Legislation and jurisdictionRelevant legislation and regulators
What is the relevant legislation and who enforces it?
Spanish competition legislation is contained in Law No. 15/2007 on the Defence of Competition (the Competition Act), which came into force in September 2007. The Competition Act regulates restrictive practices and abuses of dominant position (closely modelled on articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)) as well as merger control and state aid. In February 2008, the government adopted Royal Decree No. 261/2008 (the Royal Decree), which implements the Competition Act.
After entry into force of Law No. 3/2013 setting up the National Markets and Competition Commission (the CNMC Act and the CNMC respectively), the authority entrusted with the enforcement of the Competition Act is the CNMC. The start of operations of the new CNMC and the subsequent ceasing of operations of the former National Competition Commission (CNC) took place on 7 October 2013. The CNMC is the entity resulting from the merger of the Spanish competition, energy, telecoms, railways, audiovisual, airports and postal regulators.
The CNMC is led by a board of 10 members entrusted with decision-making powers (the Council), which is divided into a competition chamber and a regulatory chamber. The CNMC has four sector-specific directorates: Competition, Telecommunications and Audiovisual, Energy, and Transport and Post. In August 2013, the government adopted Royal Decree No. 657/2013, approving the CNMC’s statute, which further specifies its organisation and modus operandi. The Competition Directorate is entrusted with investigative powers for merger control.
Under the Competition Act, the CNMC has the final decision on merger control proceedings in the majority of cases, and the government has only some limited decision-making powers in merger control matters (see question 18).
Although the Competition Act reinforced the role of the regional competition authorities of the different Spanish autonomous communities, merger control proceedings remain outside the scope of their jurisdiction.
The Sustainable Economy Act (Law No. 2/2011, of 4 March, of Sustainable Economy) entered into force on 6 March 2011. It brought about the first amendment in the Competition Act since its adoption in 2007 by introducing a de minimis exception to the mandatory merger filing obligation. In addition, Law No. 3/2013 amended the relevant filing fees, and Law No. 6/2018, of 3 July, of the Annual Budget of the State for 2018, amended the relevant filing fee for simplified procedure cases (see question 10).
In November 2015, the CNMC issued a new version of the guidelines on simplified proceedings to adapt it to the new institutional framework brought about by the creation of the CNMC. The new guidelines reflect the nature of the CNMC (which results from the merger of the Spanish competition, energy, telecoms, railways, audiovisual, airports and postal regulators). Consequently, since then mergers taking place in regulated sectors under supervision of the CNMC have benefited from short-form notifications, something that was explicitly excluded by the guidelines in the past as reports from the relevant regulatory authorities had to be obtained beforehand.
In late 2016, a new act on administrative proceedings came into force (Law No. 39/2015 on the standard administrative proceeding of public administrations) which, among other things, modifies the concept of working days. Under the aforesaid act, Saturdays are no longer working days as regards administrative deadlines, including those applicable to merger control proceedings.
In March 2017, the Spanish government launched a public consultation on a draft bill for yet another reorganisation of the institutional framework. This would demerge the current CNMC into two independent administrative authorities or AAI (autoridades administrativas independientes) and the CNMC would cease to exist. The draft bill entrusted enforcement to a new AAI for Competition (Autoridad Independiente de Defensa de la Competencia (AIDeCo)) while a new AAI for Supervision and Regulation of the Markets (Autoridad Independiente de Regulación de los Mercados (AIReM)) would be responsible for regulating and supervising energy, telecoms, railways, media, airports and postal markets. In addition, on 29 December 2017, the Commission of Economic Affairs of the Spanish Parliament accepted a proposal calling upon the government to consider the possibility of demerging the CNMC. However, as at the date of writing, the draft bill has not been sent to the Spanish Parliament yet and an institutional reform (if any) will be dependent upon the political landscape resulting from 2019 general elections.Scope of legislation
What kinds of mergers are caught?
The Competition Act provides that transactions capable of being caught are ‘any project or transaction involving a concentration of undertakings’. Concentrations are those transactions affecting on a lasting basis the structure of control of the undertakings concerned, normally through a merger between two or more formerly independent companies, the acquisition of control of the whole or parts of one or more undertakings, or the creation of a joint venture and the acquisition of joint control of an undertaking that performs on a lasting basis all the functions of an autonomous economic entity.
What types of joint ventures are caught?
The Competition Act states that full-function joint ventures are caught by the merger control rules (see question 2). Spanish merger control provisions are aligned with EU competition rules in this respect.
Is there a definition of ‘control’ and are minority and other interests less than control caught?
The Competition Act provides for a definition of ‘control’ that is modelled on the definition under the EU Merger Regulation (EUMR). Under the Competition Act, control means the possibility of exercising decisive influence on an undertaking.Thresholds, triggers and approvals
What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?
The Competition Act provides two alternative thresholds based on market share and turnover. It applies where:
- a share of 30 per cent or more of the national market or a ‘defined’ geographic market within it, of a given product or service, is acquired or increased unless the turnover in Spain in the preceding accounting period of the target (or of the assets being acquired) does not exceed €10 million and the individual or combined market share of the parties does not amount to 50 per cent or more in any ‘affected market’ in Spain or in any ‘defined’ geographical market within Spain; or
- the aggregate turnover in Spain of the companies involved exceeded €240 million during the last financial year provided that the turnover in Spain of each of at least two parties exceeded €60 million. The market share threshold can be satisfied by the target company only.
As provided for in the EUMR, the Royal Decree provides that the turnover is deemed to be the amount derived from the sale of products or the provision of services (excluding turnover taxes) in the preceding financial year in Spain, and must be considered for the acquirer on a group basis (the turnover of the target company should only include the amount derived from the sale of products or the provision of services attributable to the target company). In addition, there are sector-specific rules, in particular for banks and other financial institutions and insurance undertakings.
The CNMC has not referred to the Commission any cases below the thresholds set forth in the Spanish Competition Act.
The Competition Act will not apply to any transaction caught by the provisions of the EUMR (with exceptions, provided for in the EUMR, as set out in the European Union chapter).
The Competition Act provides for a consultation procedure so that the merging parties may, before notification, consult the CNMC as to whether their transaction amounts to a concentration or whether it exceeds the thresholds. Under the consultation procedure, the CNMC has a three-month deadline to issue a decision.
Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?
Filing is mandatory for those transactions exceeding either of the two above-mentioned thresholds. There are no exceptions.
Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?
Foreign-to-foreign mergers must be notified provided that they meet one of the two thresholds mentioned in question 5. Indeed, foreign-to-foreign mergers have been notified to the Spanish competition authorities on several occasions. There is no local effects or nexus test (apart from the two thresholds). However, lack of local presence may in practice hamper enforcement of the final decision or other measures adopted by the competition authorities.
Are there also rules on foreign investment, special sectors or other relevant approvals?
Spain has separate rules on foreign investment that may be relevant to certain acquisitions and require specific notifications or prior approvals depending on the sectors involved.
Except for specific turnover calculation rules for the financial and insurance sectors, there are no special rules for specific sectors in the Competition Act.
After the start of operations of the CNMC, the roles formerly played by the National Energy Commission and the Telecommunications Market Commission are now mainly played by the CNMC.
In the case of merger control, the different sectoral directorates of the CNMC may notify the Competition Directorate of any merger within their respective sectors if they believe it might be caught by the merger control provisions of the Competition Act.
In the energy sector, certain acquisitions of interests or assets in the electricity and gas sectors need to be communicated to the CNMC. The CNMC is entitled to impose conditions on the acquisition: if the acquirer is not a European Union or European Economic Area country and in case of a real and sufficiently serious threat to the supply of electricity, gas or hydrocarbons.
Certain acquisitions in the Spanish banking, insurance, defence and media sectors may also require specific approvals from the relevant authorities in these sectors.
Likewise, in Phase II investigations of transactions that may have a significant impact in a specific Spanish region, a non-binding (but compulsory) opinion is requested from the relevant authorities of the affected region.
Notification and clearance timetableFiling formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
Any project or transaction involving an economic concentration of undertakings caught by the Competition Act must be notified to the CNMC prior to completion (ie, prior to putting the transaction into effect). There are no specific deadlines for filing as long as the transaction has not been put into effect. However, as regards Spanish public takeover bids, filings must be made before, or up to five days after submitting the bid to the Spanish Securities Market Commission. Failure to notify within the five-day deadline may give rise to the imposition of fines of up to 1 per cent of the annual turnover of the undertakings concerned.
In addition, a 20-day deadline for filing is applicable only in cases where the CNMC requests parties for filing a transaction ex officio. Failure to notify within the said deadline may give rise to the imposition of fines of up to 1 per cent of the annual turnover of the undertakings concerned. In addition, such filings do not benefit from the legal deadlines to which the CNMC is bound.
Which parties are responsible for filing and are filing fees required?
The offeror or acquirer is responsible for filing in the case of an acquisition. For mergers, or in the case of the acquisition of joint control (ie, joint ventures), the filing must be made jointly by the merging parties.
The following filing fees for merger control proceedings are payable:
- €5,502.15 if the Spanish turnover of all the companies involved in the transaction does not exceed €240 million;
- €11,004.31 if the Spanish turnover of all the companies involved in the transaction exceeds €240 million but not €480 million;
- €22,008.62 if the Spanish turnover of all the companies involved in the transaction is higher than €480 million and does not exceed €3 billion; and
- a fixed amount of €43,944 if the Spanish turnover of all the companies involved in the transaction exceeds €3 billion, plus an additional €11,004.31 for each €3 billion exceeding the aforesaid turnover, up to a maximum of €109,860.
The filing fee for mergers notified under the abbreviated form (see question 16) procedure is €1,545.45. The fee must be paid in advance and the notification form must have evidence of payment attached.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
As a general rule, the notified transaction may not be put into effect before clearance from the CNMC has been obtained. However, the Competition Act provides for the possibility for the parties to request a derogation from this duty from the CNMC, which may allow implementation of the transaction before clearance. In these cases, the transaction cannot benefit from the short-form notification and must be notified using the regular notification form. The CNMC will decide whether to grant the requested derogation in light of the specific circumstances of each case and the potential consequences of waiving the obligation to suspend. The derogation can be made subject to certain obligations and conditions to guarantee the effectiveness of the CNMC’s final decision. If the transaction is purely foreign-to-foreign, where one of the parties does not make sales in Spain, this could be regarded as a reason to allow the early implementation of the transaction before clearance. To date, such derogation has been granted in exceptional circumstances (see for instance, the COPE/Vocento/Punto Radio case (C/0493/13) where the CNMC conditionally allowed the parties, a week after a formal filing was carried out, to implement a temporary agreement on non-exclusive assignment of sports radio content - the transaction was subsequently cleared in Phase I with remedies). In November 2016, in the Daimler/Hailo/MYTAXI/Negocio Hailo case (C/0802/16), the CNMC allowed the parties to carve out Spain (by partially lifting the suspension obligation), that is, to close the deal on a global basis as long as the transaction was not implemented in Spain. This derogation was granted in exchange for a number of commitments submitted by Daimler and Hailo which, prior to clearance of the transaction by the CNMC, guaranteed the commercial autonomy of the Spanish subsidiary of the target company.
Similarly to the EUMR, the Competition Act states that public takeover bids are not subject to the general suspension obligation provided that certain conditions are met (see question 15).Pre-clearance closing
What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?
The Competition Act provides for a fine of up to 5 per cent of the turnover of the notifying party or parties in the financial year in which the merger took place if the transaction is put into effect before clearance. The amount of the fines imposed by the CNMC can vary depending on the particular features of the transaction. The practice of the Spanish competition authorities is to take into consideration the Spanish turnover when determining the level of fines.
The CNMC has taken action against a number of non-filed mergers and has imposed several fines in this regard over the past years. By way of example, on 24 October 2012 the CNMC imposed a €286,000 fine on Verifone - the highest fine to date - for gun jumping in the context of the acquisition of control over Hypercom. The Verifone/Hypercom merger was filed in October 2011 and it was authorised in December 2011 subject to remedies, but the transaction was put into effect in August 2011. On 16 October 2015, the CNMC imposed a €106,005 fine on Grifols for gun jumping in the context of the acquisition of certain assets of Novartis. The Grifols/Activos Novartis merger was filed in October 2014 and it was authorised in March 2015 in Phase I, but the transaction was put into effect in January 2014. In November 2015, the CNMC also fined Masmovil €39,578 for closing the acquisition of Xtra Telecom prior to clearance. The Masmovil/Xtra Telecom merger was notified in January 2015 and authorised in February 2015 in Phase I, but the transaction was put into effect prior to clearance. According to the activity report issued by the CNMC in February 2017, in 2016, the CNMC kept a good track record on enforcement in this field and investigated eight potential gun jumping cases. In 2017, the CNMC continued to actively pursue companies breaching the suspensory obligation applicable to merger control proceedings. Indeed, the CNMC levied a fine of €20,000 on Consenur for gun jumping in the context of the acquisition of the waste management services business of Cathisa. The Consenur/Activos Cathisa merger was filed in June 2016, following a request from the CNMC to do so on April 2016, and it was authorised in July 2016 in Phase I. The transaction had, however, been put into effect in July 2015. There were no gun jumping cases in 2018.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
Yes. The former CNC initiated in 2011 for the first time an investigation for alleged gun jumping in the context of a foreign-to-foreign merger (ie, the parties did not have any relevant corporate presence in Spain). The acquisition by Dorf Ketal Chemicals (India) Private Limited of the titanates and zirconates business of EI Du Pont De Nemours & Company was allegedly put into effect before it was authorised by the former CNC. The CNC fined Dorf Ketal Chemicals (India) Private Limited €35,400 (3 per cent of the parties’ turnover in Spain). In the same vein, on 31 July 2014, the CNMC fined Essilor International SA €5,065 for gun jumping in the context of the foreign-to-foreign acquisition of Polycore Optical Ltd. In addition, on 31 July 2014, the CNMC fined Essilor International SA €5,065 for gun jumping in the context of the foreign-to-foreign acquisition of Polycore Optical Ltd. This amount represented 0.0001 per cent of Essilor’s worldwide turnover in 2013. The CNMC decided to impose a symbolic fine because there was an absence of bad faith; the company eventually notified the transaction and it was cleared in Phase I unconditionally as no possible harm to competition law was identified.
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
Though no such cases have been made public, in principle, there should be no reason for the Spanish authorities to object to a ‘hold-separate’ arrangement if it means that the implemented transaction has no impact on the Spanish market (see question 11).Public takeovers
Are there any special merger control rules applicable to public takeover bids?
For public takeover bids under Spanish law, filings must be made before, or up to five days after, submitting the bid to the Spanish Securities Market Commission (CNMV) and the bid will be conditional upon the outcome of the national merger control procedure. However, the Competition Act, in line with the EUMR, provides for the possibility to implement the public bid and acquire the shares before clearance has been obtained, provided that the transaction is filed with the CNMC within five days of submitting the bid to the CNMV and that the acquirer does not exercise the voting rights attached to the securities acquired or does so only to maintain the full value of those investments and on the basis of a derogation granted by the CNMC.Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
Notification is made to the CNMC using an official form (which is attached as Annex II to the Royal Decree). For straightforward cases raising no issues, which are specifically listed in article 57 of the Royal Decree (see below), a short form is available (Annex III to the Royal Decree). Notifications must be submitted in Spanish. The notifying party should indicate in its notification which data are business secrets in order for such data to be treated as strictly confidential, and provide a non-confidential version of the notification form.Notification form
The information required is similar to the information to be provided on Form CO under the EUMR (information on the parties, their turnover and business sectors, basic features of the transaction, details of ownership and control provisions, detailed market information, and the existence of cooperative and vertical aspects). Notification is a time-consuming and cumbersome exercise. It has to be complete and the Competition Act does not provide for the possibility of obtaining waivers of any of the information requirements. The CNMC can reject notifications for incompleteness, or require more detailed information to be provided during the investigation. It sometimes requires the clock to be stopped pending receipt of the information, which can significantly increase the length of the review period.Short-form notification
The Competition Act introduced the possibility of short-form notification for straightforward cases that are unlikely to raise competition issues (similar to the Short Form CO under the EUMR). The short-form notification applies to concentrations when, inter alia:
- there are no vertical or horizontal overlaps between the parties’ activities;
- the activities carried out by the parties in the markets affected by the transaction, because of their minor importance, are not capable of significantly affecting competition;
- there is a change from joint to sole control; or
- two or more undertakings acquire joint control over a joint venture, provided that the joint venture has no or minimal activity in Spain.
The 2012-2013 Annual Report of the former CNC stated that approximately 26 per cent of the merger control filings made in Spain during that period were short form. The proportion has since risen and, on average, it has been steady at around 50 per cent since 2014, accounting for 60 per cent of filings in 2017.
There is no shorter timetable for clearance for notifications made under short form (see question 18); however, in practice, in straightforward cases, the CNMC tends to issue a decision prior to the expiry of the one-month deadline for Phase I.
Finally, submitting incomplete, incorrect, misleading or false information is subject to fines of up to 1 per cent of the total turnover of the infringing undertaking.Investigation phases and timetable
What are the typical steps and different phases of the investigation?Phase I investigations
One month after filing, the CNMC must reach a Phase I decision, extendible by 10 working days if the parties submit commitments. Within this one-month period, the CNMC will carry out Phase I investigations, which will end with a non-binding report produced by the Competition Directorate. On the basis of the report, the Council will decide whether to clear the transaction, to clear the transaction subject to the commitments presented by the parties, to shelve the file, or to open a Phase II investigation if the transaction could impede effective competition.
During Phase I investigations, if the CNMC considers the notification incomplete and requires additional information, the one-month period may be interrupted and will start running again when the additional information is submitted. Experience shows that it is very useful (and customary in practice) to enter into pre-notification discussions and agree a draft notification form with the CNMC prior to formal submission to avoid unnecessary delays and tackle any technical discussions from day one.
There is a possibility of clearing the transaction during Phase I through commitments or undertakings presented by the parties. The positive impact upon timing of choosing to offer Phase I remedies where potentially required. In 2018, the Servired/Sistema4B/EURO 6000, BP/Petrocorner and Talleres Alegría/Duro Felguera Rail transactions, where Phase I remedies were offered, were cleared in approximately two months from formal filing. However, some of these deals entailed lengthy pre-notification contacts.Phase II investigations
The basic period for Phase II investigations is two months, extendible by 15 working days where the parties submit commitments. In Phase II, the CNMC normally requests comments from ‘interested third parties’. The merging parties may also request a hearing with the CNMC.
If the CNMC decides to clear the transaction unconditionally, such decision puts an end to the Phase II investigation, and thus the government cannot further intervene in the merger review process regarding such transaction.
Despite the statutory periods mentioned above, in practice Phase II cases have taken much longer for clearance because of the possibility to stop the clock in case additional information is required. For instance, and as recent examples of Phase II case duration, the Schibsted/Milanuncios case was cleared in seven months, the Telefónica/DTS case was cleared in six months and the JCDecaux/Cemusa case was cleared in five months (time periods calculated from filing). In 2019, the Quirón/Clínica Santa Cristina case was cleared in approximately nine months from filing.Phase III investigations
However, in those cases where the CNMC decides either to prohibit the transaction or to clear it subject to commitments or conditions, the Ministry of the Economy may ask the government to decide whether to confirm the CNMC’s decision or clear it, subject or not to commitments or conditions. In the second case, the government’s decision must be based on certain specified public interest criteria other than competition. In such cases, the Ministry of the Economy has 15 days to decide whether to ask the government to intervene. If it does, the government has one month to decide on the transaction. The intervention of the government in merger control proceedings is informally known as ‘Phase III’.
In practice, the government tends not to intervene in merger control proceedings. The Antena 3/La Sexta case (2012) is the only ‘Phase III case’ in Spain to date. The transaction was notified after the Telecinco/Cuatro merger, which had already reduced the number of private free-to-air television broadcaster from four to three; the Antena 3/La Sexta merger would leave only two such operators. The former CNC imposed conditions that were more severe than the remedies the former CNC had accepted in Telecinco/Cuatro. The Ministry of the Economy decided to refer the case to the government, arguing that the decision concerned ‘reasons of general interest related to the guarantee of an adequate maintenance of sector-based regulation and the promotion of research and technological development’. The government softened the conditions originally imposed by the former CNC and declared that the conditions should be in ‘line with those [conditions applied to other operators] in the sector’. The merger was finally approved eight months after the first notification to the former CNC.
What is the statutory timetable for clearance? Can it be speeded up?
During Phase I, the CNMC must reach a decision within one month of formal filing, extendible by 10 working days if commitments are submitted. However, during this phase of the investigation there is scope for contact with the authorities, particularly if they require additional information, either formally (which ‘stops the clock’) or informally. The Competition Directorate can also request information from third parties. For straightforward cases raising no issues, the CNMC tends to issue a decision prior to the expiry of the one-month deadline for Phase I. In fact, the average timeline for a decision to be delivered by the CNMC is 20 days, providing that there are no commitments submitted by notifying parties that need to be assessed.
Phase II investigations can last between two (basic period) and four months (due to the possibility to ‘stop the clock’ in case additional information is required). During the Phase II investigation, the law provides for requests for information to ‘interested third parties’ and the possibility for the merging parties to request a hearing before the CNMC.
Substantive assessmentSubstantive test
What is the substantive test for clearance?
The substantive test for clearance is whether the transaction ‘may prevent the maintenance of effective competition in whole or in part of the national market’. The test is set out in the Competition Act together with additional criteria that the CNMC may consider when adopting its decision on a proposed transaction such as structure of the relevant markets, competitive position and economic strength of the parties involved in the transaction, actual and potential level of competition, suppliers and consumers’ available choices, existence of barriers to entry, supply trends, countervailing demand power, and efficiencies.
Is there a special substantive test for joint ventures?
There is no special substantive test for joint ventures and, therefore, joint ventures (either cooperative or concentrative) are assessed under the same substantive test provided for in the Competition Act (ie, whether they ‘may prevent the maintenance of effective competition in the market’).Theories of harm
What are the ‘theories of harm’ that the authorities will investigate?
The Spanish substantive test (ie, whether the deal prevents the maintenance of effective competition in whole or in part of the national market) is aligned with the present substantive test provided for in the EUMR. The Spanish antitrust authorities may examine market dominance, unilateral effects, coordinated effects, conglomerate effects and vertical foreclosure when assessing mergers.Non-competition issues
To what extent are non-competition issues relevant in the review process?
In theory, the main criteria should be competition-related. The analysis by the CNMC should be strictly on competition grounds, although at the level of Phase II investigation, the relevant consumers’ associations may be consulted.
However, if the government intervenes in the merger control review at Phase III (see question 17), the Competition Act expressly states that such decision must be based on certain public interest criteria different from competition criteria:
- national defence and security;
- the protection of public security and public health;
- free movement of goods and services within the national territory;
- protection of the environment;
- the promotion of technical research and development; and
- the maintenance of the sector regulation objectives.
To what extent does the authority take into account economic efficiencies in the review process?
The Competition Act allows the authorities in practice to take into account efficiencies in the review process. It explicitly mentions ‘efficiencies’ as one of the substantive criteria for assessing mergers (see question 19). According to the Competition Act, the CNMC will only take into account efficiencies that are of direct benefit to consumers, merger-specific, substantial, timely and verifiable. In practice, this means that significant evidence will need to be adduced by the parties. To this effect, there is a specific section in the notification form dealing with efficiencies. The CNMC enjoys certain discretion in considering any efficiency claim.
Remedies and ancillary restraintsRegulatory powers
What powers do the authorities have to prohibit or otherwise interfere with a transaction?
The CNMC and the government may order any appropriate measures to restore effective competition, including divestments or the unwinding of the transaction. Fines of €12,000 may be imposed per day if the parties have been required to unwind the transaction and have delayed doing so or if the parties do not comply with the undertakings imposed by the CNMC or the government. Further, failure to comply with a decision issued by the CNMC in the context of merger control proceedings is a very serious infringement under the Competition Act. Fines foreseen for these types of infringements amount to 10 per cent of the infringing company’s turnover in the last financial year.Remedies and conditions
Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?
The Competition Act allows the parties to offer commitments during Phase I and Phase II investigations. Such commitments are amendments to the transaction or other appropriate remedies to restore competition. The CNMC may market test such commitments with third parties to assess their effectiveness in addressing the competition concerns arising from the transaction.
Divestiture is certainly one of the options available to the parties, as well as any other appropriate measures to restore competition.
What are the basic conditions and timing issues applicable to a divestment or other remedy?
The CNMC may authorise structural remedies presented by the parties such as divestments. The parties to the transaction must submit a detailed plan to the CNMC setting out the steps they will follow to comply with these remedies. With respect to behavioural remedies, the CNMC is likely to impose an obligation upon the parties to submit information periodically to the CNMC to allow effective monitoring of the implementation of the remedies.
Since September 2007, the merging parties have the possibility to offer commitments to the authority to obtain Phase I clearance. To date, the CNMC has closed 25 merger investigations subject to such commitments in Phase I. Almost half of the Phase I remedies cases to date took place in the last three years (see in particular the Just Eat/La Nevera Roja, Bimbo/Panrico II, Gas Natural Fenosa/GLP Repsol Butano-activos, Naturgas/GLP Repsol Butano-activos and Gas Natural Fenosa/GLP Cepsa-activos cases from 2016, the Cepsa/Villanueva Paz, Disa/Gesa and Integra/Codman Neurosurgery Business cases from 2017, and the Servired/Sistema4B/EURO 6000, BP/Petrocorner, Talleres Alegría/Duro Felguera Rail and Naviera Armas/Trasmediterranea cases in 2018) showing, as explained above, that the CNMC and parties are becoming more ready to remedy competition concerns upfront and proceed with early closing of transactions. Likewise, the parties can offer remedies in Phase II cases (as was the case in Quirón/Clínica Santa Cristina) and if the transaction is subject to Phase III, the government can impose on the parties any kind of remedies, including divestments, to clear the transaction. However, as already mentioned, the government’s decision will be based on public interest criteria that are different from competition criteria.
What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?
To date, there are no precedents of remedies imposed by the CNMC on pure foreign-to-foreign transactions (ie, those where the parties involved did not have any corporate presence in Spain). In the Integra/Codman Neurosurgery Business transaction where Integra was active in Spain only through an independent distributor, the CNMC accepted remedies in Phase I consisting of the divestiture of a viable business in the market where competition concerns had been identified. The remedy ensured that the divested business would have the necessary means (eg, portfolio of products, brand licences, know-how, stocks, production facilities, supply agreements) required to sell the products and services concerned in Spain.Ancillary restrictions
In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?
The Competition Act expressly states that ancillary restraints that are directly linked to and essential for implementing the concentration will be covered by the clearance decision. Contrary to the current ‘self-assessment approach’ followed by the European Commission, the Spanish competition authorities expressly deal with ancillary restraints in their clearance decisions. The notification form and short form contain a specific section on ancillary restraints, where the merging parties must provide detailed information on ancillary restrictions.
The CNMC will analyse the validity of ancillary restraints under the principles provided for in the European Commission’s Notice on restrictions directly related and necessary to concentrations. However, the Spanish competition authorities have sometimes followed a more restrictive approach than the European Commission on this matter.
Involvement of other parties or authoritiesThird-party involvement and rights
Are customers and competitors involved in the review process and what rights do complainants have?
Third parties (ie, customers or competitors) have a different role in merger control proceedings than in proceedings relating to restrictive practices and abuses of dominant position. Normal merger control procedure can only be initiated by the notifying party or parties. However, a third party may initiate proceedings by filing a complaint making the CNMC aware of a notifiable transaction that has not been notified.
As to customers’ and competitors’ rights in the review process, while they are very limited in a Phase I investigation, they are greater in a Phase II investigation (if opened), where they can become involved in the procedure as ‘interested third parties’ if they ask to intervene (see question 30). Moreover, the Spanish competition authorities usually contact and send questionnaires to customers, suppliers and competitors of the notifying parties and relevant consumer associations in Phase II merger control cases (see question 22) and, sometimes, also in Phase I merger control cases. The CNMC usually pays close attention to any feedback received from the market while carrying out its assessment.Publicity and confidentiality
What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?
The procedure before the competition authorities is reasonably transparent. The fact of the notification is made public on the CNMC’s website within one to three days after the transaction has been filed. Likewise, if the transaction is made subject to a Phase II investigation, a short notice of this event is made public on the CNMC’s website. The purpose is that potentially interested parties may become aware of the starting of Phase II proceedings if they want to request leave to intervene and submit comments on the transaction. Finally, once the final decision regarding the transaction is adopted, a non-confidential version is published on the CNMC’s website.
To avoid any possible concerns, the notifying party should indicate in its notification which data are business secrets to have them treated as strictly confidential, and it must provide a non-confidential version of the notification form.Cross-border regulatory cooperation
Do the authorities cooperate with antitrust authorities in other jurisdictions?
Yes, mainly with the EU authorities. The CNMC also cooperates with other antitrust authorities in the context of the OECD and the ICN. In addition, the CNMC interacts with Latin American authorities in the Latin American, Caribbean and Ibero-American competition fora.
Judicial reviewAvailable avenues
What are the opportunities for appeal or judicial review?
Decisions of the Competition Directorate can be appealed to the CNMC Council (provided that certain conditions are met), and decisions of the Council can be challenged before the Audiencia Nacional (a Spanish tribunal with national jurisdiction). The government’s final decision on merger control proceedings in Phase III investigations (see question 17) may be subject to judicial review by the Spanish Supreme Court. Experience shows limited appeal activity with regard to merger control decisions and unsuccessful outcomes.Time frame
What is the usual time frame for appeal or judicial review?
Although it is difficult to give a time frame, experience has shown that the Spanish Supreme Court’s judicial review of government decisions may take between two and four years.
Enforcement practice and future developmentsEnforcement record
What is the recent enforcement record and what are the current enforcement concerns of the authorities?
In 2018, 82 transactions were notified to the CNMC, as opposed to 96 in 2017. Most of them were unconditionally cleared in Phase I. Four cases were cleared subject to remedies in Phase I (Servired/Sistema4B/EURO 6000, BP/Petrocorner, Talleres Alegría/Duro Felguera Rail and Naviera Armas/Trasmediterranea). No transaction was prohibited and only one was subject to an in-depth Phase II analysis, and was cleared with remedies in April 2019 (Quirón/Clínica Santa Cristina). The number of filed transactions shows a slight reduction in merger control activity.
It is particularly interesting to note that the Phase I remedies offered in all four transactions included behavioural remedies, which shows how the CNMC is also making use of behavioural remedies in Phase I, whereas the European Commission favours divestments. Similarly, the recent Phase II case (Quirón/Clínica Santa Cristina) only included behavioural remedies. It is also worth noting that, following what was learned from the Bimbo/Panrico II case, in BP/Petrocorner the authority accepted a fix-it-first remedy.
In the CNMC’s Action Plan for 2019, the authority explained that special attention was to be paid to the following sectors: financial, pharmaceutical, port services, railway, telecoms, basic industry and digital economy, with an emphasis on e-commerce.
The CNMC has continued to show a clear willingness to monitor remedies and this has continued to be an enforcement priority. During 2013, the former CNC fined Telecinco €15.6 million (the highest fine to date in the context of merger control proceedings) for having failed to implement the remedies that were accepted by Telecinco as a result of the Telecinco/Cuatro merger. In the same case, in September 2015 and September 2016, the CNMC fined Telecinco €3 million each year regarding further failure to implement the remedies. During 2017 and early 2018, the CNMC has continued to closely monitor compliance with remedies as shown by cases Telecinco/Cuatro, Verifone/Hypercom, Redsys/Redy, Integra/Codman Neurosurgery Business or Día/Eroski Activos, where the CNMC has confirmed with a decision to that effect that the parties had complied with the remedies. In turn, in 2018 the CNMC opened an investigation in relation to an alleged failure to comply with the commitments undertaken by Repsol when it acquired Petrocat in 2014.
In addition, and as explained above, the CNMC has continued to actively prosecute companies for breach of the suspensory obligation applicable to merger control proceedings (ie, closing the relevant transaction prior to clearance) as shown by the fact that, as mentioned above, in 2016, the CNMC investigated eight potential gun jumping cases. However, only one formal investigation was opened against the company Consenur in relation to case Consenur/Activos Cathisa, eventually imposing a fine of €20,000 on Consenur for gun jumping in the acquisition of the waste management services business of Cathisa.Reform proposals
Are there current proposals to change the legislation?
Following the reform of the Spanish competition rules that entered into force from September 2007 to March 2008, Spain’s competition law has been in line with the EU rules and has streamlined the authorities responsible for competition enforcement in Spain. However, the competition authority can adopt ‘soft law’ (guidelines, notices, etc) to assist in the interpretation of key issues relating to Spanish merger control provisions and in fact did so in October 2011 with regard to simplified proceedings.
It is foreseen that the Competition Act will likely be amended in order to transpose the ECN+ Directive on the enforcement powers and resources of competition authorities of the member states (Directive (EU) 2019/1).
Update and trendsKey developments of the past year
What were the key cases, decisions, judgments and policy and legislative developments of the past year?Key developments of the past year36 What were the key cases, decisions, judgments and policy and legislative developments of the past year?
The number of merger filings (82 notifications) made in Spain in 2018 shows a slight reduction in activity (13 per cent less than in the previous year) but still a healthy number of transactions were filed as opposed to the years prior to the economic upturn when merger control activity in Spain reached historical lows. The enforcement track record shows a mature and consistent approach to merger control scrutiny as most transactions were unconditionally cleared in Phase I and only four cases were cleared subject to remedies in Phase I. No transaction was prohibited and one was subject to an in-depth Phase II analysis, which has been cleared subject to behavioural remedies in early 2019 (Quirón/Clínica Santa Cristina).
Recent enforcement shows a willingness to accept behavioural remedies both in Phase I and Phase II. All four cases cleared in 2018 subject to remedies in Phase I included behavioural remedies, which shows the CNMC also making use of behavioural remedies in Phase I, contrary to the practice of the European Commission, which favours divestments. In addition, the recent case cleared in Phase II in 2019 only included behavioural remedies. The remedies offered by the parties in those transactions also show that the regulator is willing to address proportionality concerns by accepting behavioural remedies.
Finally, the other 2018 transaction worth mentioning is BP/Petrocorner, where, following what was learned from the Bimbo/Panrico II case, the authority accepted a fix-it-first remedy for the second time.