The Spanish Supreme Court has issued a judgment on 29 January 2015 declaring that:
- The Fining Guidelines of the Spanish Competition Authority, which mirror to a large extent the European Commission’s Fining Guidelines, are contrary to the fining system of the Spanish Competition Act. Thus, the Spanish Competition Authority should no longer apply them.
- In the same judgment, the Supreme Court stated that the theoretical maximum amount of the fines that can be imposed in Spain is 10% of the total turnover of the infringing company. Indeed, this was the interpretation of the Spanish Authority. However the Spanish High Court (a first instance court) had interpreted since March 2013 that the maximum amount of the fines was 10% of the turnover generated in the affected market (excluding sales in markets unrelated to the anticompetitive practices). The Supreme Court confirms now the Authority’s interpretation, contrary to the High Court’s view.
The entry into force in Spain of the current Competition Act in 2007 triggered a proactive and strict enforcement of Competition rules. Since then, the Authority multiplied the number of dawn raids and infringement proceedings, as well as the amount of its fines. In the appeals filed with the Hight Court against the fining decisions of the Authority, the High Court has tended (i) to reduce the amount of the fines and (ii) disregard the Fining Guidelines of the Authority, adopted in 2009. These judgments were systematically appealed by the Authority before the Supreme Court. On 29 January, the Supreme Court ruled for the first time on this recent case-law of the High Court. On the one hand, the Supreme Court confirms the interpretation of the Authority on the maximum amount of the fines that can be imposed by the Authority. On the other hand, it confirms the position of the High Court indicating that the Fining Guidelines of the Authority are not compatible with the current wording of the Competition Act.
2. Theoretical maximum amount of the fine
The Supreme Court clarifies that the maximum amount of the fine that can be imposed for Competition Law infringements in Spain is 10% of the overall turnover of the infringing undertaking (i.e. including sales in markets unrelated to the infringement) in the year preceding the fining decision. The Supreme Court hereby supports the doctrine of the Authority. This limit is higher than the one proposed by the High Court, which situated the maximum amount of the fine in “only” 10% of the turnover of the infringing undertaking in the market affected by the infringement.
3. The 2009 Fining Guidelines
The Supreme Court adds that the Authority’s Fining Guidelines adopted in 2009 are not compatible with the Competition Act. Similar to the European Commission’s Guidelines, the amount of the fines to be imposed for Competition Law infringements is calculated applying a percentage (generally 10% or 15%) to the undertaking’s turnover generated in the market affected by the infringement, per year of duration of the infringement. Then the fine is adjusted, upwards or downwards, to take account of any aggravating or mitigating circumstances. The Supreme Court considers this calculation method does not fit in the current wording of the Competition Act.
4. Method to be followed onwards when calculating the fines concerning Competition Law infringements
If this judgment is to be confirmed by further jurisprudence of the Supreme Court, it is likely that the Authority will calculate fines differently from how it has been doing it since 2009. The Supreme Court does not provide specific indications as of how should Competition Law fines be calculated in the future. It only says that the fines can be imposed within a range with an upper limit of 10% of annual turnover of the infringing undertaking. The maximum amount, states the Supreme Court, can only be reached when the individual liability of the undertaking being sanctioned is exceptionally serious. The problem lies in how to determine the precise amount of the fine within that extremely wide range. The Supreme Court makes an obvious statement indicating that the Authority should take into consideration the criteria set out in the Competition Act (dimension of the affected market, market share of the infringing company, etc.). The Supreme Court seems to suggest that the fine should be proportionate to the turnover generated by the infringing company in the market affected by the infringement. Also, it vaguely refers to other criteria such as the illicit profits, the likelihood of the infringement to be detected, etc.
5. Implications of this judgment
In the coming months, the Supreme Court will continue ruling on similar appeals filed by the Authority against High Court’s judgments that have reduced the amount of the fines imposed for Competition Law infringements. If the doctrine of the 29 January Supreme Court judgment is confirmed in successive judgments, the following can be anticipated:
- The Authority could refrain in the near future from applying its Fining Guidelines.
- The Authority could promote a reform of the Competition Act that expressly supported the Fining Guidelines that has been applying since 2009. However, the Supreme Court anticipates that this potential reform of the Competition Act may not be compatible with the Spanish Constitution. As an alternative, the Authority can also accept the Supreme Court’s view and apply the (vague) Fining Guidelines suggested by the Supreme Court.
- Obviously, the companies recently fined by the Authority will rely on this Supreme Court’s judgment to try to obtain fine reductions.
- The European Commission’s Communication of July 2014 “Ten Years of Antitrust Enforcement under Regulation 1/2003” suggested that there should be further convergence on the calculation of fines across the EU member States and, to support this view, it mentioned a recent judgment of the German Supreme Court that led to a modification of the German Fining Guidelines. If the case law of the Spanish Supreme Court is confirmed, the European Commission will have another example to put forward in order to defend an eventual modification of Regulation (EU) 1/2003 imposing that the Competition Authorities of the member States apply a unified set of Fining Guidelines when they enforce Articles 101 and 102 TFEU.