In brief: abuse of dominance in Spain

Abuse of dominance

How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?

The Spanish Supreme Court has defined abuse in different resolutions (ie, 8 May 2003, Tandem Transportes and Ruta Sur) as an antisocial exercise of the exceptional economic freedom that a dominant position in the market grants.

Article 2 of the SCA contains a non-exhaustive list of abusive behaviour, including:

• the direct or indirect imposition of prices or other unfair trading or services conditions;
• the limitation of production, distribution or technical development to the unjustified prejudice of undertakings or consumers;
• the unjustified refusal to satisfy the demands of purchase of products or provision of services;
• the application, in trading or service relationships, of dissimilar conditions to equivalent transactions, thereby placing some competitors at a disadvantage compared with others; and
• the subordination of the conclusion of contracts to acceptance of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of these contracts.

Regarding the existence of per se infringements, the SCA and the Spanish courts have emphasised the role of effects in the application of article 2 of the SCA (see, for example, Judgment of the Supreme Court 516/2018, 23 March 2018).

Does the concept of abuse cover both exploitative and exclusionary practices?

The concept of abuse of dominance covers both exploitative and exclusionary practices. See above for the specific forms of abuse.

Abusive behaviour has traditionally been divided in Spain, as in other jurisdictions, according to the type of effect acts they are likely to produce. The classic debate arises over the ultimate goal of competition law in the matter of abuse, and whether it should be consumer protection, the process that involves effective competition or both.

Both types of abuse have been recognised by decision-making practice and jurisprudence.

What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?

An abuse can be found in the market where dominance exists as well as in related markets.

Related markets abuses require a connection between the dominant market and the market where the abuse takes place (see, for example, case 645/08 Hidrocantábrico/Centrica).

What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?

In addition to the legal exemptions of articles 4 and 5 of the SCA and the absence of any of the material requirements to which we refer in question 10, there are certain generic defences in Spain against the accusation of abusive behaviour:

• objective and reasonable justification of the conduct;
• compliance with a legal rule;
• recognised illegality of the company victim of abuse;
• sporadic nature of the practice;
• consent or request of the client; and
• indispensability or proportionality of behaviour.

It is perfectly possible to invoke, at any time and under any type of abuse, defences of objective necessity, the fact that conduct can be seen as a reasonable step by a dominant firm to protect its commercial interest or, more generally, efficiency enhancement effects of the conduct.

Specific forms of abuse

Rebate schemes

In general, there are no relevant differences between the approach followed by the European Commission and the NMCC with regard to specific forms of abuse. Therefore, the following questions will focus on the relevant case law for each of the specific forms of abuse.

Rebate schemes having actual or potential foreclosure effects similar to exclusive purchasing obligations may amount to an abuse of dominant position. In general, retroactive rebates are more likely to be considered as an abuse of dominant position than incremental rebates.

In case 648/08 Axion/Abertis, the NMCC found that Abertis had abused its dominant position by applying rebates linked to the hiring of broadcasting in all the geographical areas in which the national territory could be split, with a view to foreclosing the entry of new competitors in any of those areas.

Tying and bundling

Tying and bundling practices that may harm consumers by foreclosing the market for any of the products that are part of the tie or bundle may amount to an abuse of dominant position.

In case S/DC/0590/16 DAMA vs SGAE, the NMCC considered, among other things, the existence of an abuse of dominant position by requiring the joint sale, without itemisation, of authorisations for the public reproduction and broadcast of musical and audio-visual content. The joint sale as well as the price structure made it difficult to compare and contract with other operators in the granting of authorisations and remuneration of public reproduction and broadcasting rights in the catering sector.

Exclusive dealing

Exclusive dealing practices having actual or potential foreclosure effects by limiting competitors’ access to customers may amount to an abuse of dominant position.

In case S/DC/0567/15 Estudios de Mercado Industria Farmacéutica, the NCCM found that a clause allowing IMS to terminate its agreements with pharmaceuticals distributors if the distributors started to also work with IMS competitors, or a clause imposing on the distributors the obligation to offer to IMS the same commercial conditions as those granted to IMS competitors (most-favoured-nation clause), amounted to an abuse of dominant position. The NMCC’s view was that this clause reduced or eliminated the distributors’ incentives to enter into agreements with IMS competitors.

Predatory pricing

Predatory conducts where a dominant company deliberately incurs losses or foregoes profits in the short term with a view to foreclosing competitors to strengthen or maintain its market power, and thereby causing consumer harm, may amount to an abuse of dominant position.

In case 375/96 Tabacos de Canarias, the NMCC found that Tabacalera had abused its dominant position by selling some types of cigars at a price below its production and commercialisation costs.

Price or margin squeezes

Price or margin squeeze practices where a dominant company charges a wholesale price that prevents other companies from competing in the downstream market with the dominant company may amount to an abuse of dominant position.

In case S/DC/0557/15 Nokia, the NMCC found that Nokia had abused its dominant position by applying prices in the wholesale market for the provision of backup and supplies for the maintenance of GSM-R mobile telecommunications installations of Nokia equipment, which prevented other companies from competing in the retail market for the maintenance of such equipment.

In case S/0373/11 Correos 2, the NMCC found that Correos had abused its dominant position by applying wholesale prices to access its networks, which prevented other companies from competing in the postal services in wholesale segments. Subsequently, Correos challenged the decision before the National High Court, which reversed the NMCC’s decision. The Supreme Court upheld later on its judgment 163/2018 of 5 February 2018 (Appeal nº 2808/2015) the position adopted by the High National Court by confirming that the effects on the market had not been proved - not only because market operators had not been effectively expelled from the market, but also because such a possibility has not even been demonstrated.

Although there is still no resolution on the issue, in November 2019, the NMCC initiated disciplinary proceedings against Sociedad Estatal de Correos y Telégrafos, SA after finding reasonable grounds for a potential abuse of a dominant position consisting on the existence of high discounts to large customers, resulting in unit revenue well below their costs and prices paid by theses customers that do not respond exclusively to the cost savings they generate.

Refusals to deal and denied access to essential facilities

In general, any company is free to choose its trading partners. However, when the product or service is objectively necessary to be able to compete in a downstream market, a refusal to deal may amount to an abuse of dominant position where the refusal is likely to lead to the elimination of competition in the downstream market and thereby to consumer harm.

In the recent case SAMAD/01/2016 Cementerios de Leganés, the NMCC sanctioned Servicios Funerarios Funemadrid, SA with €50,000 derived from an abuse of its dominant position in the cemetery market in the town of Leganes, through refusing access on several occasions to certain associated companies specialising in the creation, installation, ornamentation and inscriptions of niches and headstones.

In case S/DC/0604/17 Mediapro Fútbol, the NMCC found that a refusal to grant access to the football sports channel to the OTT providers could qualify as an abuse of dominant position. The NMCC took into consideration the relevance of these channels in order to compete in the market for the provisions of pay-tv services.

In case 540/14 Istobal, the NMCC found that Istobal had abused its dominant position in the market for the provision of maintenance services of Istobal equipment by refusing to supply spare parts to independent service providers.

In case SAMAD/12/10 Tanatorios Coslada, the NMCC found that Memora, acting as the managing company of the tanatory of Coslada prohibited access to the facilities to entities that were not licensed as a funeral service company in the municipality of Coslada.

In cases 641 to 645/98 Centrica/Iberdrola, Centrica/Endesa, Centrica/UF, Centrica/Electra de Viesgo and Centrica Hidrocantábrico, the NMCC found that the distributors of electricity had abused their dominant position by refusing to grant access to certain information of their customers (addresses, consumption patterns, etc) to the suppliers. The NMCC took into account the relevance of such information to allow the suppliers to better compete in the markets for the supply of electricity.

Predatory product design or a failure to disclose new technology

Predatory product design is not a well-established category of abuse in Spain and the circumstances in which product design could be treated as anticompetitive are yet to be determined.

Price discrimination

Price discrimination practices where a dominant company applies dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, may amount to an abuse of dominant position.

In case S/DC/0511/14 Renfe Operadora, the NMCC found that Renfe Operadora had abused its dominant position by applying dissimilar conditions to the members of a certain trade association for the provision of rail traction services.

Price discrimination provisions also apply in the context of agreement between companies. However, the underlying economic reasoning does not differ from the provisions in the dominance context.

Exploitative prices or terms of supply

Unfair prices or other unfair trading or service conditions, directly or indirectly imposed, such as excessive prices, may amount to an abuse of dominant position.

In case S/0460/13 SGAE Conciertos, the NMCC found that the SGAE (a collective rights entity) had abused its dominant position in the market for the management of public communication rights of the intellectual property of the authors of musical plays exploited in musical concerts by charging the promoters fees far higher than those charged in other European countries.

In case 446/12 Endesa Distribución, the NMCC found that Endesa had abused its dominant position in the reserved electrical installations markets by overcharging for the carrying out of certain installations.

In case 626/07 Canarias de Explosivos, the NMCC found that the price increases imposed by the dominant company were abusive. The NMCC took into account the prevailing costs and prices in other competitive markets.

Abuse of administrative or government process

Abuse of administrative or government process is not a well-established category of abuse in Spain and the circumstances in which this conduct may amount to an abuse of dominant position are yet to be determined.

Mergers and acquisitions as exclusionary practices

See questions 5 and 6.

Other abuses

The list of categories of abuses contained in article 2 of the SCA is not a closed list. Therefore, there could be other categories of abuses.

In case S/DC/580/16 Criadores de Caballos, the NMCC found that the Spanish National Purebred Horse Breeders’ Association (ANCCE) had abused its dominant position in the market for the management of the genealogical book of ANCCE and the market for the regulation of its morphological contests by applying non-objective, discriminatory and arbitrary provisions in the Regulations of Morphological Contests. For instance, by requiring the implementation of the software developed by the ANCCE.

See the Supreme Court’s judgment 583/2018, Sala de lo Contencioso Sección 3ª, Appeal No. 3568/2015, 10 April 2018, related to the NMCC case S/0354/11 ORACLE 26 February 2013, respectively annulling its resolution and bringing the proceeding back to the NMCC, indicating the existence of a situation of abuse of dominant position in the field of systems management of relational databases.