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Competition Law

Law No 5/18 of 10 May, which entered into force on the same date, established the principles and rules of competition.

Scope of application

The legal regime defined by this Law applies to "economic activities carried out, on a permanent or occasional basis, in the national territory which produce or may have an effect therein, and to public and private companies, group of undertakings, cooperatives, as well as to business associations or other legal entities legally and factually incorporated, even temporarily, with or without legal personality." This Law does not apply to agreements deriving from international obligations, provided they do not harm the national economy.

Prediction of the incorporation of the Competition Regulatory Authority

With this Law, there will be a Competition Regulatory Authority that will act with autonomy and exemption, and whose oversight depends, under the terms of the Constitution, on the President of the Republic (as the holder of the Executive Power). Its funding will be provided by the State budget and supplemented by the services of the sectoral regulatory authorities and the fees to be charged for its services.

Definition of practices that are harmful to competition

They are acts which are manifest in any form and which result in abuse of a dominant position or abuse of economic dependence or prohibited practices, in particular, agreements and concerted practices unjustifiably restrictive of competition and decisions or resolutions of associations of undertakings which adversely affect the competition.

Mandatory and "voluntary” control of mergers

The Law establishes the legal obligation to notify mergers in advance of their market share or turnover, whose specific thresholds will be regulated. There is a tacit approval if the Authority does not issue a decision by the end of the period provided for in the Law. It is envisaged that there may be interaction between the Authority and sectoral regulators.

As a result, the Authority may require the notification of concentrations between undertakings which, although not subject to the obligation to notify, are considered by the Authority as 'likely to prevent, or distort or restrict competition" and / or whose effects on competition do not benefit from a positive economic balance sheet.

The Law also provides for the possibility of voluntary notification by parties involved in a merger with the aforementioned impact, which in practice constitutes a substantial incentive to the notification of mergers regardless of whether or not they meet the thresholds, even if there is no financial penalty for failure of notifying the same type of concentrations.

Penalty system

The Law defines the penalty procedure and, in this context, it should be noted that fines can reach the amount equivalent to 10% of the companies' turnover, and fines also apply to natural persons. Additional sanctions are also envisaged "in cases where the seriousness of the infringement or the public interest in general justifies it", which includes disinvestment in companies or assets or the partial cessation of activity.

Other responsibilities (very comprehensive)

The Authority will be able to carry out studies, inspections and audits, and the latter two can be carried out in the premises of companies and associations of companies, with very broad powers being foreseen. The Authority may issue recommendations containing structural measures "appropriate to the replacement or guarantee of competition", with the State, sectoral regulators or other entities as potential recipients.

The Law provides that public aid may not distort competition, which the Authority may investigate and, where appropriate, make recommendations to public bodies.

Future regulation of the Law

It is incumbent upon the President of the Republic, as Head of the Executive Power, under the terms of the Constitution.