Spain: Competition Authority
In 2019, the National Commission for Markets and Competition (CNMC) has made a sustained effort to improve its enforcement and advocacy activities. The Competition Directorate carried out 13 dawn raids involving 35 companies (five relating to bid rigging and one to an infringement using algorithms), and the CNMC issued nine decisions of prohibition with fines totalling over €400 million thanks to a mix of proactive ex officio work and a well-functioning leniency programme. In merger control, the CNMC cleared 88 mergers, four with remedies during the first phase and another was cleared with remedies in second phase. More than 50 per cent of mergers were notified for exceeding the market share threshold.
- Enforcement and merger control statistics in 2019
- Economic Intelligence Unit and ex officio investigations
- Public procurement and bid rigging prevention
- CNMC Action Plan for 2020: priorities and revisions arising from covid-19
- Covid-19 crisis
Referenced in this article
- Act 15/2007 of 3 July 2007 of Defence of Competition
- Act 3/2013 of 4 June 2013 creating the National Commission for Markets and Competition
- Economic Intelligence Unit
- ECN+ Directive
- CNMC Action Plans for 2019 and 2020
- C/1073/19 MIH Food Delivery Holdings/Just Eat
Developments in 2019
Since its inception in 2013, the National Authority for Markets and Competition (CNMC in Spanish) has displayed a dynamic activity in both enforcement and advocacy of competition policies. Our strategic goals are implemented and adjusted through Annual Action Plans that include the specific actions to be executed on an annual basis.
Our Action Plan for 2019 focused on four groups of priorities: (1) the reinforcement of the cartel leniency programme; (2) ex-post analysis of competition decisions, both in merger control (to improve remedy design) and in antitrust cases (to measure the effects of our enforcement activity in the markets); (3) investigations in the financial services, postal, health and pharmaceuticals sectors, port maritime services, telecommunications and digital economy; and (4) advocacy activities in areas such as public procurement, rail transport, air and road transport, ports, water distribution, pharmaceuticals, distribution of fuels and online advertising.
In this context, the National Commission for Markets and Competition (CNMC in Spanish) has designed and developed a set of activity indicators that allow it to evaluate its performance on a permanent basis. Moreover, it counts on self-developed software (WECO), which provides a digital platform where all competition cases are filed, allowing case handlers access to all the information regarding every case investigated by the authority since 2000. Furthermore, the CNMC heavily invests in constantly training its staff, conducting training seminars focused on different topics from relevant decisions – both national and international – to merger or antitrust courses, organised internally or by other institutions. Twice a year, the Competition Directorate organises internal training on dawn raids aimed at our own inspectors and team leaders and at the staff of the regional competition authorities.
Counting on this skilled and dedicated team, in 2019 the Competition Directorate managed to carry out 13 dawn raids involving 35 companies, considerably more than in 2018, when seven dawn raids were carried out involving 23 companies. It should be highlighted that five of the dawn raids in 2019 focused on the investigation of bid rigging and one other focused on a possible infringement with the help of algorithms.
Cartel enforcement continues to represent the core of our antitrust work. The CNMC has been especially active in the detection and prosecution of cartels thanks to a valuable mixture of proactive ex officio work, a well-functioning leniency programme and good results obtained in dawn raids. The leniency programme is a powerful instrument to identify, dismantle and discourage the creation of new cartels. In fact, 14 of the 36 cartels dismantled by the CNMC have benefited from the leniency programme: there were applications for exemption in 13 of the 14 cartels and applications for reduction in three cases. Overall, the sanctions imposed in this period were reduced by almost €167 million thanks to the exemptions and reductions in fines granted under the leniency programme to both companies and managers.
In 2019, the CNMC Board issued two decisions of prohibitions with fines regarding cartels in which companies and managers used the leniency programme. The two cartels focused on bid rigging in the industrial and railway sectors, respectively, and the combined fines amounted to €172.6 million. The resolutions explicitly stated for the first time that contracting authorities may exclude the fined companies from public tenders, not including those companies that benefited from the leniency programme.
In 2019, seven non-cartel cases concerning horizontal and vertical infringements were sanctioned with fines totalling about €259 million. One of these cases was an abuse of dominant position concerning intellectual property rights, and two others consisted of vertical infringements concerning the media sector and technical assistance for household boilers.
Regarding mergers, there is evidence of stabilisation in the decreasing trend in the number of merger transactions notified in recent years: 86 merger transactions were notified in 2019 compared to 83 in 2018 and 94 in 2017. More than 95 per cent of the mergers went through the pre-notification procedure, which streamlines and simplifies the procedure, increasing the speed of the decisions.
Regarding the notification thresholds, 53 per cent of merger transactions were notified for exceeding the market share threshold, 40 per cent of merger transactions were notified for exceeding the threshold for turnover and the remaining 7 per cent for exceeding both thresholds. The CNMC considers very useful the market share threshold included in Spanish competition law, which allowed us to assess several merger cases in the digital sector that would have otherwise escaped our attention. In particular, mergers such as Facebook/Whastapp or Apple/Shazam did meet our 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 and not only on the Spanish market.
In 2019, the CNMC Board ruled on 88 mergers, of which 83 were authorised in the first phase without commitments because they did not raise any competition concerns. They were cleared under the fast-track procedure, whereby it takes less than one month to give a transaction the green light. It is relatively common for approximately two-thirds of merger transactions not to raise any competition problem.
Another four mergers were cleared with remedies proposed by the parties during the first phase as there was evidence of risks to effective competition in the affected markets. These mergers were related to the sectors of dark fibre (upstream telecommunications market), pharmaceuticals distribution, food delivery platforms and gambling. Another merger in the health sector was cleared during the second phase with remedies; the second phase was opened for yet another case that is still under assessment.
More than 80 per cent of Supreme Court judgments and over 75 per cent of National Court judgments have conﬁrmed the resolutions of the CNMC between 2014 and 2019, as regards the infringement assessment made by the competition authority. It is a good indicator of the rigorous work of the enforcement unit.
Competition advocacy is another key area for the CNMC, which has a broad range of advocacy tools, including market studies, reports and legal challenges that focus on the activity of the public sector. With these instruments, the CNMC seeks to advocate efficient and pro-competitive regulation.
The CNMC has an important role in reporting activity on draft regulations at the request of public administrations. In 2019, we issued 22 reports of this kind, covering a broad range of economic sectors.
The CNMC published also three market studies in 2019, on the liberalisation of passenger transport services by rail, the competitive impact of unmanned petrol stations in the retail fuel market, and an overview of public procurement procedures in Spain.
One of the main areas of focus of the CNMC’s advocacy has been digitisation. Following a public consultation on the sharing economy (2015–2016), the CNMC has developed market studies with regulatory proposals on short-term housing rentals (2018), fintech (2018) and private-hire vehicles (2019). In mid 2019, the CNMC announced that it would conduct a new study on online advertising and launched a public consultation.
Public procurement has been another area of focus for our competition advocacy. Between 2014 and 2019, the CNMC has adopted 38 studies and reports with recommendations to the public administrations on the regulatory framework for public procurement and on particular tenders. In 2019, the CNMC adopted a study analysing the public savings achieved by using pro-competitive procurement procedures. It also announced that it would launch a major review of its Guidelines on Public Procurement, starting with good practices in procurement planning. In this context, the CNMC organised a conference that focused on how to better plan public procurement.
Another powerful advocacy tool available to the CNMC is its active legal standing to challenge acts and regulations of all government levels that hinder competition. Between 2014 and 2019, the CNMC challenged 18 regulations, most of them at regional and local levels. To support its appeals, the CNMC produced 21 economic reports evaluating the effects of anticompetitive regulation. In 2019, the CNMC challenged four regulations that introduced unjustified restrictions to competition.
Apart from reports, studies, guides and appeals, we are determined to promote competition culture within the public sector, economic operators and consumers. For this reason, the CNMC liberally uses media and social networks, publishes podcasts and videos, and runs a blog with the aim of explaining complex issues in plain terms. Also, and because of the importance of civil servants being aware of the value of competition in procurement procedures, the CNMC runs an ambitious programme to train public procurement officials. In 2019 alone, around 450 officials have completed this form of training on bid rigging detection and tender design.
In the international context, the CNMC was very active in 2019 at the European Competition Network (ECN), meetings of the European Competition Authorities, the Organisation for Economic Co-operation and Development, the International Competition Network (ICN) and Latin American forums, and we have reinforced our bilateral ties with other competition authorities and multilateral organisations. In particular, the CNMC was elected as co-chair of the ICN merger group, alongside the authorities of the United Kingdom and Japan. The CNMC was also selected for the European Twinning project with the Albanian Competition Authority.
Old and new challenges
The Action Plan for 2020 and the covid-19 crisis
We are proud of the improvement of our enforcement and advocacy activities, as can be seen by the evolution of our annual figures. However, one can never be satisfied: there is still much work to do, and we face new challenges at the global and national levels that will require our best efforts.
At the global level, the main challenge of competition authorities is dealing with digital markets in a comprehensible and consistent way across the world. Since digital markets tend to be global, not only is our challenge to address the dynamism of these markets with the appropriate instruments, but also to do it jointly with all competition enforcers and in a coherent way. Digital markets enhance the natural power of big players very fast because the technological and economic setting changes very quickly and disruptively. Under these circumstances, competition authorities need to be particularly vigilant and intervene in a timely manner. Therefore, I believe we need to update our focus on dominance and try to find flexible solutions.
In merger control, we need to pay more attention to dynamic issues versus the more traditional static assessment of horizontal and vertical overlaps. It is a question of adapting our tools, as we have done in sectors such as pharmaceuticals, where assessing the impact on innovation of a merger has a key role. The principles of competition remain valid but we need to reconsider our theories of harm in some cases, and to focus on new features in digital markets, such as multihoming, which is key to preserving competition between platforms that may lead to innovation. This is in line with some of our remedies in recent merger control cases regarding platforms in Spain. Of particular note is the MIH Food Delivery Holdings/Just Eat merger (C/1073/19). MIH had an indirect minority stake in Just Eat’s main competitor in Spain, Glovo, which could raise competitive risks by creating an incentive for MIH to prevent the expansion of this competitor’s business. This merger transaction was cleared in Phase I subject to certain remedies to ensure that MIH does not gain access to strategic information or participate in decision-making that affects Glovo’s strategy.
Another subject emerging strongly at the global level is the empowerment of ex officio detection of competition infringements. In 2018, the CNMC created the Economic Intelligence Unit (EIU) for cartel detection, especially in public procurement. The Unit’s staff are specialists in quantitative techniques and forensic information technology. The EIU has created a database of information from the public procurement platform of the Spanish Ministry of Finance, which encompasses the majority of public tenders from national government and some regional and local governments.
In 2019, the EIU focused on the development of statistical tools and screening techniques to identify collusion patterns using detailed data from the public procurement databases. The new software will be used to ‘red flag’ potential markets and infringements that warrant closer investigation, and complement information from other sources such as the CNMC channel for whistle-blowing and complaints. As a result, in the past two years, the CNMC has dismantled several cartels involving bid rigging, other investigations are in process, and several dawn raids started from information generated by the EIU.
Another of our immediate challenges is the amendment of the Competition Act to transpose the ECN+ Directive. The Spanish Competition Act, approved in 2007, has been a success, but some minor improvements should be introduced to increase its effectiveness. In this sense, we are looking into the possibility of introducing a settlement procedure. It might also be necessary to increase our unique 18-month statutory deadline for antitrust investigations to deal with particularly complex cases and effectively ensure the rights of defence when there are multiple parties in a case. Besides, the transposition of the ECN+ Directive should give us the ability to prioritise our investigations and make more efficient use of our scarce resources. This new provision will also ensure that national competition authorities have clear guidelines for their annual priorities.
Nevertheless, the transposition of the ECN+ Directive will not require any changes in the functional structure of the CNMC. The integration of the former Spanish competition authority with the sectoral regulators has proved to be successful. The current model was designed to eliminate the legal uncertainty created by the potentially different positions of the sectoral regulators and the competition authority, for example regarding a merger in the telecommunications or the energy sector. In addition, to help ensure consistency in decisions, the integrated model allows synergies for competition enforcement in the form of improved access to information, better regulation and enhanced ex officio detection of anticompetitive behaviours in regulated sectors. The experience of these six years shows that these synergies are not mere possibilities but actual accomplishments. The joint work of the relevant CNMC directorates in the analysis of mergers in the fuel sector, and in the process of liberalisation of passenger rail transport, are two clear examples. However, this does not mean that it is an easy task. Nonetheless, I think it is fair to recognise that the integrated model is more effective than simple coordination between authorities.
Finally, there is a challenge that remains relevant at both the national and global levels: advocacy on competition rules. It is our duty to enhance compliance, work jointly with all stakeholders in the detection and eradication of competition infringements and help to unleash the full potential of market competition. In fact, the CNMC has spent several years exploring the possibility of developing guidelines in respect of compliance programmes in relation to competition law. At the end of 2019, the CNMC developed a first draft of these guidelines to encourage good practice among professionals in all fields of activity. In the first quarter of 2020, a public call for comments on these guidelines was launched. The feedback obtained from this public consultation will enrich the final draft of these guidelines, which are due to be published in 2020. The CNMC underscores in its draft the critical importance of management involvement and staff training in a good compliance programme.
Nevertheless, there is evidence that the culture of competition law is growing in Spanish society, especially after the high number of cartels dismantled under our leniency programme. Following a very active communication strategy and thanks to a transparency policy that ensures that all our decisions are made public, consumers and undertakings have come to better understand their right to effective competition and are in a better position to identify the existence of competition infringements that they can bring before the CNMC.
Part of our communications strategy is our effort to maintain fluid communication and constant collaboration with consumer authorities and associations. To this end, we have recently signed an agreement with the Consumers and Users Board, which coordinates consumer associations in Spain, to provide training and information on regulated sectors, such as telecommunications and energy, and to help consumers understand their rights and detect any breaches of consumer protection or competition rules.
The CNMC Action Plan for 2020 includes among its priorities several of the challenges outlined above. Besides these, the CNMC will focus on monitoring vertical restraints, price algorithms, digital platforms and killer acquisitions, and will closely monitor the banking sector, rail transport, the postal sector, labour markets and the funeral sector, among others.
Regarding our advocacy powers, the Action Plan for 2020 prioritises sectors with a more direct impact on citizens, affected by digitisation or key for economic competitiveness. In respect of studies, we have already completed one study on the economic regulation of urban water management and another on the impact of subsidies to passengers on domestic flights with insular territories. In addition, we have ongoing studies on online advertising, intercity bus transport, ports and pharmaceuticals. We are also revising our Guide on Public Procurement and developing a mechanism to monitor regulation that has been subject to the CNMC’s reporting activity.
Last, one of the priorities of the CNMC’s Action Plan is to focus for the first time on the extent to which our actions are aligned with the objectives of the United Nations 2030 Agenda for Sustainable Development.
This article would be incomplete without a brief reference to the covid-19 pandemic. The contagion has thrown the world into disarray and has placed a monkey wrench in the wheels of the global economy, changing our perspectives and values, and altering the way our societies work, perhaps permanently.
The CNMC has shown a great capacity to adjust to the state of emergency declared by the Spanish government on 14 March 2020 for the management of the health crisis caused by covid-19. The CNMC remains fully operational for all practical purposes: all commissioners and staff are working remotely, the Board is meeting virtually and decisions are being adopted regularly. Businesses are encouraged to do all dealings with the CNMC electronically.
On the enforcement front, the CNMC has set up a mailbox for enquiries and complaints relating to competition rules in the current context of the pandemic. Both the Competition Directorate and the Advocacy Department are working to protect consumers and identify businesses engaging in price gouging and other abuses, and to ensure that cooperation agreements between companies in the context of the crisis are really exceptional and do not distort competition unnecessarily.
In any event, it is clear that the covid-19 crisis has led to an unexpected and unprecedented shock, and has created an unusual level of uncertainty. We are presently revising our Action Plan for 2020 to adapt to the new conditions that will prevail for Spanish firms and customers. Most of our prior commitments seem to need only minor adjustments, but it is quite possible that we will have to set new goals and new priorities to ensure that we are able to meet the demands that are more relevant for our society within the limits of our mandate.
Exchange of information and good practices with other competition authorities will be, more than ever, the way to ensure that we identify the best mixture of enforcement and advocacy tools to protect Spanish and European consumers from unfair and anticompetitive business practices in these uncertain times. It is key to share experiences and work together on the best solutions to tackle the new challenges caused by the pandemic in an effective way.