EnforcementComplaints procedure for private parties
Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?
Any private third party (natural or legal person) may file a complaint against an allegedly unlawful vertical agreement before the Competition Directorate of the National Markets and Competition Commission (CNMC) or before a regional competition authority (article 49 of the Law on the Defence of Competition (LDC)). The complaint should include the contact details of the complainant, the facts triggering the unlawful conduct (and, as the case may be, evidence of the alleged unlawful conduct), together with the definition and structure of the relevant market. The complainant may only participate as an interested party in the formal investigation that may potentially follow if it is able to show a legitimate interest in the case.
Upon receipt of the complaint, the Competition Directorate may start a preliminary inquiry to assess if there are sufficient indicia or reasons to open antitrust proceedings. However, the CNMC can also discriminate which complaints to process and which not on the basis of priority criteria. Once an investigation is formally initiated, the CNMC has 18 months to decide on the case. The procedure is divided into two phases (investigation and resolution), which take place before two different bodies of the CNMC: the investigation phase is led by the Competition Directorate (no later than 12 months), while the resolution is issued by the Council of the CNMC (no later than six months). In its decision, the Council of the CNMC may declare the existence of an infringement and impose fines.
The investigation may be closed without fines if the CNMC considers that there is not sufficient evidence of infringement or when the parties submit appropriate commitments.
The decision of the Council amounts to final agency action and may be appealed only before the administrative courts.
There is no settlement procedure foreseen in the LDC. However, the Administrative Procedure Act (article 86 of the Act 39/2015 on the Common Administrative Procedure for Public Administrations), which applies to antitrust matters in those areas of procedure not regulated by the LDC or its implementing regulations, foresees the possibility that public administrations can terminate punishing proceedings (such as antitrust proceedings) with a settlement decision.
This possibility has to our knowledge been used twice by a regional competition authority (Basque Country). In those rare cases, the regional authority terminated the antitrust investigations with a mixed decision agreeing on the amount of the fine with the parties (while the parties acknowledged the infringement), and including commitments consisting, basically, of a cease-and-desist obligation, along with an obligation to publish the decision (Decisions of 30 December 2008, case 03/2008, Asfaltos, and of 20 May 2009, case 01/2009, HIRU).
There has been some informal talk at the CNMC and expert level about introducing a settlement procedure in the Competition Act. It is possible, therefore, that a settlement procedure will be inserted in the Competition Act in the future, although this is not likely to happen in the short term.Regulatory enforcement
How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?
According to the CNMC’s Annual Report of 2020, 12 sanctioning proceedings were initiated in 2020 due to infringements of article 1 LDC, and two of them dealt with vertical restraints. In 2021, the CNMC closely assessed several digital markets and more specifically several large technology companies and online platforms
What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?
Article 1.2 LDC provides that all agreements and practices contrary to article 1.1 LDC and non-exempted by articles 1.3, 4 or 5 LDC are null and void.
However, Spanish civil law allows that only the infringing provision be declared void, provided that the rest of the agreement may survive without that provision. This will depend on the facts of the case. The Supreme Court has declared that it is not possible to sever an infringing provision where the agreement itself provides that such provision is an essential element of the agreement, and where it is impossible in practice to make adjustments or modifications that would require the mutual agreement of the parties (see judgment of the Supreme Court of 30 June 2009, case 315/2004 and of 26 February 2009, case 109/2009).
May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?
The CNMC may impose penalties for any infringement of the LDC without the permission of or confirmation by another entity or by a court.
Under the most recent 2021 modification of the LDC; vertical restraints are now categorised as a very serious infringement of the LDC (article 62.4.a) LDC) that can result in a fine of up to 10 per cent of the worldwide turnover of the infringing party in the business year preceding the imposition of the fine (article 63.1.c) LDC). If the turnover cannot be determined, the infringing parties may be exposed to a fine of more than €10 million (article 63.3.c) LDC). In addition, the CNMC may impose behavioural or structural remedies on the infringing party, although it has not thus far done so.
On the other hand, if the CNMC considers that the agreement would not produce negative effects on competition if it were modified, the CNMC could impose several commitments (ex officio or proposed by the parties) to the parties to the agreement and will monitor that parties comply with those commitments (monitory proceeding).
With regard to possible trends, in the past the CNMC was inclined to fine the supplier only, leaving the buyer unharmed. This is because it was considered that, although both were parties to the vertical agreement, responsibility for the infringement fell on the party with the higher bargaining power, usually the supplier. Notwithstanding the above, in June 2007 the CNMC fined both the supplier and the buyer on the basis that both parties had obtained an unlawful benefit from the agreement and both parties has countervailing bargaining power (see decision of the CNMC of 21 June 2007, in case 612/06, Aceites 2). In 2010, the CNMC ruled that exclusive contracts for acquisition and resale of football broadcasting rights lasting for more than three seasons for Spanish league and cup matches are anticompetitive and fined four buyers (broadcasting operators) but none of the suppliers (football clubs). Two years later, the CNMC fined Suzuki and five of its authorised dealers in Spain for agreeing minimum resale prices for Suzuki motorbikes (ie, the CNMC fined again both the supplier and the buyer) (see decision of the CNMC of 27 March 2012, in case S/0237/10, Motocicletas).
Most recently, open television operators Mediaset and Atresmedia have received fines of €38.9 million and €38.2 million respectively for vertical conduct in the television advertising markets, which are remarkably high fines in the verticals area Decision of 12 November 2018, Atresmedia/Mediaset, case S/DC/0617/17). This case was interesting as it concerned a network of vertical agreements covering more than 50 per cent of the relevant market, between each of the two largest open TV operators and the media buying agencies, which forecloses competition by alternative television operators willing to compete in the television advertising market.
The Atresmedia/Mediaset matter, coupled with the ongoing investigations in the digital markets area, may signal some new trend of verticals enforcement in Spain.Investigative powers of the authority
What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?
Broadly, the authorities responsible for enforcing the prohibition of vertical restraints are entitled to:
- conduct inspections at the undertaking’s premises (article 40 LDC), which may involve:
- gaining access to any premise, facility or vehicle of the enterprises, and even the entrepreneur’s house;
- checking books, records and documents;
- requiring the production, examination, copying or even seizure of documents relevant to the investigation;
- retaining books, records or documents for a maximum of 10 days;
- sealing filing cabinets or rooms; and
- requiring explanations of relevant documents or practices;
- issue binding letters developing and executing laws, royal-decrees or ministerial orders;
- carry out interviews;
- address information requests.
To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?
The courts have the authority to declare the existence of an infringement of article 1.1 LDC as well as to declare an agreement exempt from that prohibition pursuant to article 1.3, always within the boundaries of the petition addressed to the competent court.
In principle, only the parties to the vertical agreement are entitled to seek declaratory judgments or injunctions and bring damages claims (but, theoretically, third parties could seek damages if such parties can prove that they have suffered a loss as a result of the anticompetitive agreements, or even seek an erga omnes declaration of nullity of the agreement, even in the absence of damages). These forms of order must be sought from the commercial courts, except where the party is simply seeking damages from a previously declared infringement (follow-on actions), in which case it must do so before the ordinary civil courts. Consumer associations have standing to sue in respect of their members, of the association itself and of the general interests of consumers.
The remedies available are those typical of any other civil claim, ranging from cease-and-desist orders to the award of damages.
Assuming that a private enforcement action goes through all the possible appeals up to the Supreme Court, a final judgment may be rendered after several years. For example, in the Sugar case (a follow-on damages claim for damages arising from a sugar cartel), the claim was filed in 2007 and, after several appeals, the Supreme Court decided on the case in 2012 (judgment of the Supreme Court of 8 June 2012, case 2163/2009).
On 25 March 2013, the CNMC fined 15 paper companies for bid rigging, customer sharing and price fixing. Several undertakings that had been harmed by the antitrust infringement sued some of the cartel members before the Commercial Courts of Madrid and Barcelona, seeking compensation for damages. Between March and September 2018, the Commercial Courts awarded damages in several of those claims.
As regards costs, the general rule is that the losing party pays the costs of litigation (which are not in practice the actual costs, but a reasoned measure of costs as moderated by the court with the possible input of the Bar Association).