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Investigations

Initiating an investigation

Who can initiate an investigation of potential cartel conduct?

Penalty proceedings are initiated by the Competition Directorate of the National Markets and Competition Commission (NMCC) (or the relevant bodies of the regional competition authorities) ex officio or by means of a complaint. Before the opening of penalty proceedings, the Competition Directorate may conduct a preliminary investigation (not subject to a given deadline) in order to determine whether the opening of formal penalty proceedings is appropriate. During this preliminary investigation, the Competition Directorate may gather information and carry out dawn raids.

If, after this preliminary investigation, the Competition Directorate considers that there are reasonable signs of anti-competitive conduct, it will formally initiate penalty proceedings. The decision to initiate penalty proceedings will be notified to the interested parties, with a copy of the complaint provided to the defendant.

If an investigation is initiated by complainants or third parties, what rights (if any) do they have?

Complainants and third parties have no rights unless they are considered interested parties. If considered interested parties, once the penalty proceedings have been initiated they can access the file and take part in the penalty proceedings (ie, they can file written submissions and offer evidence).

What obligations does a company have on learning that an investigation has commenced?

They have no specific obligation. Nonetheless, there is a duty of collaboration and information. All natural or legal persons and the bodies of any public administrations are subject to the duty of collaboration with the NMCC and are obliged to provide all kinds of data and information that they may have and may be necessary for the identification of cartels. 

What obligations does a company have if it believes that an investigation is likely?

No specific obligations.

What are the potential consequences of failing to act or delaying action?

With regard to the general duty of collaboration, if a company fails to meet the deadline to reply to a request for information submitted by the NMCC, the NMCC may impose coercive fines on the company.

Formal stages of investigation

What are the formal stages of and approximate timeframe for investigations?

The Competition Act (15/2007) foresees a two-phase procedure.

During the first phase, the Competition Directorate will handle the penalty proceedings. The main milestones are as follows:

  • The facts that may constitute an infringement must be included in a statement of objections. The statement must be notified to the interested parties so that they may reply to it and offer evidence within 15 working days.
  • By taking into consideration its findings and the parties’ arguments, as well as the evidence available, the Competition Directorate must then produce a proposal for resolution. The proposal must be notified to the interested parties so that they can make written submissions within 15 working days.
  • The Competition Directorate will then refer the case to the council of the NMCC, together with a report including a proposal for resolution and the written submissions made by the interested parties.

During the second phase, the council of the NMCC will resolve the penalty proceedings, taking into account the investigation carried out by the Competition Directorate and the arguments of the interested parties. The council of the NMCC may take into account new evidence or investigate further if it is deemed to be necessary.

The NMCC may issue:

  • an infringement decision;
  • a decision that there is no evidence of infringement;
  • a decision stating that the practices are de minimis; or
  • a decision accepting commitments from the companies under investigation as long as they fully address the competition concerns and the public interest is sufficiently protected.

However, the Guidelines on Termination by Commitments of Sanctioning Proceedings sets out that, as a general rule, a settlement will not be initiated when the alleged infringement is a cartel.

The infringement decision may:

  • order to bring the anti-competitive conduct to an end;
  • impose conditions or obligations;
  • remove the effects of the prohibited conducts;
  • impose fines; or
  • impose any other measures authorised by the Competition Act.

The maximum term to issue a decision is 18 months from the date of the decision to initiate the penalty proceedings. The investigation usually occurs during the first 12 months, leaving six months for the council to issue a final decision.

Investigative powers

What investigative powers do the authorities have?

The Competition Act provides the NMCC with several methods for detecting cartels, the most common being unannounced inspections (eg, dawn raids) and information requests.

Unannounced inspections can be conducted not only at the companies’ and associations’ premises, but also at the homes of directors, managers and other members of staff of the companies and associations concerned. The performance of such inspections requires the previous consent of the company or, otherwise, court approval.

 Officials are empowered to:

  • enter any premises, land and means of transport of the undertakings and associations of undertakings as well as the homes of entrepreneurs, managers and other staff members of the undertakings and associations of undertakings concerned;
  • examine the books and other records relating to the business, irrespective of the medium in which they are stored;
  • take or obtain (in any form) copies of or extracts from such books or records;
  • retain the aforementioned books or documents for a maximum period of 10 days;
  • seal all business premises, books or records and other business assets during this period and to the extent necessary for the inspection; and
  • ask any representative or staff member of the undertaking or association of undertakings for explanations on facts or documents relating to the subject matter and purpose of the inspection and to record the answers.

The NMCC is also empowered to require any natural or legal person as well as the bodies of any public administration to provide all of the information that may be necessary in order to detect a cartel. 

What is the geographic reach of public enforcement actions?

The territory of Spain.

When is court approval required to invoke these powers?

Court approval is required if a company does not consent to a dawn raid. 

Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?

See answer to the question “What investigative powers do the authorities have?” The NMCC is not required to wait for the arrival of legal advisers. However, in practice they do tend to wait between 30 to 60 minutes.

What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?

Companies are expected to cooperate with the NMCC. Failure to cooperate is considered a minor infringement of the Competition Act if a company:

  • fails to provide the NMCC with the information requested or provide incomplete, incorrect, misleading or false information;
  • does not consent to a dawn raid; or
  • obstructs a dawn raid, for instance, by:

o failing to submit or the incorrect, misleading or incomplete submission of books or documents requested by the NMCC;

o refusing to answer questions posed by the NMCC or answering them in an incomplete, inexact or misleading manner; or

o breaking the seals affixed by the NMCC’s personnel during inspection.

These infringements may be penalised with a fine of up to 1% of the total turnover of the undertaking concerned. If it is impossible to determine the turnover of the infringing company, the fine would be between €100,000 and €500,000.

Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?

According to judiciary law, attorneys (external and in-house lawyers) are subject to the same duties of confidentiality and secrecy regarding communications exchanged with clients as the regulation of the legal profession. Therefore, attorney work product is protected by the law of privilege in the sense that communication with clients must remain confidential.

However, in the context of competition law and particularly dawn raids, the European Court of Justice has stated that internal company communications with in-house lawyers in European Commission investigations are not covered by legal professional privilege.

While this judgment does not apply to investigations subject to Spanish law, and despite the fact that both external and internal lawyers are subject to the same duties, the NMCC tends to apply European case law during inspections and considers that internal counsel communications are not covered by legal professional privilege unless it is proved that they reproduce legal advice provided by external lawyers.

Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?

The NMCC cannot access personal information or information not related or going beyond the purpose of the dawn raid.

What is the process for objecting to an authority’s exercise of its claimed powers?

Decisions by the competition directorate may be challenged before the council of the NMCC within 10 days. Decisions of the chair and the council of the NMCC may be appealed, in the terms foreseen in the Administrative Jurisdiction Act (29/1998), before the National High Court within a period of two months starting from the day after the notification of the decision. Appeals against the decision of the National High Court may be lodged only with the Supreme Court. 

Publicity and confidentiality

What information about investigations will be made publicly available and at which stage(s) of the process?

Dawn raids carried out by the NMCC are published on its website. However, the identities of raided companies are kept confidential.

The opening of the penalty proceedings as well as the identities of affected companies are published on the NMCC website.

Decisions by the council of the NMCC regarding alleged infringements of competition law are published on the NMCC website once they have been notified to the interested parties and the confidentiality issues have been sorted out.

Is any information automatically confidential and is confidentiality available on request?

The NMCC may order to keep information confidential, either on its own initiative or at the request of any interested party. If the NMCC does not accept the confidentiality request, the interested party is entitled to appeal the decision before the National High Court.

All leniency applications and their contents must be treated as confidential information by the NMCC, and it will file this documentation in a separate folder when classifying such information. However, interested parties will have access to the information deemed essential in order to reply to the statement of objections. 

International cooperation

Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?

The NMCC cooperates with the European Commission and the national competition authorities in other EU member states through the European Competition Network.

The NMCC is also entitled to exchange information (including confidential information) with any other national competition authorities within the European Union, as well as the European Commission. 

Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?

See answer to the question “Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?”

Decisions

How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?

See answer to the question “What are the formal stages of and approximate timeframe for investigations?”

What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?

See answer to the question “What are the formal stages of and approximate timeframe for investigations?”

If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?

See answer to the question “What are the formal stages of and approximate timeframe for investigations?”

Which party must prove its case? What is the relevant standard of proof?

The burden of proof of the existence of a cartel rests with the party that alleges an infringement, so it falls upon the NMCC. There is no specific level of proof required by Spanish legislation in order to determine the existence of cartel infringements. Both direct and circumstantial evidence are admissible.

Members of an alleged cartel that claim the benefit of an individual exemption must bear the burden of proving that the conditions for an individual exemption are met. It is practically impossible for cartel members to benefit from an individual exemption.

Is there a hearing? If so, what is the process for submitting evidence and testimony?

Although uncommon, hearings can be agreed. Oral hearings have not been held since 2010, but the NMCC recently stated that it will agree to hold oral hearings in penalty proceedings that, due to their complexity, require it.

The interested parties, their representatives, the officials of the Competition Directorate and the persons authorised by the council of the NMCC will take part in the oral hearing. It begins with a presentation by an official of the Competition Directorate of a proposal for resolution and continues with the arguments of the interested parties. Replies by both the Competition Directorate and the interested parties will then follow. The chair of the NMCC and any other member of the council authorised by the chair may address any party to seek clarification.

What are the accused’s procedural rights?

The alleged infringers are entitled to access the file, make written submissions, offer evidence and request an oral hearing. 

Appeal process

What is the appeal process?

Decisions by the council of the NMCC may be appealed to the National High Court within two months of the appellant being notified of the decision.

Appeals against National High Court judgments may be lodged with the Supreme Court where there is a matter of significant legal interest. A significant legal interest is presumed with regard to first-instance judgments issued by the National High Court concerning decisions by regulatory bodies. The Supreme Court focuses on points of law, unless factual findings are found to be clearly erroneous.

The appeal does not lead to a suspension of penalties imposed by the NMCC, unless the companies involved justify serious damage stemming from the imminent execution of the penalty and this is accepted by the National High Court.  

To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?

The National High Court is entitled to review the agency’s findings of fact, the legal assessment and penalties.

By contrast, the Supreme Court is focused only on points of law unless factual findings are found to be clearly erroneous.

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