BACKGROUND AND CURRENT SITUATION
GENERAL OBJECTIVES AND INFORMATION
The fight against cartels is now one of the top priorities of all competition authorities in developed countries. There is no doubt that cartels are an evil for the economy and society and it is essential to have efficient mechanisms to prevent and detect them and to impose effective and dissuasive sanctions.
The fight against cartels is of particular importance for the Spanish economy and competitiveness in the European and international markets, and is therefore undoubtedly in line with the "State Plan for Scientific and Technical Research and Innovation 2013-2016". Through transversal and interdisciplinary research, and bearing in mind internationalisation (as is the case in this project), the aim is to seek a response to priorities such as, among others:
- Economic growth and the transformation, evolution and future of the welfare state
- The design, evaluation and impact of public policies, both at national and European level
- Innovation and progress in the legal and economic field of business activities, through the deepening of better organisational models for economic activities, the international and global impact of economic and business activities and the competitiveness of the Spanish economy, as well as the search for new models of business leadership and competitiveness
By evaluating the design, evolution and results of the fight against cartels both in Spain and in Europe, this project seeks to promote competitiveness and good business practices, which in turn will lead to innovation, dynamism, economic growth and new opportunities.
Similarly, it is in line with European priorities. If we consult the Council Decision on challenges in research and innovation 2014-2020 (known as "Horizon 2020") we see how the European Union advocates an "innovative and reflective society", going on to describe the challenges to create "stable, sustainable and appropriate growth for our economy".
However, the fight against cartels has had significant shortcomings in past decades in the Spanish sphere. With the new Competition Law of 2007 and its implementing regulations, improvements and new instruments were included, most notably the so-called leniency programme which promoted the self-incrimination of one or more of the cartelists in exchange for a substantial exoneration or reduction of the administrative fine. The importance of these changes, as well as the general interest in an effective fight against cartels, made an in-depth study of this anti-cartel policy and an evaluation of its results necessary. For this reason, from the Centre for Competition Policy (CPC), with funding from the Ministry of Economy and Competitiveness, under the national R&D&I programme and with the collaboration of the National Commission for Markets and Competition (CNMC), we have been carrying out research into the fight against cartels in the Spanish sphere over the last four years, directly involving more than 20 researchers, and in which the heads of the CNMC, professionals and other interested experts have also collaborated.
This project culminated in the international congress "The Fight against Hard Core Cartels: Trends, Challenges and Best International Practices", held at the CNMC headquarters on 27 and 28 November 2014. At this congress, the new challenges to be investigated were established. These premises were presented by this investigation team and agreed with various national competition authorities (including the Spanish one), representatives of the European Commission and the European Court of Justice. It is worth mentioning the collective publication directed by Prof. Beneyto and Prof. Maillo, with the participation of the researchers participating in the project and other experts. This publication has been published by the prestigious Aranzadi Thomson Reuters publishing house as part of its "Grandes Tratados Aranzadi" collection (The Fight against Cartels in Spain. ISBN 978-84-9059-593-4).
The results of the investigation already carried out undoubtedly reveal signs of a clear improvement in the effectiveness of the policy against cartels, particularly as regards their prosecution through administrative channels. This is an incipient improvement, with a barely six-year history, which is still largely subject to judicial review by the Audiencia Nacional and the Supreme Court.
Indeed, it has been noted that the reinforced powers of the competition authority and above all its leniency programme have significantly increased the opening of sanctioning cases against cartels and their condemnation. Many more cartels have been detected, sufficient evidence has been gathered and much higher fines have been imposed. This has resulted in increased awareness among business and society of the harmfulness of cartels and the effectiveness of instruments to pursue them which in turn may have contributed to destabilising existing cartels and discouraging new ones. If we compare the results with the situation prior to 2007, we must congratulate ourselves because a significant qualitative leap has been made.
However, it is still too early to be satisfied. Many of the authority's sanctioning decisions have been subject to judicial review. Whether this trend towards greater efficiency is consolidated, enhanced or curtailed will largely depend on the decisions of the courts and the reactions of the competition authority to them. The Audiencia Nacional is annulling many of the sanctions imposed by the competition authority or reducing the final amount that infringers have to pay. The calculation of the sanctions and, in general, the practice of imposing administrative fines that the former National Competition Commission (CNC) had promoted has therefore been contested before the Audiencia and, this 2015, revised by the Supreme Court in key rulings. It has already forced its successor, the new National Commission for Markets and Competition (CNMC), to implement changes and will require new developments that will be studied, monitored and proposed. Evidentiary issues are also giving rise to challenges and debates in the most far-reaching judicial instances.
From an administrative point of view, the results of the project have also revealed a remarkable progress, compared to the situation before the new law of 2007, in the important work of promoting Competition (including mechanisms for the prevention of cartels). The authority has been much more proactive and has adopted multiple reports, guidelines and action guides both with regard to companies and business associations, as well as to administrations and public authorities. It has promoted compliance programmes, although without offering them a strong incentive to reduce any sanctions, and has been much more belligerent with public administration practices that facilitate cartels. Here again, however, some of his actions have been challenged and are pending judicial review. Moreover, the results of the project show the untapped potential of these promotion and prevention functions.
This new project will continue to consider the administrative route as the main instrument for an effective fight against cartels and will seek ways to defend and enhance it. This will therefore be the first major challenge facing the fight against cartels. Priority attention will be given to the implementation and improvement of the leniency programme as the main (but not the only) instrument for the detection and collection of evidence of infringements. In this respect, the impact on its effectiveness of opening/enhancing criminal and damages actions will be examined. The mechanisms of articulation and interaction between leniency and these other avenues will be analysed. In addition, sanctions and evidence will be further developed. In all this, the study of administrative practice will be as important as jurisdictional review. The introduction in our system of a system of settlements will be explored, which will speed up administrative procedures and the closure of cases by limiting the scope and frequency of jurisdictional reviews, as exists in other systems such as EU law. Finally, great importance will be attached to the techniques for preventing cartels, and in this line, to the relations between the competition authority and the public administrations. In order to achieve these objectives, the team has been strengthened from three perspectives: on the one hand, new administrative experts in Spanish law have been incorporated and the involvement of the authorities' staff in the project has been intensified; on the other hand, several judges from the National Court participate in the team; and finally, new experts in other European and international jurisdictions have been incorporated. In addition, links have been established with other research groups (also with R & D projects) with a view to planning future joint activities, in particular with regard to the interactions between public procurement, cartels and the role of public administrations in this respect.
Beyond the administrative route, attempts have been made to open, strengthen or at least seriously discuss new avenues, complementary to the administrative one, to effectively combat cartels, in particular, claims for damages arising from cartels (and private enforcement more generally) and criminalisation.
With regard to damage claims, the first compensation for damages suffered by victims of a cartel has been known in Spain. Nevertheless, and despite this progress, the results of the project reveal the great limitations and significant obstacles that still exist for this route to be truly effective. The Spanish legal framework will have to undergo important changes in the coming years as a result of the recent approval of a new regulatory package promoted by the European Commission, consisting of a recommendation on collective actions, a practical guide for the quantification of damages derived from antitrust infringements and, above all, a directive on actions for damages derived from antitrust infringements. After a long preparatory discussion, the first steps of which date back to 2005, the new Directive will require significant changes both from a procedural and substantive point of view. It will undoubtedly incorporate changes that will remove or reduce some of the existing obstacles (not all of them, of course) and facilitate future claims. Once transposed, a new stage will be opened, the follow-up to which will be very interesting. This new project must carry out an in-depth analysis of the new European framework and above all of its future transposition in Spain and its practical application. This will focus specifically on the impact it can have on improving the fight against cartels. To carry out this task we have incorporated new proceduralists and privatisation experts as well as experts in other European and international jurisdictions.
As for the criminalisation of the cartels, it continues to be a highly controversial issue with both detractors and convinced supporters. In Spain it is still an unexplored avenue. The research we have carried out has been limited to analysing the possibility of fitting some existing cartels into criminal law, as well as making an initial assessment of pros and cons and some foreign experience. It has been noted that in Europe and internationally the criminalisation of cartels is the subject of monographs and numerous studies and that some European jurisdictions, especially the British one, have recently reformed and improved the criminal law procedures they already had in place. An in-depth study of these reforms, their design and, above all, a follow-up of the problems that arise in their application, will enable us to know the advantages and risks of criminalisation compared to other options, as well as the interactions with other channels. The importance of the British experience (the most advanced in Europe in this field) has led us to incorporate several British experts into the team, some of whom have focused the bulk of their research in recent years precisely on this phenomenon of criminalisation.
We also strengthen the economic perspective. As no positive effects of the Cartels are expected, there is no need for a complex market assessment to counterbalance positive and negative effects. However, the research carried out has confirmed that the economic studies are still very relevant to the Cartels. They are necessary, inter alia, for the purpose of deepening their internal functioning and dynamics, the economic context in which they are most likely to occur, for the estimation and quantification of their harmful effects, for evidence of concerted practices and for the economic assessment of leniency policies, the level of fines and their deterrent character, as well as for the assessment of possible business reactions.
In order to carry out the investigation described above, a team with investigative expertise and interdisciplinary character has been assembled. The basic team of the previous project is maintained, reinforced with new incorporations and including profiles that cover the novelties raised.
In line with these more ambitious objectives, the research and work team has been strengthened in the legal and economic areas (simultaneously promoting the internationalisation of the team). We continue the indispensable interaction between academics and researchers with members of the competition authorities, lawyers, judges, consultants, other professionals and stakeholders. In order to facilitate the development of the research, sub-coordinators specialised in each of the topics raised have been selected, who together with the principal investigators will supervise the development of the research.
All the jurists included in the team are experts either specifically in competition law or in administrative sanctioning law (including jurisdictional review at both the Spanish and European levels), economic criminal law, procedural law or civil law (damages), all of which are essential to be able to study and evaluate these three ways of preventing and fighting cartels. The inclusion of European and international jurists facilitates the analysis of comparative law and the interactions between the different systems (national, European and international) in the fight against cartels, as well as the study of best European and international practices.
The team of jurists has been joined by a reinforced team of economists specialised in microeconomics, industrial economics and market regulation with experience and numerous previous publications on competition. They will bring their expertise to various issues that are essential to analyse and assess the various ways of fighting cartels, such as their internal functioning and dynamics, the economic context in which they are most likely to occur, the quantification of the damages they cause, or the economic assessment of leniency and reward policies, the level of fines and their deterrent character as well as business reactions.
As a result of the above, it is proposed:
- To continue to monitor and assess in depth the policy and regulations for combating cartels in Spain, focusing on the major challenges described:
- Defence and strengthening of the administrative channel as a priority (special attention to the new institutional environment, leniency, sanctions, evidence, settlements and prevention)
- To increase the effectiveness of the Cartel damages claim process through an ambitious adaptation of the Spanish regulatory framework to the recently adopted European regulatory framework on antitrust infringement claims
- Analysis of the phenomenon of criminalisation and its first European and international experiences in order to assess its introduction in Spain in the future
- Complete this national monitoring with a comparative study of the fight against cartels in various EU States and other relevant jurisdictions. In particular, the organisation, resources, powers and mechanisms foreseen for their fight will be deepened, identifying trends, challenges and best international practices.
- Contrast the results of the study with the Spanish experience and identify possible improvements after examining international best practices in the fight against cartels.
- To promote the development of international networks already initiated for the Centre for Competition Policy and the project's researchers with two priority geographical areas: Europe and Latin America.
- To publish the results in both Spanish and English with contributions from the best national, European and international experts from the academic, professional and public institutions.