Legal framework

Antitrust law

What are the legal sources that set out the antitrust law applicable to vertical restraints?

The legal sources that set out the law applicable to vertical restraints in Spain are Law 15/2007 of 3 July 2007 for Defence of Competition Act (LDC), Royal Decree 261/2008 of 22 February 2008, approving the Defence of Competition Regulation (RDC), and Law 3/2013 of 4 June 2013, creating the National Markets and Competition Commission (Law 3/2013).

Types of vertical restraint

List and describe the types of vertical restraints that are subject to antitrust law. Is the concept of vertical restraint defined in the antitrust law?

Spanish law does not define the concept of vertical restraints. Nonetheless, the following are the types of vertical restraints as accepted by the administrative practice of competition authorities and case law of the courts:

  • resale price maintenance: agreements or concerted practices having as their direct or indirect object the establishment of a fixed minimum resale price or a fixed minimum price level to be observed by the buyer;
  • exclusive supply: where the supplier is required to exclusively or mainly distribute the products to only one purchaser;
  • networks of exclusive agreements causing foreclosure in the market downstream;
  • exclusive customer allocation: the supplier agrees to sell its products to only one distributor for resale to a particular group of customers;
  • selective distribution: distribution systems based on qualitative criteria;
  • single branding: agreements that have as their main element that the buyer is obliged or induced to exclusively or mainly sell products from a single brand;
  • tying arrangements: situations where customers that purchase one product are also required to purchase another distinct product from the same supplier or from someone designated by the latter;
  • category management: agreements whereby a distributor entrusts the supplier with the marketing of a category of products, including in general not only the supplier’s products, but also the products of its competitors; and
  • franchising: agreements containing licences of intellectual property rights related in particular to trademarks or signs and know-how for the use and distribution of goods or services.
Legal objective

Is the only objective pursued by the law on vertical restraints economic, or does it also seek to promote or protect other interests?

The objective of Spanish competition law is the effective protection and promotion of competition.

Responsible authorities

Which authority is responsible for enforcing prohibitions on anticompetitive vertical restraints? Where there are multiple responsible authorities, how are cases allocated? Do governments or ministers have a role?

The functions of the National Markets and Competition Commission (CNMC) are to guarantee, preserve and promote the correct functioning, transparency and existence of effective competition. For the purposes of the foregoing, the CNMC shall exercise its functions throughout the Spanish territory and in relation to all markets and economic sectors, including enforcement of the law on vertical restraints.

According to Law 1/2002 of 21 February 2002 on coordination of the jurisdictions of the State and the Autonomous Communities in the field of defence of competition, regional competition authorities will be responsible for exercising their powers in their territory when a business conduct alters or may alter free competition within the scope of the respective region. The exercise of their functions is restricted to conducts having an impact in the region where the relevant regional authority acts. The CNMC maintains a close collaboration with the regional competition authorities, with the objective of improving the application of antitrust regulation through the reciprocal exchange of information.

Jurisdiction

What is the test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? Has the law in your jurisdiction regarding vertical restraints been applied extraterritorially? Has it been applied in a pure internet context and if so, what factors were deemed relevant when considering jurisdiction?

Vertical restraints will be subject to antitrust law in Spain if they have effect in all or parts of the Spanish territory.

As a general rule, Spanish competition authorities do not apply the law extraterritorially. This could in theory happen, however, if a given conduct not performed in Spain has effects in Spain.

At a national level, there is some reported activity in the context of internet sales.

Agreements concluded by public entities

To what extent does antitrust law apply to vertical restraints in agreements concluded by public entities?

Competition law applies to conduct with an impact in the market, including the conduct of state-owned or public entities. In the decision of 6 October 2011 (case S/0167/09, Productores de Uva y Vinos de Jerez) the CNMC expressly declared, for the first time, that public entities can breach competition law when they facilitate an agreement or a conduct contrary to competition law.

Also, the regional authorities have occasionally prosecuted public entities. The Catalan Authority adopted the decision of 24 November 2014 (case 40/2011, Servicios funerarios del Llobregat) where it fined the City Council of L’Hospitalet de Llobregat for the conclusion of agreements consisting of reserving the transfer of corpses from hospitals to a specific funeral services company. Therefore, antitrust law also applies as a general principle to vertical restraints concluded by public entities.

Sector-specific rules

Do particular laws or regulations apply to the assessment of vertical restraints in specific sectors of industry (motor cars, insurance, etc)? Please identify the rules and the sectors they cover.

Generally, the LDC establishes that conduct that fulfils the requirements of the EU block exemption regulations is also exempted under the LDC.

Royal Decree-law 4/2013, of 22 February, of support measures to entrepreneurs and to promote growth and employment, includes a number of measures to promote competition. In particular, it establishes a maximum duration of one year (annually extendable for a maximum of three years) for contracts between petrol companies and service stations. Moreover, petrol companies can no longer recommend resale prices in the supply agreements with service stations; and petrol companies with a market share above 30 per cent cannot sign new exclusive supply agreements in those regions where the 30 per cent market share is exceeded.

General exceptions

Are there any general exceptions from antitrust law for certain types of agreement containing vertical restraints? If so, please describe.

There are two types of exceptions, which do not appreciably restrict competition:

  • if the aggregate market share held by (competing) parties to an agreement does not exceed 10 per cent of any of the relevant markets affected by the agreement; or
  • if the market share held by (non-competing) parties to an agreement does not exceed 15 per cent on any of the relevant markets affected by the agreement.

 

The second threshold would be the de minimis threshold applicable to vertical restraints.

When competition is restricted by the cumulative effect of parallel agreements, these market share limits are lowered to 5 per cent. A cumulative effect will not be found to exist if less than 30 per cent of the relevant market is covered by parallel networks of agreements.

Vertical restraints are not exempted under the above rules if they have as their object certain ‘hard-core’ restrictions similar to those listed in the Commission Notice on agreements of minor importance that do not appreciably restrict competition under article 81(1) of the Treaty establishing the European Community (2001/C 368/07).

In any event, the following agreements (to the extent that they contain a vertical or other restraint) are not considered to be of minor importance, regardless of the market size covered by the agreement:

  • agreements including holders or beneficiaries of exclusive rights; and
  • agreements involving companies present in relevant markets in which more than 50 per cent of the market is covered by parallel networks of vertical agreements having similar effects.

 

Finally, the CNMC may declare that article 1.1 LDC is not applicable to agreements that, although not meeting the above criteria for being considered de minimis, are not of sufficient importance to significantly restrict competition in light of their economic and legal context.