Spain: National Authority for Markets and Competition

The National Authority for Markets and Competition (CNMC) was created in 2013 through the integration of the former competition and regulatory bodies. This new institutional architecture has expanded the available tools to preserve and promote competition and efficient economic regulation, pooling previous knowledge and experience. The coordination between the different directorates (competition, telecoms, energy, postal and transport services) allows us to reach more informed decisions on competition and regulatory issues. Furthermore, our larger size and the greater diversification of activities constitute a solid safeguard for the independence of the CNMC. Five years after the creation of the CNMC, I can say with satisfaction that we are reaping the fruits of this institutional framework.

On the merger side, the CNMC assessed 454 (83 in 2018) mergers in the period 2014–2018. Most of them raised no competition concerns, so they were cleared under the fast-track procedure, with which it takes less than one month to give the transaction the green light.

In 2018, 79 operations were cleared without in-depth review and were free of commitments, while in four cases commitments were offered by the merging parties. Of the latter, it is worth highlighting, due to their complexity and importance, the merger of Spanish payment systems ServiRed, Sistema 4B and EURO 6000; and the acquisition of Trasmediterránea, one of the most important passenger shipping transport companies in Spain, by its rival Naviera Armas group. Likewise, the Council decided on the in-depth review of the merger between the health service providers Quirón and Clínica Santa Cristina.

Our merger review system allows for the rapid clearance of non-controversial operations and the effective control of those that could raise concerns, delivering reasonably good results for companies and competition. The number of merger notifications remains at around 90 per year, with almost all being rapidly cleared.

Regarding activity in the antitrust domain during the past five years, the CNMC has been especially active in the detection and prosecution of cartels. This result has been achieved thanks to a mix of proactive ex officio work, a well-functioning leniency programme and good results obtained in dawn raids. We count on the experience of a skilled and dedicated team of inspectors working in close contact with our IT experts.

Indeed, in the 2014–2018 period, the CNMC sanctioned 32 cartels (representing 55 per cent of the antitrust cases in that period). A third of those cartels were uncovered thanks to our leniency programme, which has proved very effective, with over 100 leniency applications since it began in 2008. The leniency programme has spurred our institution to carry out more inspections in an increasingly effective manner. We also carried out a total of 39 inspections in 160 companies. In seven cases, inspections deriving from leniency applications allowed us to detect additional competition infringements in neighbouring markets.

In this five year period, the CNMC imposed fines totalling more than €1.2 billion, of which €970 million corresponds to cartels. The following economic sectors are areas where cartels have been detected, investigated and sanctioned:

• car manufacturers (€131 million, in 2015);
• diaper producers (€128 million);
• security services (€46 million); and
• cables (€43 million).

Another milestone in 2016 was the first ever sanction imposed on company managers, which the Supreme Court recently upheld. The benefits for leniency applicants have also been high. Since the introduction of our leniency programme, total fine immunity amounts to around €200 million and fine reductions have reached €24 million so far.

Focusing on 2018, the CNMC dismantled and sanctioned four cartels, with accumulated fines of €115 million, in the following sectors:

• courier and parcel services;
• IT services for the public administration;
• advertising; and
• automotive batteries.

The agreement among the four largest Spanish banks (Santander, BBVA, CaixaBank and Sabadell) to set up the contracting conditions of financial derivatives was also sanctioned in 2018 with fines totalling €90 million. Two commitment decisions were also agreed upon in the wholesale pay-TV market and in the retail trading of electricity and gas.

All these proceedings were conducted within a more than reasonable time frame. Indeed, our Competition Act requires that the investigation, after the opening of formal proceedings following an inspection, be carried out within a maximum of 18 months, something uncommon in other jurisdictions, allowing the CNMC to be more effective in solving cases.

Yet not everything has been as smooth sailing in this five year period. One of the most serious problems faced by this institution was the annulment by the Supreme Court in January 2015 of the guidelines for the calculation of fines approved by the former Competition Commission in 2009. The Supreme Court considered that the legal maximum of 10 per cent should be interpreted as an upper limit of a range of fines, and not as a cap or levelling threshold, forcing the CNMC to adapt its fining methodology and recalculate many of the fines that had been imposed in the recent past. A new fining methodology has since been developed to meet the criteria set up by the high Court, and was confirmed by several judgments of the appeal courts in 2018.

Apart from the fines, courts upheld around 80 per cent of the CNMC’s decisions on substantial grounds (eg, the existence of an infringement). At the Authority we are committed to strengthening the economic and legal aspects of our decisions in order to facilitate court review and maintain this track record.

Competition advocacy has been another main pillar of the CNMC’s competition policy. The CNMC’s advocacy focuses on four main areas: promoting better regulation; public procurement; public aid; and raising public awareness of competition policy.

Between 2014 and 2018, the CNMC adopted 158 advocacy reports, studies and guides evaluating regulation and other forms of public intervention (public procurement, public aid and other administrative acts) or assessing markets. These include reports adopted at the request of the public sector, as well as reports and studies conducted at the CNMC’s own initiative. The CNMC has issued five annual reports on state aid and has produced 11 market studies targeting sectors such as fuel retailing, airports, pharmaceuticals, Fintech, private-hiring vehicles and short-term rentals. The CNMC has also issued guidelines concerning the methodology of market studies and the evaluation of public aid.

In addition, the CNMC has a powerful advocacy tool in the form of its active legal standing to challenge acts and regulations of all government levels that hinder competition. Between 2014 and 2018, the CNMC challenged 12 anticompetitive regulations, most of them at regional and local level. The CNMC also produced expert reports evaluating the effects of anti­competitive regulation to accompany such appeals. So far, the Advocacy Department of the CNMC has produced 20 reports of this sort.

Beyond reports, studies, guides and appeals, the CNMC focuses on raising the awareness of competition policy between market operators, consumers and the public sector. The CNMC is highly active on media and social networks, produces podcasts and videos, and runs a blog explaining complex issues in plain terms. It also runs an ambitious programme targeting public procurement officials, as a result of which more than 1,600 officials have so far received training on bid-rigging detection and tender design.

Looking ahead, the CNMC will endeavour to remain active in all these domains. As far as enforcement is concerned, the CNMC announced, in autumn 2018, the creation of the Economic Intelligence Unit for cartel detection, which is a major priority for the CNMC, especially in the fight against collusion in public procurement. The Unit has been created and properly sourced with skilled staff and specific resources with the aim to boost ex officio detection of cartels, especially those affecting bid-rigging in public procurement. Undoubtedly, the interplay between private and public enforcement, and particularly the effect that damages actions might have on the incentives of firms to apply for leniency, has also raised awareness of the need to intensify ex officio investigations as a more proactive approach towards cartel detection. This unit carries out a wide variety of market screening activities including structural and behavioural screens, and includes staff specialised in quantitative techniques and forensic IT, headed by cartel detection experts, with the aim of improving the likelihood of turning these quantitative findings into investigation cases.

However, this unit will not start from scratch. Since the end of 2014, a working group has been devoting a lot of time to the creation of a database with most of the information included in the public procurement platform from the Spanish Ministry of Finance, which includes the majority of public tenders from the national government and some of the regional and local governments. The CNMC has found out that many public procurement officials were unaware of competition law or lacked enough knowledge to detect indicia of a bid-rigging infringement. Futher, public procurement authorities do not always know where and whom to inform if detecting suspected bid-rigging, or the consequences of this submission for their tenders. As such, the CNMC has for some time been carrying out training sessions to inform and improve our relations with these procurement bodies, and to set up clear contact points that could help to uncover bid-rigging cases.

The focus has now turned to the development of statistical tools and screening techniques to identify collusion patterns using detailed data from the public procurement databases. The new economic intelligence unit is developing software that uses quantitative indicators to identify collusion patterns and signs of bid-rigging. This application will be used to ‘red flag’ potential markets and infringements that deserve a closer investigation, and to complement information from other sources such as our tool for whistle-blowers and complaints.

So far, I can confirm with satisfaction that the performance of this working group has increased the number of complaints, leniency applications and whistle-blowing submitted to the CNMC related to bid-rigging cases and we expect numbers to keep growing in the near future.

In this vein, we want to improve our staff’s training in the management of information channels, as well as to create an internal protocol for the management of information and sources of information, which ensures the confidentiality of informants.

Other areas of future development apart from cartel detection include the following:

• Early transposition of the ECN+ Directive and reformation of the Competition Act, with the purpose of strengthening the leniency programme and adding new instruments to our competition toolkit, such as settlements.
• Strengthening decision monitoring with a view to analysing the effects of sanctions or commitments on competitive behaviour and the effects of remedies on market performance, as well as the detection of possible non-compliance of cease orders.
• Reinforcement of proceedings with a thorough monitoring of the judicial review of resolutions on competition in coordination with our legal services.
• Preparation of guidelines on access to files and confidentiality.

In the digital economy, we would like to monitor online platforms with market power to verify that in markets of national scope, restrictive practices that limit competition between platforms are not carried out (either through horizontal agreements or vertical restrictions). We will also remove obstacles to the development of local platforms serving especially small and medium-sized companies in the different areas of the digital economy. Finally, we will review the contracting terms imposed by platforms to SMEs for the use of their services, especially in the case of vertically integrated platforms. Training of our staff on issues related to blockchain, algorithms or machine learning will also be pursued.

The surveillance and supervision of the finance, energy, railways, ports or tele­communications sectors will continue, and others such as pharmaceuticals, basic industries or digital economy will be deepened, with special emphasis on electronic commerce.

The advocacy department of the CNMC will continue to promote competition and raise public awareness of competition policy through the elaboration of market studies to better understand sectors and the functioning of markets, as well as challenging anticompetitive regulations and raising awareness in the public sector when needed.