Relaxing whilst doing Competition Law is not an Oxymoron

Overzealous antitrust enforcement in Spain?

with 7 comments

A couple of days ago Nicolas wrote a post reporting the concerns expressed by some experts in relation to a possible enforcement gap in Italy in light of the fact that the Autoritá Garante has been mainly focusing on investigating unfair competition cases rather than on pursuing antitrust cases. Apparently, some of the lawyers who attended the conference at which Nicolas was present bemoaned these “dark times for antitrust in Italy”.

The situation in Italy, if true, appears to be in stark contrast to the one we have in Spain, where the Comisión Nacional de la Competencia is currently showing that it is one of the most overzealous enforcers in international antitrust.

In the past 18 months the CNC has initiated 70 formal investigations concerning all sorts of practices in a wide array of markets, and has adopted 20 fining decisions (click here for more details; I know there´s even an inside-joke at an american firm in Brussels which is based on spotting new investigations undertaken by the CNC). These numbers don’t include neither informal investigations nor proceedings initiated by regional competition authorities. Who said Spaniards aren’t productive?

From a strictly numerical point of view, these are clearly not at all dark times for antitrust in Spain. Indeed, there’s plenty of work for Spanish competition lawyers.

However, when looked at from a qualitative standpoint, the story seems a bit different (next week I´ll post a comment on the reasoning of the  joke major decision adopted last week sanctioning electricity companies with 61 million euros and you´ll see what I mean).  The CNC has skilled staff but pehaps their willingness to have on their plate more than what they can deal with is at the root of some questioable prioritization decisions and of some (too many) weak reasonings (which nevertheless generally withstand judicial review…)

The CNC must be credited for its very good job in bringing competition law issues to the forefront of the public debate, but it also needs to understand that Spanish over-enforcement is an undesirable and harmful to vigorous competition on the merits as the alleged Italian under-enforcement.

Written by Alfonso Lamadrid

26 May 2011 at 6:56 pm

Posted in Uncategorized

7 Responses

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  1. Alfonso,

    if what you describe above is indeed true, then one may think of the risk that the Spanish CA takes to “chill competition” in the national markets. To my mind, they seem to overlook the possible negative deterrence effects of their actions.

    In that respect, I just wonder whether this is the case because of specific legal provisions that oblige the Spanish CA to act accordingly every time there is a complaint for instance, or this is so due to an attempt to fulfill personal aspirations either of its management team or of any other political body that may influence the decisions of the Spanish CA to prosecute…

    George Pedakakis

    26 May 2011 at 7:16 pm

  2. I agree with George. A number of NCAs in the EU must decide all complaints on the merits by virtue of a legal obligation. Their ability to set enforcement priorities is limited.

    Each year those NCAs thus achieve very high decisional numbers and may be described as overzealous, whilst in reality they have no other choice but to take decisions (think of France). Of course, this may come at the expense of legal reasoning. That said, and this is my personal opinion, the French CA shows that high numbers and solid reasoning can work together.

    This comes in contrast with other CAs who virtually take no decisions, and focus on advocacy, reports, etc (the OFT?). Those authorities often have a lot of enforcement discretion (‘opportunité des poursuites’)+ a large margin of maneuver when it comes to set priorities.

    With this background, a question arises: is there a risk of enforcement fragmentation accross the EU? With VEBIC and Tele2 Polska, there’s been a lot of fuzz about local provisions undermining the effectiveness of EU competition law. Could the ‘opportunité des poursuites’, or more generally, the poor track record of certain CAs be the next issue on the radar screen?

    Nicolas Petit

    27 May 2011 at 9:02 am

  3. The situation in Spain is quite desperate and difficult to explain especially to foreign clients. Why has it become like this? Some ideas: (1) The quality control at the investigative body of the CNC is very low, which also reflects itself in sloppy drafting and poor argumentation -even when the authority has a strong case-. Some SOs are sursprisingly bad. (2) Often, only one case handler is fully informed of the facts, but he/she is quickly lost to prosecutorial bias and stops listening to the parties’ arguments. (3) Very tight deadlines makes it difficult for the case handler and the sub-director in charge to seriously review the parties’ submissions and reconsider their preliminary opinions. (4) The supposedly objective and independent Council is indirectly involved in the investigating phase and is prejudiced once seized of the matter. (5) High output is seen as a sign of quality by the President. (6) The High Court is overburdened with work and often does not seriously review the CNC’s decisions. (7) “Dirigiste” tradition in Spain where many still think the public administration knows better than the companies how the market should operate.

    Madrid Lawyer

    27 May 2011 at 9:57 am

  4. The points raised by both George and Nicolas are pertinent and absolutely right. In Spain the CNC does has the obligation to deal with the merits of any complaint it receives. Nonetheless, this obligation (not necessarily a bad thing) is not the cause of the problem but rather an aditional complication.

    Having to decide every complaint on the merits does not mean that formal proceedins must be initiated every time no matter how absurd the complaint may be, nor that any practice disliked by a competitor must be sanctioned. Problems arise when this obligation is coupled with the attitude I describe in the post.

    George: I don´t think this is a matter of personal aspirations. I have good friends at the CNC and I´m sure that they don´t do this for personal reasons. On the contrary, many people there believe that they´re acting the right way and that they´re misunderstood by everyone else (companies, lawyers and sometimes even the European Commission). Amongst others, this state of mind leads to (i) the perception that companies and lawyers are the enemy, which exacerbates problems; (ii) a reinforcement of the links between the Investigation Directorate and the Council in the face of a hostile outside world, which exacerbates problems too.

    The comments by “Madrid Lawyer” provide very good insights on where the roots of these problems may lie.

    Alfonso Lamadrid

    30 May 2011 at 12:03 pm

  5. GCR reported today the following with regard to this topic:
    Spain’s National Competition Commission is facing a backlash from companies who claim its aggressive enforcement actions violate their fundamental rights of defence.

    George Pedakakis

    6 June 2011 at 8:05 pm

  6. Thanks George! I read this article last night and, although I agree with a great part of its content, I think that the title “Spanish inquisition” might very well be a bit too harsh..

    Alfonso Lamadrid

    7 June 2011 at 7:10 pm

  7. Alfonso, keep in mind that this is an article “made to sell”! No wonder the title would be controversial to say the least.

    George Pedakakis

    7 June 2011 at 8:13 pm

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