The European, Middle Eastern and African Antitrust Review 2017

Spain: Overview

DLA Piper Spain

The Spanish National Markets and Competition Commission (NMCC), as in previous years, has made the fight against cartels its main priority, although merger control continues to gain importance in parallel to the economic situation.

In the field of competition infringements the authority is increasing the level of fines in an attempt to raise compliance. The amount of the fines imposed by the NMCC totalled €549 million of which €506 million (90 per cent of the fines) were for 14 cartel cases involving more than 250 undertakings. The remaining fines were imposed as a result of anticompetitive agreements or abuse of dominant position (€24.7 million), for failing to comply with previous NMCC decisions (€17.5 million) or for non-notified mergers (€146,078).

With regard to merger control in 2015, 93 concentrations were notified, a 10.7 per cent increase from the previous year.

2015 has also been a significant year for dawn raids, the NMCC carried out 10 dawn raids in 35 companies belonging to different sectors.

Merger control

Euskaltel/R Cable (Case C/0707/15)

In November 2015 the NMCC cleared at Phase I of the merger control procedure the acquisition by Euskaltel of sole control over the regional electronic communications and pay-TV services provider R Cable. Both are regional companies that are active in the same markets in the north of Spain. However, the NMCC considered that this transaction did not give rise to any competition concerns due to the fact that the merged entity’s market share is low in the markets where there was some overlapping between the parties and because of the limited presence of these two operators in the wider national market.

In addition, the NMCC took into account the existence of alternative operators that will guarantee an adequate competitive development in the markets. Moreover, the NMCC saw the transaction as an opportunity for the merged entity to develop competitive strategies on a national basis.

Pelayo/Agromutua (Case C/0683/15)

In September 2015, the NMCC authorised the acquisition of sole control by Pelayo over the assets of Agromutua dedicated to the agricultural insurance business. Both companies are active in the agricultural insurance market.

The NMCC detected that the transaction strengthened the presence of Pelayo in the Spanish agricultural insurance market where it would have a significant market share. However, the NMCC considered that the absence of significant entry barriers and the annual term of the agricultural insurance contracts ensure effective competition between market players. The transaction was cleared in Phase I without commitments.

Endesa/Madrileña Suministro de Gas/ Madrileña Suministro de Gas Sur (Case C/0685/15)

In September 2015 the NMCC issued a Phase I clearance decision in relation to the acquisition of sole control over Madrileña Suministro de Gas and Madrileña Suministro de Gas Sur by Endesa. The merger involved a major gas supplier in the Spanish gas market, Endesa, and two relevant gas distributors in many towns and cities of the autonomous region of Madrid.

The transaction was cleared in a Phase I decision without commitments because Endesa is not present in the market for the distribution of gas in the autonomous region of Madrid, which implies that there is no overlap and the strengthening of a new competitor now able to compete with the traditionally dominant gas operators.

Enagas/Osaka/UFG/Saggas (Case C/0652/15)

In June 2015 the NMCC authorised the acquisition of joint control over Saggas by Enagas, Osaka and UFG. Saggas owns the regasification plant at Sagunto (Spain), Enagas is the only carrier in the Spanish gas system, and Osaka and UFG are both gas companies that belong to vertically integrated groups also present in the electricity market. Before the transaction, Osaka and UFG had joint control over Saggas, thus the transaction meant the incorporation of Enagas as a new shareholder.

The transaction gave rise to certain horizontal overlaps between Saggas and Enagas in the market of infrastructures for importing natural gas and in transport infrastructures. However, the NMCC considered that this did not give rise to competition concerns since Enagas has been declared by the Hydrocarbon Sector Act as an independent manager of those natural gas networks that are not of its property, which guarantee the separation of its activities.

DIA/ Eroski-Assets (Case C/0634/15)

In April 2015 the NMCC cleared the acquisition of sole control by Distribuidora Internacional de Alimentación SA (DIA) over certain assets of Eroski. Specifically, 160 supermarkets located in Madrid, Andalucia, Castilla y León, Extremadura and Castilla La Mancha and previously operated as Caprabo, Eroski City and Eroski Center.

The authority considered that the transaction significantly strengthened the position of DIA restricting the existing competition in certain local areas. Therefore, the parties offered commitments to the NMCC to guarantee that the transaction was cleared in a Phase I decision. The commitments were limited to the divestment of three supermarkets located in the problematic geographic areas.

Taminco/CEPSA Química assets (Case C/0643/15)

In March 2015 the NMCC cleared in Phase I with commitments the acquisition of sole control by Eastman – through its subsidiary Taminco – of certain assets belonging to CEPSA Química and related to its business in Spain dedicated to the production of methylamines and methylamine derivatives. The acquired assets included client contracts, intellectual property, know-how and goodwill.

The NMCC considered that the transaction posed competition concerns because of Taminco’s position in the supply of trimethylamines. To secure clearance of the transaction in the first phase of the merger control procedure Taminco committed to supply trimethylamine to Algry Química, SL for a period of four years, under the terms of a supply agreement subject to supervision by the authority.

Cartel investigation

Urinary incontinence absorbents (Case S/DC/504/14)

In May 2015 the NMCC imposed fines totalling €128.8 million on eight manufacturers of adult diapers, their sectorial association and four of executives, concluding that the activity of the parties constituted a breach of both the Spanish Competition Act and article 101 of the Treaty on the Functioning of the European Union (TFEU). This is a very relevant case because it is the first time that the NMCC has imposed fines on a natural person in the context of a competition infringement after the authority’s declared decision to foster compliance by fining managers.

According to the authority the parties fixed the prices of the diapers supplied within the Spanish National Health Service for non-hospitalised patients since at least 1996. The undertakings would have reached agreements with the rest of agents participating in the distribution chain (including distributors and pharmacists) although fines are ultimately only imposed on manufacturers.

The NMCC’s considers the extent of the conduct of the parties involved as specially significant since the combined market share of the offender undertakings in the relevant market was 95 per cent. This very fact has been judged as very serious by the NMCC given that urinary incontinence affects nearly 2.5 million people in Spain.

The investigation was triggered by a leniency application filed by Procter and Gamble.

Modular construction (Case S/0481/13)

In December 2015 the NMCC issued a decision concluding that nine undertakings had engaged in fixing prices and had entered into agreements to share customers and rig tenders organised by both private and public bodies in the Spanish market for modular constructions. The NMCC has imposed fines totalling €9.3 million.

The NMCC commenced its investigations in 2013 after a leniency application was filed by Algeco, which was exempted from payment of a fine. In 2014 the NMCC decided to extend the investigations to a larger number of undertakings as a result of the dawn raids it had carried out.

The authority found that the anticompetitive practices had been taking place from 2008 to 2013 and affecting the territory of different Spanish autonomous regions.

Car manufacturers (Case S/0482/13)

In July 2015 the NMCC imposed fines amounting to €171 million on 21 companies and two consulting companies for a cartel in the market for the distribution and marketing of motor vehicles and in the provision of after-sales services. The NMCC considered that the infringing companies implemented a systematic exchange of confidential and commercially sensitive information, both current and future, which was highly disaggregated and which covered almost all of the activities carried out by the sanctioned companies through their distribution and after-sales network.

The investigation was triggered by a leniency application filed by SEAT, together with the group that it belongs to (Volkswagen Audi España and Porsche Ibérica).

Paper and corrugated cardboard manufacturers (Case S/0469/12)

In June 2015 the NMCC issued a decision concluding that 18 undertakings and one sectorial association were involved in price-fixing and market-sharing practices in the Spanish sector for the manufacture of paper and corrugated cardboard. As a consequence of the sanctioning proceedings opened by the NMCC, it imposed fines totalling €57.7 million.

During the course of the investigation the NMCC detected exchanges of commercially sensitive information, customer allocation practices, collective recommendations and agreements in relation to prices. Further, the authority found that the sectorial association (AFCO) played a fundamental role regarding the adequate functioning of the cartel, very often using the media for its purposes. The NMCC ultimately declared that the undertakings involved had committed a single and continuous infringement of the Spanish competition rules that constituted a cartel.

Antitrust: restrictive agreements and dominance

AGEDI – AIE (Case S/500/13)

In November 2015 the NMCC imposed fines totalling more than €2.7 million on two IP rights associations – AIE and AGEDI – for abusing their dominant position when managing such IP rights.

According to the NMCC’s opinion, both associations fixed an inequitable and discriminatory remunerative system regarding the management of music usage rights by the broadcasting radio entities. This remunerative system applied different tariffs depending on the public or private ownership of the broadcasting radio entities or on the membership of those to the Commercial Broadcasting Spanish Association, which represents 80 per cent of the total audience in Spain.

Yoigo – Telefónica (Case S/0490/13)

In June 2015 the NMCC fined telecommunications operators Telefónica (€6 million) and Yoigo (€300,000) for entering into agreements whose object and effect were to restrict competition in the electronic communication markets.

Both companies entered into agreements to share and use the deployment of mobile telecommunications networks, as well as for the distribution by Yoigo of a convergent product including Yoigo’s mobile telephony services and fixed telephony services provided by Telefónica.

The NMCC considered that these agreements were anticompetitive since they restricted competition as a result of their capacity to reduce the competitive pressure in the electronic communications markets.

Non-compliance

Grifols (Case SNC/DC/037/15)

In October 2015 the NMCC imposed a fine to Grifols totalling €106.500 for failing to comply with the suspension obligation affecting mergers. The merger consisted in the acquisition of sole control over the pharmaceutical Novartis. The NMCC found that Grifols had implemented the transaction in January 2014 while the notification was not submitted until March 2015.

TV operators (Cases SNC/DC/0036/15 and SNC/DC/0039/15)

In September 2015 the NMCC fined the free-to-air TV operators Mediaset (€3 million) and Atresmedia (€2.8 million) due to the failure of both operators to comply with the commitments imposed by the NMCC when it cleared the acquisitions of sole control over, on the one hand, the free-to-air TV operator Cuatro (Mediaset) and, on the other hand, the also free-to-air TV operator La Sexta (Atresmedia).

State aid

From January 2015 to June 2016 there were 18 state aid cases related to Spain being examined before the European Commission. Fifteen of them have resulted in the European Commission issuing decisions holding that the measures under assessment do not constitute state aid. The remaining three cases are still pending assessment and during 2015 the European Commission issued decisions related to the commencement of formal investigation procedures in this regard.

According to the authority, the fact that the European Commission’s decisions have not declared the existence of illegal state aid involving Spain throughout 2015 and the first half of 2016 shows Spain’s good compliance with the rules contained in the Treaties.

Trends, developments and strategies

Relating to merger control, the number of concentrations notified to the NMCC increased during 2015 to 93 (a 10.7 per cent increase), while 84 transactions were notified in 2014 and 59 in 2013. This was mainly due to the fact that the economic situation in Spain is improving. From a qualitative standpoint, in 2015 84 concentrations (92.3 per cent of the total) were cleared in Phase I without commitments, three were in Phase I with commitments and only one in Phase II with commitments. About half of the concentrations in 2015 were notified under the simplified proceeding that allows rapid resolution of the notifications. Finally, three merger cases were closed due to no merger filing obligations or withdrawal of the parties. Additionally, in November 2015 the NMCC announced the issuance of a new communication on the simplified merger control notification that takes into account the integration of the competition authority and the Spanish regulatory bodies. As a result, this communication simplifies those merger control notifications to be filed in relation to regulated sectors.

On another note, with regard to cartel infringements throughout 2015 the NMCC has surpassed the maximum total fines imposed during a year resulting from cartel infringements, imposing fines totalling €506 million. Concretely, the NMCC issued 14 decisions against more than 250 undertakings as result of their involvement in cartel practices. Additionally, the NMCC has proposed in its 2016 Action Plan the use of the following instruments to intensify its fight against cartels: (1) the encouragement of the personal prosecution of the executives and directors of those companies involved in competition infringements as a deterrent measure, and (2) the enforcement of a prohibition to enter into agreements with the public administration to those companies that were sanctioned as a result of a competition infringement in accordance with the provisions of the Spanish Public Sector Contracts Act. In February 2016, the NMCC has also announced that it will intensify its fight against bid rigging. For that purpose, the NMCC has recently created a working group that will gather information for the detection of bid-rigging practices, analyse previous bid-rigging cases, and implement screening procedures to detect these sorts of practices.

Regarding general antitrust cases, in 2015 fines amounting to €24.7 million were imposed in five different proceedings on several undertakings regarding the infringement of articles 1 and 2 of the Spanish Competition Act unrelated to cartels. Such infringements consisted of four cases of horizontal and vertical restraint agreements and one case of abuse of a dominant position.

Finally, and related to state aid, the NMCC prepares an annual report on public aid in Spain as part of its duty to monitor the activities of public authorities. In addition, this report provides a statistical overview of state aid in Spain and the main highlights from a legislative and decision-making perspective at European level. No significant developments took place in Spain in the past year.

Outlook

According to the NMCC’s Action Plan, in 2016 the authority expects to exercise its duty of control over concentrations in the food markets and some relevant transactions in the energy markets due to the disinvestment process carried out by the oil companies as a result of the significant fall in international crude prices.

Apart from mergers, the NMCC’s Action Plan states that in 2016 the priority of the NMCC regarding cartels will be the fight against cartels and, for that purpose, the authority has proposed some measures and goals as: the fight against cartels that manipulate public tenders; the promotion of the leniency programme; the encouragement of the use of all tools provided by the law to detect and confront cartels; and collaboration with other competition authorities. Furthermore, in 2016 the NMCC is expecting to publish a guideline on dawn raids whose main objective will be providing guidance to undertakings and legal advisers on the dawn raids carried out by the authority. This new document aims to increase the legal security of the undertakings under investigation.

On the other hand, the recent judgment issued by the National High Court in January 2016 regarding the expiry of the sanctioning proceedings should be noted. The Spanish Competition Act provides that the maximum term for the NMCC to issue a resolution in any sanctioning proceedings shall not exceed 18 months since the opening of the proceedings without prejudice to the potential suspensions that may be adopted by the NMCC. However, according to this judgment, any suspension of the proceedings adopted by the NMCC once the initial term (18 months from the opening of the sanctioning proceedings) has expired shall not be taken into account for the calculation of the expiry of the sanctioning proceedings. Therefore, as a consequence of this judgment, the Spanish courts may in future annul relevant resolutions issued recently by the NMCC because sanctioning proceedings have expired.

In another noteworthy ruling, in December 2015 the General Court of the EU held that the Spanish tax lease system for the shipbuilding industry did not constitute state aid. Such ruling annulled a decision of the European Commission that considered that the system represented illegal state aid that was incompatible with the EU internal market. The General Court found that the tax lease system only benefited investors and therefore the advantages of the system were open to any investors taxable in Spain. Additionally, regarding the Commission’s decision, the General Court assessed errors and an insufficient statement of reasons to classify the scheme as state aid. The Commission also failed to show that the measure was likely to distort competition and affect trade between member states.

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