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What is the legal framework in your jurisdiction covering the behaviour of dominant firms?
In Spain, the competition provisions related to dominance are set out in article 2 of the Spanish Competition Act 15/2007 (SCA) as well as in Royal Decree 261/2008, (RDC). Article 102 of the Treaty on the Functioning of the European Union (TFEU) also applies in regard to dominance affecting competition in Spain where there is also an effect on trade between member states. Moreover, the Civil Procedure Act 7/2001 (CPA) is also relevant as it contains some provisions intended to favour claims for damages derived from infringements of competition law.
In addition, the Spanish National Markets and Competition Commission (NMCC) has published some helpful guidelines, for instance the guidelines on the termination of infringement proceedings by means of commitments on 28 September 2011. The NMCC has terminated several abuse of dominant position proceedings using these guidelines since then.
Article 2 of the SCA states that any abuse by one or more undertakings of their dominant position in all or part of the national market is prohibited. The abuse may, in particular, consist of:
- 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; or
- 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.
Articles 4 and 5 of the SCA exempt certain conducts from the prohibition of article 2. Article 4 states that the prohibitions of this kind shall not apply to any conduct that results from the application of an Act. Article 5 provides that the prohibition included in article 2 shall not apply to conducts, which, due to their minor importance, are not capable of significantly affecting competition.
Nothing prevents the concurrent application of articles 1 (agreements) and 2 of the SCA to the same conduct (ie, NMCC decision in case 0511/14 of 28 February 2017, Renfe Operadora).
Definition of dominance
How is dominance defined in the legislation and case law? What elements are taken into account when assessing dominance?
The law does not define dominance. Anything that is likely to impede or hinder effective competition in a relevant market may be a dominant conduct. On the other hand, the ability to hinder the maintenance of effective competition may not be the most accurate reference. It raises problems with situations where the degree of concentration in the market is large or increases but, despite this, the result is efficient or a larger number of competitors would not ensure more advantages for consumers.
Therefore, from an economic standpoint, it is more logical to establish, as the practice of the NMCC indicates, that for the existence of a dominant position to be proven, it may be sufficient to establish that the company has a significant degree of independence with respect to the reactions of competitors and customers. The requirements of the dominant position taken into account by our authority are the usual and there is no established order of importance: market shares (absolute and relative), stability and volatility of quotas, entry barriers, economic capacity of competitors, competitive advantages, degree of vertical integration and dominance in related markets, compensatory power of demand, sectorial regulation, etc. Maybe the best definition of dominance in Spain can be found in NMCC’s decision of 27 July 2000 Propiedad Intelectual Audiovisual.
The NMCC and the courts have accepted the existence of the collective dominance position in several resolutions (ie, Mobile Phone Calls of 6 March 2014 or Short Messages of 12 December 2012).
Purpose of legislation
Is the purpose of the legislation and the underlying dominance standard strictly economic, or does it protect other interests?
The basic aim of article 2 of the SCA is to set standards for the conduct of firms with a position of such economic strength that have a degree of immunity from the normal disciplining effects of the competitive market. It seeks to avoid the misuse of market power and to bring results that would occur if competition did exist.
As per article 102 of the TFEU, our SCA and courts go further, requiring dominant firms to refrain from certain conducts that would be lawful if carried out by non-dominant firms.
The objectives of Spanish legislation have never been articulated in any formal document although consumer welfare and efficiency are at the heart of article 2. However, other wider objectives have played an important role, for example promoting fairness for small and medium-sized companies, strengthening the liberalisation process of some relevant sectors or market integration.
Sector-specific dominance rules
Are there sector-specific dominance rules, distinct from the generally applicable dominance provisions?
There are sector-specific dominance rules. However, both the approach followed to determine dominance and the obligations imposed on the operators differ from the general dominance rules.
The NMCC is required to determine the dominant players in the energy industry on an annual basis. Dominant players are companies that have a market share above 10 per cent in any of the following segments:
- production and supply of electric power in the Iberian electricity market;
- fuel production and distribution;
- production and supply of liquefied petroleum gas; or
- production and supply of natural gas.
Such operators are subject to a number of limitations, for instance, their participation in the virtual capacity auctions can be limited.
In addition, the NMCC is also required to identify operators that have a significant market power in the electronic communications market. The NMCC may impose on these operators a wide range of obligations, such as access obligations.
Exemptions from the dominance rules
To whom do the dominance rules apply? Are any entities exempt?
As already covered in question 1, certain acts (not undertakings) are exempted from the prohibition of article 2. Article 2(3) expressly prohibits abusive behaviour committed by companies that have been granted a dominant position by legal provision. That is to say, there are acts that have express legal protection and acts that are carried out from a legally granted position but that can be abusive (NMCC decision of 6 February 2014 Aena).
With respect to the public authorities, their actions are not subject to the SCA when it does not imply the exercise of an economic activity but the mere exercise of its legal-public prerogative (it may be interesting, however, to consult NMCC decision of 10 December 2003 Asociaciones Cárnicas).
Transition from non-dominant to dominant
Does the legislation only provide for the behaviour of firms that are already dominant?
Dominant positions are not forbidden. The SCA bans abusive behaviour from undertakings that have an actual dominant position in the market (NMCC decision of 26 May 1997 Tabacalera). These positions can be reached by questions derived from the efficiency itself (whether temporary or not) or through merger transactions. Actually, the only way in which a non-existent behaviour can be conditioned in the present is through the merger control regime.
Is collective dominance covered by the legislation? How is it defined in the legislation and case law?
Collective dominance is covered by article 2 of the SCA, prohibiting abusive exploitation by one or more companies of its dominant position in all or part of the national market (see also questions 1 and 2).
Furthermore, this concept was developed by Spanish case law, which requires compliance with Community precedents in order to establish if there is a position of collective dominance (Resolution of the Spanish Supreme Court, Appeal No. 4495/1998, 8 May 2003). A more recent assessment of the collective dominance can be found in Mobile Phone Calls of 6 March 2014 or Short Messages of 12 December 2012 (annulled by National High Court’s judgment, Appeal No. 41/2013, 4 September 2017, and later confirmed through the Supreme Court’s judgment 1857/2018, 20 December 2018).
NMCC Resolution Mobile Phone Calls of 6 March 2014 established that:
in order to determine the existence of a collective dominance in a particular market, jurisprudence has been requiring the following elements: (i) the existence of a common strategy or behaviour that, if followed, would benefit all dominant companies involved; (ii) every dominant company should be able to control the behaviour of the other dominant companies in order to assure that the common strategy is being followed; (iii) the situation should be maintainable in time, in other words, incentives should exist in order to deter companies involved from abandoning the common strategy; (iv) the possible reaction to potential competitors and consumers should not be able to put in danger the common strategy.
Although the NMCC declared that there was not a situation of abuse of dominance in this particular case, this resolution is still valuable in order to define the concept of collective dominance. This decision was later confirmed by the National High Court’s sentence 182/2017, 23 May 2018, and by Supreme Court’s sentence 1495/2018, 9 October 2018.
Does the legislation apply to dominant purchasers? Are there any differences compared with the application of the law to dominant suppliers?
As stated in previous answers, Spanish competition legislation applies to any type of undertakings engaged in an economic activity. Therefore, there is no distinction between suppliers or purchasers. Article 2(2) of Act 110/10963, which was the first piece of antitrust legislation in Spain, stated that a company has a dominant position when, for a certain type of product or service, it is the only acquirer or provider in the national market.
Thus, the legislation applies to dominant purchasers (see case S/0006/07, AVS, Mediapro, Sogecable y Clubes de Fútbol de 1ª y 2ª División).
Market definition and share-based dominance thresholds
How are relevant product and geographic markets defined? Are there market-share at which a company will be presumed to be dominant or not dominant?
The resolutions of the Spanish authorities do not usually substantiate in detail the definition of the relevant market they use, so it is not easy to identify the criteria they apply. In any case, there are no specific thresholds that separate the existence of a dominant position or not.
The EU Communication of 1997 and its criteria are fully applicable in Spanish law, although there are additional elements that can indicate relevant markets themselves: concessions or authorisations, sales channels and characteristics of the buyer, branded products, own products, exploitation of essential resources or facilities, etc. In addition, there are other elements of interest related to complementary or accessory products or services and to related and connected markets. See for example the decisions in cases 513/01 Tubogas/Repsol, 8 March 2002; 605/04 Asempre, 22 June 2004; or 486/00 McLane, 22 April 2002.
Abuse of dominance
Definition of 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.
The fundamental features of the notion of abuse would be:
- typicality: conduct within the prohibition of article 2 of the SCA;
- indeterminate legal concept: the conducts included in the SCA are exemplary and not exhaustive;
- predictability: the qualification of the behaviour as abusive has to be predictable;
- abuse is an objective concept that does not depend on intentionality or the causation of effects in the market; and
- without reasonable economic justification.
Exploitative and exclusionary practices
Does the concept of abuse cover both exploitative and exclusionary practices?
The concept of abuse of dominance covers both exploitative and exclusionary practices. See below 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, although in Spain the existence and pursuit of exploitative abuses due to excessive prices is more frequent than in other jurisdictions.
Link between dominance and abuse
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?
If the concept of abuse is objective, it is not necessary to prove the connection of abusive behaviour with the exercise of market power. No causal link between the dominant position and its exploitation is required (ie, Astra Zeneca/Commission, decision of the EU Court of 6 December 2012).
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 the answer to 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
Types of conduct Types of conduct
In general, there are no relevant differences between the approach followed by the European Commission and the NMCC with regard to specifics forms of abuse. Therefore, the answer to 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.
See 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.
Exclusive dealing practices having actual or potential foreclosure effects by limiting competitors access to customers may amount to an abuse of dominant position.
See 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 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.
See 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.
See 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.
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 (judgment of 5 February, 2018) the position adopted by the High National Court by confirming that the effects on the market have not been proved - not only because market operators have not been effectively expelled from the market, but also because such a possibility has not even been demonstrated.
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.
See recent case SAMAD/01/2016 Cementerios de Leganés: in this case, 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.
See 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.
See 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.
See 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 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.
See 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.
See 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.
See case 446/12 Endesa Distribución: the NMCC found that Endesa had abused its dominant position in the reserved electrical installations markets in its distribution geographical area by unduly charging a price for the execution of certain installations.
See 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.
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.
See 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.
Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?
The Spanish body empowered to investigate abuses is the NMCC, which is a public law institution. This authority has taken over the competition commission and the main regulatory bodies, the energy regulator (the National Energy Commission), telecommunications (the Telecommunications Market Commission), the rail sector (the Railway Regulatory Committee), the postal service (the National Commission of the Postal Sector), airports (the Commission of Economic Regulation of Airports) and the audiovisual sector (the State Council for Audiovisual Media).
The NMCC is composed of a council consisting of two chambers: the competition chamber (focused on the enforcement of competition law) and the sectorial supervisory chamber (competent in regulatory matters). In March 2017, the Spanish government opened a public consultation to determine whether it is necessary to carry out another reorganisation with a view to virtually doing away with the NMCC by dividing it into two independent administrative authorities. One would be in charge of competition matters and the other of the regulated markets. There are four directorates, namely a competition directorate and three regulatory directorates (the telecommunication and audiovisual directorate, the energy directorate and the transport and postal services directorate).
The SCA, as amended by Act 3/2013, gives the NMCC powers to pursue investigations, resolve and impose sanctions in competition proceedings. The act also confers on the NMCC arbitration functions, consultative powers and the task of promoting competition in the market.
The Spanish commercial courts are also entitled to declare the existence of an abuse as they have jurisdiction to declare the infringement of articles 1 and 2 of the SCA and articles 101 and 102 of the TFEU.
Sanctions and remedies
What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?
According to the SCA, the NMCC can impose fines on the economic agents, companies or associations that intentionally or by negligence infringe competition regulation. For these purposes, the SCA classifies the infringements according to their seriousness as minor, serious and very serious. Behaviours that suppose an abuse of dominance can be classified as serious or very serious infringements.
The amount of the fine will depend on the seriousness of the infringement. Thus, the NMCC may impose fines of up to 10 per cent of the total turnover of the infringing company in the preceding business year in the case of very serious infringements and fines of up to 5 per cent of the total turnover of the infringing company in the preceding business year in the case of serious infringements. When the turnover of the infringing company cannot be calculated, the NMCC can impose a fine of up to €10 million.
In addition to the fine that would be imposed on the company, the SCA foresees a personal sanction of up to €60,000 for each of the legal representatives of the company or the members of the management bodies who have participated in the anticompetitive practice. In fact, in 2016 the NMCC issued its first resolutions fining the legal representatives of the companies that were liable for cartels regulations.
The NMCC published a communication on the method of calculating fines deriving from the infringements of articles 1, 2 and 3 of the SCA in February 2009. These guidelines provided a three-step method for quantifying the fines inspired by the methodology used by the European Commission within the scope of Council Regulation (EC) No. 1/2003.
However, the Supreme Court issued a judgment In January 2015 finding that this method was not applicable under Spanish law. In summary, the Supreme Court held that:
- the 10 per cent limit on the annual turnover of the company (or 5 or 1 per cent depending on the seriousness of the infringement) must be understood as the maximum limit within the sanction and is to be determined according to its seriousness; and
- the percentage must be calculated on a company’s total annual turnover and according to the criteria set out in the SCA.
Furthermore, the SCA sets out the criteria that have to be considered in order to determine the amount of the fine:
- scope and characteristics of the affected market;
- market shares of the infringing companies;
- scope and duration of the infringement;
- effects of the breach on the rights and legitimate interest of consumers or on other economic operators; and
- the illicit benefits obtained as a consequence of the infringement.
The SCA also foresees a list of mitigating and aggravating factors (articles 64.2 and 64.3 SCA).
The main aggravating factors are:
- the repeated commission of infringements established in the SCA;
- the role of leader in, or instigator of, the infringement;
- the adoption of measures for enforcing or safeguarding the achievement of the unlawful conduct; and
- failure to collaborate with, or the obstruction of, inspections.
The main mitigating circumstances are:
- the undertaking of actions that bring about an end to the infringement;
- the effective non-implementation of the prohibited conduct;
- the undertaking of actions intending to remedy the harm caused; and
- the active and effective collaboration with the NMCC outside the scope of the leniency programme.
The sanctioning power of the NMCC shall lapse after four years in the case of very serious infringements, and two years in the case of serious infringements. In cases of application of article 101 of the TFEU, the expiration period would be five years. In this regard, it is important to highlight that the term of the lapse shall be counted from the day when the infringement has been committed or, in the case of continued infringements, from when they have ceased.
Can the competition enforcers impose sanctions directly or must they petition a court or other authority?
The NMCC can impose sanctions directly. These ones are classified as administrative sanctions because the process is under an administrative law regime. Courts can enter into competition matters in two cases: appeal process against the NMCC administrative decision, or lawsuits submitted by private individuals before the commercial courts.
What is the recent enforcement record in your jurisdiction?
In 2018, the NMCC has imposed sanctions for dominant abuse in one case, case SAMAD/01/2016 Cementerios de Leganés: In this case, 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 addition to it, the Spanish courts have published the following judgments:
- Supreme Court judgment 163/2018, Sala de lo Contencioso Sección 3ª, Appeal No. 2808/2015, 5 February 2018, adopting the same position as the National High Court, confirming that the margin squeeze realised by Correos was not proved sufficiently.
- We should also mention the Supreme Court’s judgment 583/2018, Sala de lo Contencioso Sección 3ª, Appeal No. 3568/2015, 10 April 2018, relating 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. In this case, no sanction as such was imposed on any of the parties, but the Supreme Court has annulled the NMCC’s decision, bringing the case back to this public entity in order for it to investigate and resolve again.
- Supreme Court judgment 1495/2018, Sala de lo Contencioso, Sección 3ª, Appeal No. 4509/2017, 9 October 2018, related to NMCC case S/0391/91 Mobile Phone Calls of 6 March 2014, which confirmed the NMCC’s resolution, declaring the non-existence of a situation of abuse of dominance.
- Supreme Court judgment 1857/2018, Sala de lo Contencioso Sección 3ª, Appeal No. 6552/2017, 20 December 2018 related to the NMCC case S/0248/10 Short Messages, 12 December 2012, confirming the withdrawal of the sanction imposed on the infringing companies, derived from the abuse in their dominant position through charging an excessive price for the use of short messages.
Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?
As a general principle, contracts, or parts of them, entered into by dominant firms that infringe antitrust provisions, including article 2 of the SCA and 102 of the TFEU, can be declared null and void by the relevant courts.
Regarding whether it is a specific clause or the entire contract that is invalidated, both options are possible under Spanish law, depending on whether the clause or clauses found abusive are essential to the contract or not. In this regard, it is important to note that no specific rules exist regarding this particular point. Thus, existing legislation and legal principles from Spanish civil law are to be applied.
To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?
Private enforcement is possible, but only for damages claims (see question 32). The NMCC can order a firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract. Decisions from these proceedings can be appealed before the National High Court and the Supreme Court (see question 33).
Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?
The Council of Ministers approved Royal Decree-law 9/2017, of 26 May 2017, which implements Directive 2014/104/EU on antitrust damages actions into the Spanish legal framework. The transposition has introduced important amendments to the CPA and the SCA.
Private damage claims are available for both direct and indirect purchasers, and the compensation includes the right to indemnification for actual loss and loss of profit, plus the legal interests since the claim was submitted. Note that the amendments to the SCA cannot be applied retroactively, and the amendments to the CPA are only applicable to claims initiated after 27 May 2017.
The main changes introduced to the SCA are the following:
- recognition of the right of harmed parties to obtain full compensation for damage suffered;
- the introduction of joint and several liability for all infringers for the damage caused to the harmed parties. Therefore, any harmed party can claim full compensation for damage to any of the undertakings intervening in the cartel. Nevertheless, there are two exceptions to this rule, one relating to SMEs and the other relating to undertakings that are exempted from the payment of a fine owing to their participation in a leniency programme;
- the establishment of a limitation period of five years for actions for damages arising from infringements of competition law;
- the binding nature of any competition infringement declared by a final decision of a Spanish competition authority or court, for the purposes of an action for damages brought before national courts;
- the introduction of the rebuttable presumption that cartels always cause harm and the implementation of certain rules in order to make it easier for claimants to calculate and quantify the damage suffered;
- the implementation of a new consensual dispute resolution regime that has the aim of fostering consensual agreements with infringers; and
- the introduction of the passing-on defence, which establishes that the right to compensation granted to the injured party refers only to the overcharge really suffered and that was not passed on along the supply chain. Moreover, the SCA also sets the possibility for indirect purchasers to claim compensation for the harm caused when direct purchasers have passed on the overcharge generated by the violation of competition rules. The burden of proving such passing-on falls to the claimant, although there is a rebuttable presumption that the indirect purchaser has proved the overcharge if it meets certain criteria.
The changes introduced to the CPA mainly refer to the disclosure of evidence. Not only can the harmed party request such disclosure, in addition the defendant in an action may request the disclosure of evidence by the claimant or third parties in order to prepare its defence, especially if it is planning to apply the passing-on defence. When requesting the disclosure of evidence, it must always be duly justified. In the case of the plaintiff, it must submit a well-founded justification including reasonably available facts and enough evidence to support the credibility of the claim. In the case of the defendant, it must present such justification in relation to its defence.
Although it is too early to say it with certainty, the impact on enforcement activity is likely to be significant. Before this, some relevant damage claims were brought before courts in Spain and damages awarded in the sugar industry or electricity distribution markets, for example.
To what court may authority decisions finding an abuse be appealed?
No appeal by administrative procedure may be lodged against the resolutions and acts of the council of the NMCC and judicial appeals may only be lodged in the terms foreseen in the Administrative Jurisdiction Act 29/1998, of 13 July, before the National High Court. According to such terms, infringing parties may lodge a judicial appeal against the decision of the competition authority within a period of two months starting from the day after the notification of the decision.
In general terms, appealing does not lead to a suspension of the sanctions imposed by the administrative body (NMCC), unless the involved companies justify serious damage stemming from the imminent execution of the sanction and the National High Court accepts these arguments as valid to suspend the payment of the fine.
Appeals against the decision of the National High Court on points of law may be only lodged with the Supreme Court. In this sense, the National High Court is entitled to review the agency’s findings of fact, the legal assessment and penalties. By contrast, the Supreme Court focuses only on points of law unless factual findings are found to be clearly erroneous.
Nonetheless, summarising, we can conclude that there are different rights of appeal, depending on the stage of the procedure, as below.
- Decisions of the Competition Directorate are appealed to the Council of the NMCC. The time frame given is 10 days from the date of notification of the decision.
- Decisions by the Council of the NMCC are appealable before the National High Court within two months of the appellant being notified of the decision.
- Judgments issued by the National High Court may be challenged before the Supreme Court within 30 days If there is a matter of significant legal interest. A significant legal interest is presumed with regard to judgments by the National High Court concerning decisions of regulatory bodies.
Moreover, a government’s decision - from the Council of Ministers or any other ministry - confirming or dismissing a previous decision by the NMCC, when applicable, may be directly appealed before the Supreme Court within two months of the day that the appellant is notified.
Unilateral conduct by non-dominant firms
Are there any rules applying to the unilateral conduct of non-dominant firms?
Some unilateral conducts by non-dominant firms may fall within the scope of the Unfair Competition Act. For instance, predatory pricing aimed at driving competitors out of the market may amount to an unfair competition act.