Spain: National Authority for Markets and Competition

The National Authority for Markets and Competition (CNMC) consolidated in 2015 after a merger process that started in late 2013. The institution integrates competition and sectoral regulation authorities (energy, telecoms, transport, postal and audiovisual) in order to exploit economies of scale and scope, and to pool the knowledge, expertise and experience of the previous institutions. The new design makes it possible for the CNMC to internalise the debate between competition and regulation thanks to a comprehensive analysis of complex problems that demand coordinated solutions that include ex ante and ex post actions. The results are more coherent and decisions better grounded thanks to a single decision body. Even if there is still room to further reinforce the synergies and to establish a common culture, we consider that the merger has been successful and that the new institutional framework works properly.

Our combined mandate including competition advocacy and enforcement as well as regulatory supervision in core sectors gives us a greater ability to face current economic challenges such as the digital economy. The CNMC can push harder for a better economic regulation than its predecessors could. Furthermore, the Spanish legislation gives us many ways to foster competitive and well-
functioning markets thanks to powerful tools such as those derived from the Single Market Act or article 5.4 of the CNMC Act that allows us to go to court against regulation that restricts competition without a reasonable justification. Our recent approach to issues such as the regulation of last generation internet networks, the regulation of airport services or energy markets shows a broad understanding of the impact of different regulatory options on consumer welfare, our final aim. This wider focus also increases the confidence of firms.

I would also like to highlight some initiatives we have recently put in place to reinforce transparency and the independence of our institution beyond the advances made by the 2013 CNMC Act. A few months ago we launched the first register of interest groups at a national level in Spain. It follows the basis of the EU register and is having a very good reception. We also published an internal code of conduct and set up a confidential mail address to make it easier for our technical staff to file internal complaints of misbehaviour in order to protect them from undue political interference. These initiatives, together with the CNMC Act, place our institution at the cutting edge of the process of institutional renovation in Spain. At the same time, we are making advances to enhance the competition culture in Spain with seminars and practical courses for lawyers, judges, SMEs and business associations. It is also important to mention some communication and transparency tools like our online blog and the new open data policy to disseminate the statistics we generate.

2015 has been outstanding from a competition enforcement point of view. Cartel prosecution continues to be our number one priority and 2015 has been a record year in terms of the number of fines imposed: €517.7 million once fines to leniency applicants are excluded. Both leniency and ex officio work maintain a brisk pace, with more than 35 companies investigated in 10 different dawn raids related to national cases. The CNMC issued 15 decisions against companies formally accused of forming a cartel and the total amount of fines handed out was €492.6 million, 95 per cent of total fines for anticompetitive infringements. The most significant cartels belonged to the automotive, dairy milk and fuel distribution sectors, and we unveiled two important cases related to bid rigging of public contracts for waste management and modular construction. Bid rigging and public contracts are also a main concern for the CNMC.

The most relevant cases in 2015 were the following:

• Car manufacturers were fined with the biggest fine totalling €131.4 million for extensive and detailed exchange of sensitive information.
• 43 companies active in the waste management sector, assisted by three sectoral associations, agreed to split up the market and received a fine of over €98 million.
• Fines amounting to more than €88 million were imposed on nine dairy companies and two regional associations for agreements restricting competition on the purchase price of raw milk.
• Large oil companies (Repsol, Cepsa, Disa, Meroil and Galp) were fined €32.4 million for coordinating prices, customers and commercial terms in the automotive fuel distribution market. Repsol and several independent companies that owned gas stations were also fined €22.9 million for price coordination.
• Car dealers of different brands (SEAT/Audi/VW, Toyota, Land Rover, Hyundai and Opel) received fines amounting to €12.3 million – once fines to leniency applicants are excluded – for limiting discounts and using a third company to monitor the compliance with the agreements.
• Other cartelised firms were fined in the sectors of modular construction (€9.6 million), refrigerated transport (€8.8 million) and concrete posts (€1.8 million).

Other infringements include the fine against Telefónica for horizontal and vertical agreements with Xfera Móviles (Yoigo) that restricted competition in the telecommunications market, with a fine of €6.3 million. Or the Telefónica/DTS case where these companies were sanctioned with €5.5 million and €10 million respectively for restricting competition with regard to the acquisition and use of football TV rights. Intellectual property rights management entities (AGEDI and AIE) were also sanctioned with €2.8 million in a case of abuse of a dominant position for fixing inequitable rates and for applying discriminatory conditions. Two other cases of the same kind were settled with commitments agreed with the parties. The CNMC also issued three penalty decisions amounting to €8.5 million, €2.5 million and €750,000 respectively, against three oil companies (Repsol, Cepsa and BP) for failing to comply with a 2009 decision involving indirect fixing of retail prices.

As for judicial review, during 2015 the Spanish Supreme Court issued 91 judgments related to 39 different decisions of the Spanish Competition Authority. Out of 91 cases, just nine decisions were annulled (10 per cent). Of these, in five cases the inspection was declared null and in another the term had expired. Furthermore, in 27 judgments the substance of the Competition Authority’s decision was upheld but the fining methodology was declared null and a new calculation was ordered following a previous court decision.

A total of 91 merger transactions were notified (up from 84 in 2014 and 59 in 2013), consolidating the upward trend initiated in 2014. Out of these 91 merger transactions, 87 were authorised in Phase I, two of them with commitments offered by the parties (DIA/Eroski and Taminco/Cepsa). One merger (Telefónica/DTS) went into Phase II and was also cleared with commitments. The other three notifications were not pursued, either because notification was not required or because the parties abandoned the operation. In addition, two disciplinary proceedings were initiated in the case of mergers executed without prior notification and another two for failure to comply with obligations imposed in the context of merger transactions, both in the TV market. Total fines neared €6 million.

The most relevant merger analysed by the CNMC was the acquisition of DTS (the dominant national pay-TV operator) by Telefónica (the main telecoms operator). It was cleared in April 2015 after a six-month procedure when Telefónica offered several commitments to solve the competitive problems the operation posed for the relevant markets. The commitments included granting wholesale access to Telefónica’s competitors to premium TV content – football, sports, films, etc – to ensure a competitive playing field to alternative telecoms operators. These remedies are closely monitored by the CNMC.

The CNMC’s advocacy activity has gained effectiveness thanks to the integrated work of the competition and regulatory supervision units within the same authority, as its advocacy department is now in a position to play an important role to further competition concerns in decisions regarding sectoral regulation. Furthermore, both the Single Market Act and article 5.4 of the CNMC Act – already mentioned – give the CNMC new ways to foster a culture of better regulation. These tools have been intensively used in issues related to urban transport and tourist accommodations in the context of the sharing economy and in more traditional sectors such as retail distribution.

The advocacy department has informed 26 regulatory projects in 2015 including the new Public Contracts Act, health sector and intellectual property regulation, as well as legislation regarding transport, financial and insurance services. We also released our seventh State Aid Annual Report and continued to analyse regulatory projects that specially affect this issue. With respect to market studies, the CNMC published reports on wholesale fuel markets, gas facilities inspections and retail drug distribution (pharmacies). Furthermore, we continued to work on a report on the sharing economy based on the results of a public consultation. In April 2016 the preliminary findings derived from the consultation were released and we received over a thousand opinions that will help us to improve the document. All these actions have been combined with an effective communication strategy and complementary actions such as seminars, conferences and articles that enhance the impact of our findings.

The CNMC continues to have an intense international activity with a particular focus on the EU and Latin America. Our staff participates actively in both ECN and ECA meetings at a European level, and in international events held by the OECD and ICN among others. We organised several capacity-building activities with our Latin American counterparts that have a long tradition. In 2015 we also hosted a bilateral workshop with the French Authority to foster collaboration and continued our cooperation with our Portuguese counterparts.

I would like to highlight the importance of our IT team for the CNMC’s work. Their contribution to the effectiveness of dawn raids is well known. However, they offer much more than that to our institution. They have built over the years a very powerful document management tool that provides easy access to the files in real time and allows the parties involved in a case to track all changes in a file from beginning to end. This tool (WECO) is fundamental for internal transparency and helps enormously to simplify the inherent complexity of legal procedures. In 2015 we worked to extend the use of this tool to other CNMC areas and on upgrading the system through a new intranet that will soon allow us to rely on an integrated information system. In the near future all the activity of the CNMC will be carried out through this new intranet and the processes will be completely automatised. We consider that this advance is a cornerstone in our effort to improve the transparency and efficiency of our institution.

All in all, our best efforts are devoted to maintaining the CNMC as one of the top competition authorities in the world through a careful strategy that builds on a long tradition of previous competition authorities. We rely on the three pillars of independence, transparency and efficiency to take this institution further along this road. And we count on our skilled and experienced staff as the best resource to succeed.