullity of the agreement, even in the absence of damages). These forms of order must be sought from the commercial courts, except where the party is simply seeking damages from a previously declared infringement (follow-on actions), in which case, it must do so before the ordinary civil courts. Consumer associations have standing to sue in respect of their members, of the association itself and of the general interests of consumers.
The remedies available are those typical of any other civil claim, ranging from cease-and-desist orders to the award of damages.
Assuming that a private enforcement action goes through all the possible appeals up to the Supreme Court, a final judgment may be rendered after several years. For example, in the Sugar case (a follow-on damages claim for damages arising from a sugar cartel), the claim was filed in 2007 and, after several appeals, the Supreme Court decided on the case in 2012 (judgment of the Supreme Court of 8 June 2012, Case 2163/2009).
On 25 March 2013, the CNMC fined 15 paper companies for bid-rigging, customer-sharing and price-fixing. Several undertakings that had been harmed by the antitrust infringement sued some of the cartel members before the commercial courts of Madrid and Barcelona, seeking compensation for damages. Between March and September 2018, the commercial courts awarded damages in several of those claims. Those judgments are likely to be appealed.
As regards costs, the general rule is that the losing party pays the costs of litigation (which are not in practice the actual costs, but a reasoned measure of costs as moderated by the court with the possible input of the Bar Association).