Spain: Towards Consolidation of Competition Culture

In summary

In 2020, the National Commission for Markets and Competition (CNMC) met the challenges posed by the covid-19 pandemic while keeping pace with its usual activity. The Competition Directorate carried out four dawn raids involving 10 companies, and the CNMC issued two prohibition decisions with fines totalling over €4.3 million. The CNMC cleared 64 mergers, and over 50 per cent of mergers were notified for exceeding the market share threshold. In 2021, the CNMC launched its strategic plan for the next six years to consolidate a solid culture of competition in Spain to maximise welfare.

Discussion points

• The covid-19 pandemic
• Economic Intelligence Unit and ex officio investigations
• Public procurement and bid-rigging prevention
• CNMC Strategic Plan 2021–2026: digitalisation, sustainability and innovative markets

Referenced in this article

• Fine on Repsol
• Economic Intelligence Unit
• ECN+ Directive
• Guides on planning of public procurement, the benefits of competition for consumers and antitrust compliance programmes
• CNMC Strategic Plan 2021–2026
• CNMC position paper on the Digital Services Act
• CNMC position paper on the Green Deal

Overview of activities

The activity of the National Commission for Markets and Competition (CNMC) in 2020 was marked by difficulties owing to the covid-19 pandemic and by the new expectations created around its renewed council, presidency and vice presidency, with the set-up of a new strategic plan for the next six years. However, the CNMC has embraced those challenges and continued its duties owing to its highly professional staff.

The potential risks that the pandemic brings for the functioning of the market are already in the spotlight of every competition authority. As a consequence of supply shortages, certain entrepreneurial strategies relating to price gauging, implicit agreements and abusive conduct in respect of essential goods (eg, face masks and hydroalcoholic gels) have spread around the world, and authorities have adopted specific measures to address them.

In the case of the CNMC, in March 2020, a special email inbox was set up for complaints and queries relating to the application of competition rules in the context of the pandemic. Over 700 requests were received, including inquiries and complaints, during its four-month existence, and the vast majority of them were answered in less than one week.

The CNMC initiated several investigations as a result of some of those complaints. The most relevant ones involve suspected unfair practices in the financial sector (eg, bundling of financial products in ‘covid credits’) and the insurance sector, where the CNMC has already opened formal proceedings against an insurance company for potential anticompetitive behaviour during the pandemic.^[1]

The CNMC also received requests from companies regarding temporary cooperation agreements among businesses to address some of the economic effects of the pandemic. It provided informal guidance in a timely manner, in particular regarding cooperation agreements in the health, insurance and financial sectors.

In the context of the covid-19 pandemic, competition advocacy to the public sector has been a major area of focus. A high number of regulatory measures were adopted in Spain within very tight time frames as a response to the sanitary and economic crisis. In this context, the CNMC has been available and readily providing advice through formal and informal channels on competition issues arising from activities in the public sector.

In 2020, the CNMC adopted a record-high number of advocacy reports on regulatory measures and other forms of public intervention (a total number of 23 reports were adopted, including four on draft laws), many of them involving measures pertaining to the covid-19 pandemic and related effects. It also collaborated with other agencies on issues such as the price gauging of hygienic masks and has been monitoring public aid granted in the context of the pandemic.

In its seventh annual report on public aid in Spain, a special chapter was dedicated to public aid implemented during the pandemic. Similarly, as economic aspects of the crisis became more pronounced, the CNMC focused its advocacy capacities on the role of competition to favour economic recovery.

At the end of 2020, the CNMC adopted a guide on the planning of public procurement and compliance programmes in respect of antitrust rules and, in the first part of 2021, a guide on the benefits of competition for consumers. It also conducted three market studies in 2020 on urban water and wastewater services, on subsidies to airline tickets in non-mainland territories and on the procurement of special modes of passenger transport (for professional, sanitary and school purposes). It also challenged before the courts two regulations that restricted competition in the field of urban and interurban ride-sharing.

Besides the new issues arising from the pandemic, the CNMC conducted business in a normal fashion. With regard to competition enforcement, in 2020 it initiated over 12 formal proceedings for antitrust behaviour, which is the highest number registered since 2014. Throughout 2020, and despite the challenging circumstances, the Competition Directorate managed to carry out four dawn raids involving 10 companies – among them, the CNMC’s first inspection in the context of a notified merger, in the funeral services sector.

In 2020, the Economic Intelligence Unit (EIU) prompted the largest number of investigations since its creation in 2018. The EIU is responsible, among other things, for the first case dealing with the use of algorithms in the real estate sector (proptech). The EIU was also key in the preparation of some inspections in the chemical industry and in investigations that led to various decisions in 2020, including the cartel in meteorological radars sanctioned by the CNMC.

Sixteen of the 25 investigations started by the EIU in 2020 arose from informants, six were informed by public procurement authorities, two were informed by anti-fraud agencies and one was purely ex officio by the CNMC. Fourteen more cases were subject to inquiry and allocated to regional competition authorities following the existing regulation.

The EIU, in cooperation with the advocacy department, also participated in 13 training programmes addressed to public procurement authorities and aimed at facilitating the detection of anticompetitive behaviour in public tenders.

With regard to merger control, although 2020 was marked by the pandemic and procedures were suspended for several months, the CNMC continued to analyse a good number of transactions, deciding on 64 mergers transactions in 2020, 55 of which were approved in Phase I without remedies and another three with remedies. Three mergers were subject to in-depth investigations (Çimsa/Cemex, Santa Lucía/Funespaña and Mooring/Port Services). One of them was finally cleared subject to remedies while the others remain under investigation as at the time of writing.

Over 90 per cent of the mergers underwent the pre-notification procedure, which streamlines and simplifies the procedure, increasing the speed of the decisions. Regarding the notification thresholds, 56 per cent of merger transactions were notified for exceeding the market share threshold, 36 per cent of merger transactions were notified for exceeding the turnover threshold, and the remaining 8 per cent were notified for exceeding both thresholds.

The CNMC considers the market share threshold included in the Spanish competition law to be very useful; it has allowed the CNMC to assess several merger cases in the digital sector that would have otherwise escaped its attention. In particular, mergers such as Facebook/WhatsApp and Apple/Shazam did meet its threshold based on the 30 per cent market share, and the CNMC was able to refer them to the European Commission for assessment of the effects on the European market, not only on the Spanish market.

Cartel enforcement continued to represent the core of the CNMC’s antitrust functions. The CNMC was especially active in the detection and prosecution of cartels owing to a valuable mixture of proactive ex officio work (reinforced with the set-up of the EIU), a well-functioning leniency programme and good results obtained in dawn raids. In 2020, the board of the CNMC issued two decisions of prohibitions with fines regarding cartels (meteorological radars and solid fuels). The fines amounted to €4.3million. The CNMC also fined Repsol €5 million for failing to comply with the conditions imposed in two previous resolutions.

New challenges: the Strategic Plan

The year 2021 has been especially challenging for the CNMC since a new team arrived at the institution, and a new strategy for the next six years had to be approved. Those institutional changes took place in a complex and unprecedented situation that the CNMC has taken as an operational opportunity to improve its environment and strengthen Spain’s economic future.

In the context of digitalisation, ecological transition and considerable business evolution, an institution such as the CNMC, which pursues the well-being of consumers and the good health of domestic activity, can be decisive in ensuring competitive and resilient markets that underpin robust economic recovery. With this goal in mind, over the next six years, the CNMC hopes to consolidate a solid culture of competition in the country that allows welfare to be maximised through competitive, innovative and liberalised markets aimed at increasing consumer welfare.

The CNMC’s greatest challenges include adapting to and anticipating the eventual new rules of the game. It must foresee the risks to effective competition in sectors that are in constant technological evolution while promoting innovative activities that benefit consumers. The CNMC has already taken some steps in this regard, through written contributions to European legislative processes, such as the New Competition Tool (which later became the Digital Markets Act), the Digital Services Act and the Green Deal.^[2]

The CNMC continues focusing on those issues in its Strategic Plan, which will determine its steps for the next six years. Specifically, the Plan is structured around three main areas of measures – internal, institutional and international – that, founded in the consolidation of the culture of competition and good regulatory practices, are all devoted to achieve competitive, innovative and liberalised markets that will eventually improve the welfare of citizens.

Internal pillar

With regard to the internal pillar, the strategy envisages a new way of working based on objectives and results rather than hourly shifts. Cross-departmental collaboration will be reinforced between the CNMC’s various directorates and departments, exchanging knowledge and setting up multidisciplinary work groups that generate synergy and add creativity and value to the process of obtaining results.

Within this approach, the economic and legal units will have the necessary means to consolidate their cross-departmental role to achieve higher levels of internal resilience and consistency in analysis methodology. There are already four working groups with those characteristics at the CNMC, with people from different units analysing together issues such as the digital economy, competition and sustainability, energy and innovation, and railway liberalisation.

The CNMC will also be involved in a rigorous ex post evaluation process of the impact of all its actions, not only in the areas of promoting and defending competition, but also in the regulatory part of its activity. Further, every action taken by the CNMC will be committed to applying the sustainable development goals of the 2030 Agenda and digitalisation, identifying actions that will contribute to achieving those goals, with a clear focus on the ecological transition.

With regard to the CNMC’s antitrust activity strategy, the most significant changes will come from the transposition of the ECN+ Directive, not overlooking other initiatives that may emerge from the European Union, such as the projects concerning the Digital Markets Act, the Digital Services Act and the Green Deal, or the imminent revision of the regulations concerning restrictions to competition in vertical relationships and the framework for analysing those restrictions in horizontal relationships.

The progress being made in the CNMC’s compliance policy is also of relevance in respect of enforcement guidelines; it has a high informative value for the business community. In this regard, in 2020, the CNMC published its guidelines for compliance programmes, which acknowledge incentives through fine reductions as an added value to other existing guidelines.

The CNMC will be especially vigilant of sectors where competition may be compromised by structural or circumstantial factors, as has happened during the covid-19 pandemic in, for example, the pharmaceutical, insurance, funeral and financial sectors. Furthermore, the identification of anticompetitive practices in the field of public procurement will remain a priority to ensure the effective use of scarce public resources. On both issues, the EIU will continue to examine the use of advanced data analysis techniques aimed at identifying those unlawful practices.

In the area of advocacy, efforts will be focused on the quality of regulation and the effectiveness of public intervention in the markets, especially with the removal of unnecessary obstacles and barriers that burden economic recovery, productivity and innovation. The CNMC will also expand its collaboration with civil society and government agencies via public consultations, guidance documents and access to CNMC statistical information, and new collaboration mechanisms will be articulated to strengthen ties with academia, consumers, the business sector and authorities.

Regulatory quality and market unity will be vividly promoted to ensure that all Spanish consumers have access to all products under equal conditions and that companies can provide their products and services with no unjustified or disproportionate burdens and restrictions.

Institutional pillar

The institutional pillar concerns the objectives of developing and promoting collaborative relations with other institutions, reinforcing the legitimacy of the CNMC and promoting a true culture of competition in Spain. The first steps have already been taken in respect of institutions that are more relevant for the well-being of citizens, namely the Minister for Consumer Affairs and the Spanish parliament; however, coordination and collaboration with other regulators such as the Bank of Spain, the National Securities Market Commission, the Independent Authority for Market Responsibility and the Data Protection Agency are also essential. The CNMC is already collaborating de facto with the Bank of Spain on various initiatives, including digitisation, data and research services.

Those interactions result in more efficient use of public resources and benefit general interest. The CNMC also aims to strengthen collaboration between itself and business organisations, and it will work to promote jointly the market economy and free enterprise, market unity, sustainable economic development, and technology research and innovation.

Without interfering in judicial independence and the jurisdictional function, the CNMC will also enhance ties with judges, with whom it undoubtedly shares the enforcement of competition law in Spain, and regional competition authorities, with which it coordinates on a daily basis.

Finally, the CNMC will also reinforce its cooperation with universities, which are the cornerstone for establishing a true culture of competition in Spain, as well as the seedbed of professionals for the future.

International pillar

International cooperation is more relevant today than ever before; challenges are global in nature and a large proportion of market scenarios do not have well-defined borders. In this environment, the CNMC will maintain a proactive and dynamic profile in every international forum where it participates: it is already involved in the leading competition and regulatory bodies at the global, European, Latin American and Mediterranean levels. The European Union is a clear example of the benefits of cooperation on competition and regulation.

In terms of competition, the CNMC will continue to actively participate in the European Competition Network, attending the various committees, working groups and expert meetings and intently participating in the most relevant current debates, such as negotiations on regulations in the area of digital markets, to guarantee new, coordinated and consistent legislation through the action and responsibility of the national competition authorities. The CNMC is also preparing to organise Competition Day as part of Spain’s upcoming presidency of the European Council in the second half of 2023.

In the field of competition policy, the CNMC has permanent bilateral relations with the competition authorities of its neighbouring countries (Portugal, France, Italy and Morocco) and a special relationship to exchange experiences and knowledge with the authorities of Germany and the United Kingdom. Beyond the EU’s borders, it will remain actively engaged in international fora, such as the Organisation for Economic Co-operation and Development, the International Competition Network, the United Nations Conference on Trade and Development, the Central American Competition Forum, the Latin American and Caribbean Competition Forum and the Ibero-American Forum on Competition. The CNMC is also a facilitator of the Ibero-American School of Competition, a meeting point for all the competition authorities of Latin America with the CNMC.

The integration of all those strategic points of organisation contribute to the ultimate goal of consolidating a culture of competition and better regulation in Spain. To this end, the CNMC has devised a new communication strategy to engage in effective dialogue with all the stakeholders involved – be they citizens, companies or institutions – and bring the CNMC closer to the general public while clearly stating its objectives and its benefits for consumers and users. This is because the CNMC’s activity must be accessible to everyone – both citizens and companies. This is a permanent goal that stems from its commitment to public service. The CNMC should be seen for what it is: a transparent, useful and prestigious institution.

Notes