Spanish Competition Authority intervenes to prevent actions by public authorities that may harm market unity

Written on 6 Jun 2016

The reaction of the Spanish Commission on Markets and Competition (CNMC) against all types of administrative activity likely to harm the unity of the market is becoming more intense and varied, having already impacted a large number of sectors as diverse as transport, telecommunications, hotel, amusement machines, teaching; and retail distribution.

Law 20/2013 (9 December) on the Market Unity Guarantee (MUG) has incorporated into Spanish law a set of principles laid down in the Services Directive, including market unity. This is based on the free movement and establishment of economic operations, free movement of goods and services throughout the national territory, and equality of the basic conditions of the exercise of economic activity. Its main objective is to eliminate administrative barriers and bureaucratic obstacles so that companies may operate in different autonomous regions without being obliged to comply with different legislation in each.

The CNMC is authorised to file a contentious-administrative claim (request for judicial review) when it considers that any administrative general provision, act, resolution, inactivity or decision adopted by any Public Administration is contrary to the legal principles regulated under the MUG. This can be done either by limiting effective and sustainable competition in the economy, reducing the level of productivity or hindering economic growth. This standing is recognised in Law 3/2013 (4 June) creating the CNMC, and in Article 27 of the MUG and is a novel pathway for the CNMC to preserve and promote genuine competition in all markets and sectors.

The CNMC has made use of this power several occasions and in different sectors. There are numerous examples of the filing of contentious-administrative appeals, without going further back than this year, that demonstrate the intense activity that is being carried out by the CNMC in defence of the unity of the market, amongst which we can cite those raised against:

  • the new limitations on competition established in the regulation of the leasing vehicles with driver, derived from Royal Decree 1057/2015 and in Order FOM 2799/2015, because the CNMC considers they introduce unjustified restrictions on competition that harm consumers, companies and the public sector. In terms of transport, for the same reasons, the CNMC has raised an appeal against regulatory by-laws of the taxi licences of various towns (Córdoba, Málaga);
  • certain resolutions regarding regional aid for employment training in Cantabria and Castilla-La Mancha, because the CNMC understands they violated the principles of inter-territorial non-discrimination and national efficiency in relation to the participation requirements and assessment criteria;
  • the restriction of activity required by the Council of Orba (Alicante) exclusively in favour of architects, by unjustifiably and substantially limiting competition to the detriment of other graduates and being contrary to the principles of necessity and proportionality.

As an example of a prior administrative action we can emphasise the requirement that the CNMC has submitted to the Mallorca Island Council requesting the repeal of the regulation cautiously establishing a moratorium on installing new shopping centres, and that for creating an unjustified entry barrier to new operators which does not conform to the Services Directive. It is also expected that the CNMC will continue to use its standing in other issues and sectors which could include, for example, the non-manned service stations that could not be implemented in nine autonomous communities whose regulations require the presence of a person in charge.

In the field of the sharing economy and new online services platforms, throughout 2016 the CNMC has exercised the power of appeal up to eight times, amongst which are the appeal against the Decree of the Community of Madrid that regulates apartments and houses for tourist use, and the filing against the modification of the Land Transport Regulation. We expect the CNMC to continue to intervene to protect the opportunities for disruptive, innovative technologies and solutions to emerge whenever this is in the best interests of Spanish consumers.

In conclusion, the active standing of the CNMC to contest measures adopted by any Public Administration when deemed contrary to the legal principles regulated under the MUG, prevents Public Administrations from unnecessarily fragmenting the market or hindering the maintenance of effective and sustainable competition throughout Spain.