At a glance: automotive industry disputes in Spain

Disputes

What competition and antitrust issues are specific to, or particularly relevant for, the automotive industry? Is follow-on litigation significant in competition cases?

EU Regulation No. 461/2010 on the application of article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector, as well as its accompanying supplementary guidelines, is also applied by competition authorities in Spain to cases decided under either EU or Spanish competition law.

The main recent investigation and sanctioning proceedings conducted by the National Commission on Markets and Competition (NCMC) in the Spanish automotive sector include the following.

• In July 2015, the NCMC imposed a record combined fine of €171 million on 21 car manufacturers and distributors and two consulting firms for an alleged cartel consisting of exchanges of commercially sensitive information relating to motor vehicle distribution and aftersales services. The sanctioned companies represented more than 91 per cent of the Spanish market for car distribution. The investigation by the NCMC was triggered by a leniency application filed by one of the automotive manufacturers in Spain.
• Between 2015 and 2016, the NCMC imposed fines totalling roughly €53 million on a significant number of car dealers of different OMS distribution networks in Spain – as well as some consultancy firms and trade associations for their role as cooperators – on grounds of their participation in several cartels, through which they fixed prices or other commercial conditions and exchanged commercially sensitive information.
• In June 2016, the NCMC imposed a fine of €638,770 on a Spanish car-wash equipment manufacturer (which also provides repair and maintenance services itself and via appointed third parties) for alleged anticompetitive conduct consisting of a refusal to supply spare parts and technical data to independent repairers.

As regards follow-on litigation, in recent years there has been a significant increase in private actions for damages suffered by victims of cartels in Spain (ie, civil law damage claims before the courts following administrative law sanctioning proceedings before the NCMC). It is expected that this trend will increase now that major developments regarding civil damage claims have been introduced into the Spanish legal system by Royal Decree-Law 9/2017. This regulation, which implements EU Directive 2014/104/EU on certain rules governing actions for damages for competition law infringements, aims to ensure that parties affected by cartels in Spain are effectively compensated by bringing specific private actions for damages. In that regard, given the recent activity of the NCMC and the European Commission against original equipment manufacturers, spare parts manufacturers and car dealers, the automotive sector is expected to be subject to increased damage litigation before Spanish courts in the near future.

What kind of disputes have been experienced in the automotive industry, and how are they usually resolved? Are there any quick solutions along the supply chain available?

While class actions and litigation around recalls or product safety are rare, dispute and claims proceedings do affect the Spanish automotive industry. A great percentage of these disputes are related to business restructuring (ie, where a car manufacturer ceases its relationships with certain dealers). In recent years, there have also been many insolvency related disputes. There are also manufacturers-dealers litigation regarding distribution agreements, termination thereof and claims for compensation.

More recently, since 2015 a number of players in the automotive industry have been involved in antitrust litigation proceedings. Arbitration is not very common in automotive-related litigation.

In general, the Spanish system provides claimants with the possibility of obtaining quick and provisional solutions through interim injunctions, which are especially useful in cases of supply chain disruptions.

What is the process for dealing with distressed suppliers in the automotive industry?

Distressed situations and insolvency proceedings are complex. The way the automotive industry should deal with suppliers facing such circumstances must be determined on a case-by-case basis, depending on the factual circumstances at hand, by seeking securities and guarantees to guarantee fulfilment of suppliers’ obligations – and by considering not only the legal implications but also the economic impact that the relationship with the automotive manufacturer may have on a supplier’s overall performance and business continuation.

One particularity of Spanish insolvency law is that the mere declaration of insolvency of a company is not a valid cause for termination of agreements entered into by that company. This means that a car manufacturer cannot terminate a supplier agreement only on grounds that the supplier has gone into insolvency; the contractual relationship will continue unless other reasons for termination appear such as a material breach of the supplier’s duties.

Are intellectual property disputes significant in the automotive industry? If so, how effectively is industrial intellectual property protected? Are intellectual property disputes easily resolved?

In relation to intellectual property disputes, one first needs to consider the following:

• Usually, first instance decisions are not publicly accessible in Spain (second instance decisions are). Moreover, courts provide aggregated data in their annual reports (number of IP claims filed per year but not per industry). Hence, given that not all cases move to the second instance – and that there is no unified database or docket – it is difficult to provide figures on cases handled by civil or criminal courts involving IP disputes in the automotive field.
• Commercial courts handle all IP claims in Spain on an exclusive basis in the first instance. The most common venues for IP litigation in Spain are the Barcelona and Madrid Commercial Courts, as well as the EU Trademark and Design Court located in Alicante.
• The Barcelona Commercial Courts have specialised in IP matters since January 2012. Courts 1, 4 and 5 handle all patent, utility models and design claims filed with the Barcelona courts on an exclusive basis; courts 2, 6, 8 and 9 handle all trademark and copyright claims; and courts 3, 7 and 10 deal with cases involving unfair competition, advertising and antitrust. There are six specialist IP commercial courts in Madrid (courts 6 to 11) that have heard all patents, trademarks and design cases filed before the Madrid courts since 2017. Valencia Commercial Courts have also specialised in IP matters since 2017. This guarantees consistency in judicial decisions and, therefore, predictability. Section 15 of the Court of Appeals of Barcelona, section 28 of the Court of Appeals of Madrid, section 9 of the Court of Appeals of Valencia and the EU Trademark and Design Appeal Court of Alicante (section 8), also specialising in IP, hear all appeals against the first-instance court decisions. More recently, since January 2019, the number of IP courts specialising in IP has been enlarged, including commercial courts located in Granada, Las Palmas de Gran Canaria, A Coruña and Bilbao.

With the above in mind, below are some figures (which should, therefore, be read with caution):

• From 2008 to 2021 there were at least 40 civil proceedings involving IP rights in the automotive field in Spain.
• The majority of those cases involved trademark and trade name claims (28). The remaining ones involved patents, designs or copyrights, sometimes joining unfair competition claims in the same proceedings.
• The most common type of infringement appears to be the use by workshops or car sellers of famous car brands.
• In the cases subject to review, the majority (21 out of 28) of the trademark infringement claims were admitted. All of the design infringement claims and the majority of the unfair competition claims were also upheld. In the majority of patent cases, however, the courts either dismissed the claims or declared the patent to be invalid.

Overall, this data shows that, in comparison with other industries (for instance, the pharmaceutical industry), the number of disputes in the automotive sector does not appear to be very significant in Spain. However, we would be reluctant to reach such a conclusion given that the figures provided above may not reflect reality. Moreover, Spanish courts – particularly, the Barcelona Commercial Courts and, of course, the EU Trademark and Design Court – have developed expertise in the field of IP law over a number of years and are rather sensitive towards the protection of IP rights. In our recent experience, these courts would decide upon ex parte preliminary injunctions within 24 to 48 hours. Preliminary injunctions proceedings with a hearing may take 12 to 16 weeks. A judgment in the first instance may be issued within 18 to 24 months from filing – including infringement and invalidity claims. Finally, given the lack of technical background of Spanish courts, expert evidence in patent cases is key – as courts will rely substantially on it – and parties will usually file more than one expert opinion to support their positions.