The Fourth Section of the Contentious-Administrative Chamber of the Supreme Court, in its recent Judgment No. 674/2019 of 23 May and Judgment No. 704/2019 of 27 May, has upheld the appeals filed by the State Attorney’s Office on behalf of the CNMC against the judgments of the National High Court of 28 July and 22 December 2017. These rulings annulled the CNMC’s resolutions imposing two economic sanctions on Repsol, S.A. for a total amount of 42.59 million euros. The judgments now handed down by the Supreme Court resolve a controversial matter that analyses whether it is in accordance with the principles of personality and guilt -set out in articles 24 and 25 of the Constitution- to sanction only the parent company as the author of competition offences, when such offences are committed by one of its subsidiaries of which it has 100% control or close to that percentage, or whether, on the contrary, it is necessary to distinguish between acting as the perpetrator of the collusive conduct and that which is attributable by way of joint and several liability.
The backgrounds of both cases date back to 2015, when the CNMC imposed a sanction of €20,000,000 on Repsol, S.A. for having carried out collusive behaviour. Subsequently, it imposed a penalty of €22,590,000 for having carried out coordination agreements and exchanges of strategic information relating to prices, between a wholesale operator and various independent managers who belonged or had belonged to its flagship network.
The judgments now handed down do not enter into a debate on whether or not the practices carried out constitute infringements of Competition Law, but on who should be subject to such sanctions.
Faced with these sanctions, Repsol, S.A. filed the corresponding contentious-administrative appeals, which, as explained above, were considered by the National High Court, on the understanding that, if Repsol, S.A. was considered responsible for the infringements when the material author of the facts was its subsidiary Repsol Comercial de Productos Petrolíferos, S.A. -99.78% owned by the former-, the “principle of individual nature of penalties” was being violated.
However, with the Supreme Court rulings now handed down, the interpretation of article 61 of the Law for the Defense of Competition defended by the CNMC is taken up again, which differentiates two types of responsibilities: (i) that of the material infringer who in this case would be Repsol Comercial de Productos Petrolíferos, S.A. (article 61.1); and (ii) the responsibility of the parent company for an action of its subsidiary based on the decisive influence that the parent company has over it (article 61.2).
According to the Supreme Court, article 61.2 allows only the parent company to be sanctioned without infringing the principle of guilt, since it would always be sanctioned for that which is exclusively attributable to it, and there is no evidence that the subsidiary acted independently of Repsol, S.A., since, if this dissociation between the two had been accredited, the sanction should have been imposed exclusively on the subsidiary. It is also added that, if the imputation of the parent company had been based on unproven facts or ignoring the proof of discharge from the parent company, we would be faced with a violation of the right to the presumption of innocence, but not of the principle of guilt and personality.
The Supreme Court considers that such principles cannot be understood to have been infringed because the parent company has not been sanctioned with facts attributable to the subsidiary also in existence, since independent action by the subsidiary has not been proven, but rather the parent company can be held exclusively responsible, due to the specific integration of the concept of “decisive influence” of the parent company over the subsidiary.
Finally, the possibility is left open that such responsibility of the parent company may be demanded exclusively under article 61.1 and not 61.2, since the determining factor, in the words of the Supreme Court, is that the parent company has been sanctioned for acts that are understood to be exclusively attributable to it.
The only way to appeal against the Supreme Court’s rulings is to file an appeal for protection of constitutional rights with the Constitutional Court, which in this case should be based on the violation, by the rulings, of any of the fundamental rights provided for in articles 24 and 25 of the Constitution.