Spain introduces new measures to improve deterrence of competition infringements

The Spanish Competition Authority (“SCA”) has been highly active in its enforcement of competition regulations, having imposed significant fines on companies for antitrust infringements. The SCA recently introduced or enhanced two specific tools aimed at increasing the deterrent effect of sanctions: (i) the possibility of the imposition of sanctions on natural persons and (ii) the possibility of disqualifying companies sanctioned for antitrust infringements from public tenders.
 
Furthermore, on 26 May 2017, the Spanish Government enacted Royal Decree-Law 9/2017 (“RDL 9/2017”) implementing the EU Damages Directive. RDL 9/2017 introduced important amendments that will make Spain more attractive to claimants for damages arising from antitrust infringements and will also increase the deterrent effect.
 
These new measures represent a clear signal to companies regarding the SCA’s strict position on the enforcement of competition regulations in Spain.
 
Sanctions on Natural Persons
 
Under Article 63.2 of the Spanish Competition Act, legal representatives and managers who have directly participated in a restrictive agreement can be sanctioned with a fine of up to €60,000. Although the SCA rarely applied this provision in the past, it changed its practice in 2016 and has since openly disclosed its willingness to apply it and has indeed imposed sanctions on individuals in four recent decisions.[1]
 
In these decisions, the SCA interpreted the concept of legal representative or manager very broadly in order to be able to sanction natural persons who do not hold a legal or managerial position in a company insofar as they were directly involved in the infringement and they acted as de facto representatives of the companies. This broad interpretation has been rejected by the courts in appeal proceedings in terms of the concept of “legal representative”, which must be construed restrictively, excluding the possibility of sanctioning de facto representatives.
 
As to managers, the SCA identifies the following elements as relevant when considering whether managers may be held personally liable. In particular, whether (i) they have decision-making authority; (ii) they exercise powers of organisation and control within the company; (iii) they perform assignments of special responsibility with autonomy; and (iv) they have been directly involved in the infringement. As a consequence, individuals who are merely employees cannot be sanctioned, even if they actively participated in restrictive agreements. In particular, the SCA sanctioned individuals who held the position of CEO, CFO or president of the board of directors as well as managers of working groups in associations of undertakings.
 
Moreover, Spanish courts have clarified that only those individuals who participated in the infringement can be sanctioned. Indeed, the SCA had only sanctioned those individual who had a particularly active and leading role in the design, implementation and monitoring of the restrictive agreements, and not all individuals whose involvement had been proven. However, we cannot exclude the possibility of the SCA adopting a stricter approach in the future.
 
The fines imposed ranged between €4,000 and €36,000. In calculating the sum of the fine, the SCA took into account: (i) objective criteria, such as the severity of the infringement, and (ii) subjective criteria, particularly the duration of the involvement of each individual in the restrictive agreements and the corresponding professional category (the higher the degree of responsibility within the company, the higher the fine).
 
It is notable that the names of the individuals who were sanctioned were not redacted from the public version of the decision that was published on the SCA’s website and the courts have validated this approach.
 
Disqualification from Public Tenders
 
Since 22 October 2015,[2] natural and legal persons sanctioned for serious infringements that distort competition can be banned from contracting with public bodies for up to three years. This prohibition can be applied in addition to the penalties established in the Competition Act. The sanctioning decision must be final in order for the prohibition to be effective.
 
A prohibition has not yet been imposed, although it is likely to have a significant impact on cases involving bid-rigging practices and may be one of the most powerful tools to combat anticompetitive agreements in specific sectors that are clearly dependent on contracting with public entities.
 
Implementation of the EU Directive on Antitrust Damages Actions
 
With a few exceptions, RDL 9/2017 does not exceed the scope of the EU Damages Directive. However, the implementation of these provisions will clearly make it easier for claimants to obtain effective compensation for damages suffered from anticompetitive practices in Spain since it foresees significant changes. In particular, the main changes are:
 

• Increasing the limitation period from one to five years. The period is suspended when competition authorities initiate proceedings until one year after the decision on an alleged infringement is made final.

 

• Introducing a presumption of harm in cartel infringements. Claimants held the burden of proving the cause of the damages as well as the corresponding amount, which could be particularly burdensome since it was not always easy for claimants to access the evidence required to quantify the amount of the damages claimed. RDL 9/2017 establishes a presumption of harm and allows courts to estimate the amount thereof if it is not possible to calculate the damages.

 

• Introducing specific mechanisms to facilitate claimants’ access to relevant documents before substantiating the claim. Spain’s pre-trial disclosure process was rather limited and courts have been reluctant to order the broad disclosure of documents to claimants. RDL 9/2017 modifies this framework, making it easier for claimants to access evidence; however, the new mechanism should not be understood as creating a discovery system similar to that in Anglo-Saxon systems. Specific mechanisms are also established that seek to protect the confidentiality of business secrets and the requirement that the party who requests the access should provide sufficient caution.

 

• Declaring the joint and several liability of all co-infringers in relation to damages caused as a result of anticompetitive behaviour; the exemptions foreseen in the EU Damages Directive will also apply.

 

• Binding effect of the SCA’s final decisions on civil proceedings so far these decisions only had a limited value, before the RD 9/2017 and it was possible for civil courts to depart from the findings included therein.

 
In addition, RD 9/2017 goes further than the EU Directive and extends the presumption of parental liability for the infringement of its subsidiary to civil proceedings.
 
Despite its recent implementation, RD 9/2017 has clearly fostered awareness among claimants and is expected to lead to increasing claims for damages from antitrust infringements in the near future in Spain.
 
Relevance of these measures
 
The consequences for companies infringing competition regulations in Spain can be very serious and not limited to the imposition of fines. New sanctions introduced by the SCA as well as the implementation of the EU Damages Directive clearly show the importance of ensuring compliance with Spanish competition regulations.
 
URÍA MENÉNDEZ
 
Uría Menéndez is one of the most prestigious independent law firms in the Iberian market. Founded in the 1940s, we have over 500 lawyers in 17 offices located in the most important financial centres in Europe, the Americas and Asia. Our international structure allows us to provide Spanish, Portuguese and EU legal advice to clients on their investments in the Iberian Peninsula and internationally.
 
In Europe, the firm provides cross-border coverage through its offices located in Madrid, Barcelona, Bilbao, Valencia, Brussels, London, Lisbon and Oporto.
 
Uría Menéndez has also established a network of offices in the main jurisdictions of Latin America and has consolidated its commitment in this area taking part in the first major Latin American law firm: Philippi Prietocarrizosa Ferrero DU & Uría, with offices in Chile, Colombia and Peru.
 
The Competition and EU law Practice Area of Uría Menéndez is comprised of five partners, one counsel and 15 associates based in Madrid, Brussels and Lisbon.
 
Patricia Vidal Martínez
patricia.vidal@uria.com / +34915860161
 
Patricia Vidal is a lawyer and partner of Uría Menendez (EU and competition law department). She joined the firm in 1996.
 
She has worked on a wide variety of national and international cartel cases (including leniency programs) before the Spanish and EU authorities, and regularly advises on mergers (including international multi-filings), agreements and strategic alliances, state aid issues and infringement proceedings for the abuse of a dominant position. Patricia has vast experience in competition litigation before the Spanish and the EU courts, including also in the field of claims for damages for antitrust infringements.
 
Patricia is regarded as a leading lawyer by Chambers Global and Chambers Europe. She has also been named a recommended lawyer in Spain for EU and competition law by other reputed directories, including PLC, GC Counsel, Who’s Who Legal, Best Lawyers, CGR (among the 100 best world-wide female competition counsel) and Women in Business Law.
 
Ana Raquel Lapresta Bienz
raquel.lapresta@uria.com/ +32 2 639 64 60
 
Ana Raquel is a senior associate based in the Brussels office of Uría Menéndez. She joined the firm in 2009 and has worked in both the Brussels and Madrid offices. She was seconded to the Regulatory and Competition Department of the Sydney office of Corrs Chambers Westgarth.
 
She has vast experience advising clients on merger control proceedings, including international multi-filing coordination. She represents clients in procedures before the European Commission, the Spanish competition authorities and the EU courts, for the investigation of anticompetitive infringements. She also advises clients from different sectors, including financial, insurance, energy and telecommunications.