At a glance: sanctions for cartel activity in Spain

Sanctions

What, if any, criminal sanctions are there for cartel activity?

Law No. 15/2007 of 3 July for the Defence of Competition (LDC) does not establish any criminal sanction for competition law infringements. However, some provisions of the Spanish Criminal Code (Law No.  10/1995 of 23 November 1995) could apply to competition law infringements. Particularly, articles 262 and 281 of the Spanish Criminal Code provide for criminal sanctions for bid rigging or limiting the output of raw materials or essential products and article 284 of the Spanish Criminal Code provides for criminal sanctions for those who alter prices through violence, intimidation or deceit.

What civil or administrative sanctions are there for cartel activity?

The LDC qualifies cartels as a very serious infringement of competition rules that can be fined with up to 10 per cent of the total turnover of the infringing undertaking in the financial year before the imposition of the fine. When the turnover of the infringing undertaking cannot be calculated, the National Commission for Markets and Competition (CNMC) may impose a fine of up to €10 million. Legal representatives or members of management bodies who have directly participated in the cartel can also be fined up to €60,000.

Significant fines are imposed frequently in cartel cases. Between 2017 and 2019, nine cartels were sanctioned, with fines amounting to a total of €359.6 million (€317 million after the deduction of exemptions and reductions under the leniency programme). Generally, fines have increased significantly in recent years, particularly for larger undertakings, as a result of jurisprudence requiring the competition authorities to calculate fines based on a percentage of total turnover rather than affected sales. In this regard, 2019 represents almost half of the fines imposed by an amount in the last three years, with only two cartels being sanctioned in that year (22 per cent of the total number of cartels fined).

Fines imposed on directors have also progressively increased. In 2017 a single fine of €12,000 was imposed on one director. In 2018, three directors were fined a total amount of €109,000 for participating in a cartel. In contrast, during 2019, 22 directors received fines amounting to a total of €946,500 (€790,800 after deducting the exemptions under the leniency programme).

Do fining or sentencing principles or guidelines exist? If yes, are they binding on the adjudicator? If no, how are penalty levels normally established? What are the main aggravating and mitigating factors that are considered?

In November 2018, the CNMC published provisional guidelines on setting fines for competition law breaches (the Provisional Fines Guidelines). Guidance had been eagerly awaited since, in a judgment of 29 January 2015, the Spanish Supreme Court annulled the Guidelines that the CNMC had issued in 2009, thus requiring the CNMC to change the method used until then for setting fines and leading to the annulment and recalculation of a large number of penalties in the interim.

The Provisional Fines Guidelines are consistent with the practice the CNMC applied in the nearly four years following the judgment of the Supreme Court. In essence, the fine is calculated as a percentage of between zero and 10 per cent of the total turnover of the infringing undertaking. To calculate that process the CNMC establishes a general figure for the infringement of between zero and 10 per cent depending on the seriousness of the infringement as a whole. The circumstances that are usually taken into account to calculate this general figure are:

• characteristics of the market affected by the infringement;
• market shares of the undertakings investigated;
• the scope of the infringement;
• the effect of the infringement on the market and any illicit profit; and
• any adoption of measures to enforce compliance with the cartel agreement.

For cartel infringements, the CNMC generally applies a general figure of between 5 per cent and 8 per cent as a basis for setting the fine, adjusting that figure to the individual circumstances of each undertaking to establish the individual figure. The circumstances that are usually taken into account to calculate this individual figure are:

• the duration of the firm’s participation in the infringement;
• the firm’s share of the infraction (the percentage of the affected sales that were by that firm); and
• any aggravating and mitigating circumstances.

As to the aggravating and mitigating factors, the LDC provides for the following aggravating circumstances (it is not a closed list):

• the repeated commission of infringements;
• the position of leader in, or instigator of, the infringement;
• the adoption of measures to impose or guarantee the enforcement of the infringement; and
• the lack of collaboration or obstruction of the inspection tasks, notwithstanding the possible consideration of this conduct as an independent infringement.

Alternatively, the following mitigating circumstances, among others, shall also be taken into account to set the amount of the penalty:

• the performance of actions that terminate the infringement;
• the effective non-application of the prohibited conduct;
• the performance of actions intended to repair the damage caused; and
• the active and effective collaboration with the authority outside the framework of the leniency programme.

Once the CNMC has calculated the fine for each undertaking, a final check is made to ensure that the resulting fine is proportionate to the seriousness of the infringement by applying the proportionality limit, which aims to calibrate the fine with the potential illicit profits. To date, this limit has been calculated as a percentage of the total affected sales. However, the Provisional Fines Guidelines appear to introduce a new element of deterrence under which the estimated illicit profit can be multiplied by a factor between one and four according to the duration of the infringement and the size of the undertaking investigated.

The Guidelines are provisional and may be revised in light of guidance from the courts. For the meantime, they provide additional legal certainty concerning the fines for possible infringements and complement the provisions of the LDC. However, there are still many uncertainties and several appeals have been lodged regarding the calculation method of the CNMC.

Are sanctions reduced if the organisation had a compliance programme in place at the time of the infringement?

The CNMC has reiterated that the mere implementation of a compliance programme, whether ex-ante or ex-post concerning detection of the violation, does not per se justify mitigating the company’s liability to determine the fine.

According to the CNMC’s recently published Compliance Guidelines, the authority may assess, on a case-by-case basis, whether the pre-existence of a compliance programme, its improvement or its subsequent implementation after the investigation, can be considered as a mitigating circumstance to adjust the amount of the fine (eg, see cases S/0482/13, Car Manufacturers; S/DC/0544/15, International Removals; S/DC/0557/15, Nokia; case S/DC/0565/15, Computer tenders; and S/DC/0612/17, Industrial Assembly and Maintenance).

In its guidelines, the CNMC indicates that it will normally view an effective ex-ante compliance programme more positively than the promise to implement or improve an ex-post compliance programme, although it should be noted that according to those guidelines to benefit from a compliance programme the party involved, in effect, would need to apply for leniency and collaborate fully in the competition authority investigation.

Are individuals involved in cartel activity subject to orders prohibiting them from serving as corporate directors or officers?

There are no specific provisions in this regard under Spanish law.

Is debarment from government procurement procedures automatic, available as a discretionary sanction, or not available in response to cartel infringements?

According to the Spanish Law No. 9/2017 of 8 November 2017 for Public Sector Contracts (LCSP), since 2015, persons sanctioned for serious infringements that distort competition can be banned from contracting with public bodies for a maximum period of up to three years. This also applies to cartels and can be applied in addition to the other penalties provided for under Spanish rules.

Article 72 of the LCSP states that the debarment can be imposed in two ways:

• by a decision of the competition authority in which there is an express pronouncement on the scope and duration of said debarment; or
• if the decision of the competition authority does not expressly rule on this issue, through the appropriate ad hoc procedure.

In 2019, the CNMC sought to have undertakings involved in bid rigging banned from future public contracts for the first time (case S/DC/0598/16, Electrificación y Electromecánica Ferroviarias). Since then, the CNMC has issued three more decisions by which it declares the debarment as applicable (cases S/DC/0612/17 Industrial Assembly and Maintenance, SAMUR/02/18 Transporte Escolar Murcia, and S/DC/0626/18 Radares Meteorológicos). However, the CNMC has not fixed the scope or duration of the prohibition in any of these cases. Since the LDC does not grant it the power to do so it instead has referred those cases to the State Advisory Board for Public Contracts. Those cases are currently suspended pending appeal. The Regional Competition Authority for Catalonia, however, has itself directly imposed the ban on two occasions (cases 94/2018 Licitacions Servei Meteorològic de Catalunya and 100/2018 AEROBUS), although the legal basis for those bans is not clear.

Where possible sanctions for cartel activity include criminal and civil or administrative penalties, can they be pursued in respect of the same conduct? If not, when and how is the choice of which sanction to pursue made?

The CNMC cannot bring criminal proceedings based on competition infringements, those proceedings and the upcoming consequences are administrative (eg, fines against companies or directors, or prohibitions for participating in contracts with the public administration). However, some conducts could both infringe competition law and constitute criminal activity (eg, the alteration of prices through fraud or bid rigging (article 262 of the Spanish Criminal Code)). Criminal proceedings arising from anticompetitive conducts can be brought by any affected party or by the public prosecutor. If criminal proceedings are initiated, civil claims will be suspended if:

• the parties’ pleas are based on one or more grounds that are being investigated as a criminal matter; and
• the decision of the criminal court may have a decisive influence on the civil case (article 40 of the Spanish Code of Civil Procedure).

Article 46 of the LDC also provides that the existence of a question referred for a preliminary ruling in criminal matters which cannot be left out of the decision or which directly affects the content of the decision shall lead to a suspension of proceedings until the matter has been resolved by the corresponding criminal courts.

There is no provision under Spanish law that prevents the development of private and public (administrative) enforcement in parallel, although in practice most private enforcement cases take the form of follow-on actions.

Law stated date

Give the date on which the information above is accurate.

31 October 2020.