Fair Competition: Antitrust Law and Unfair Practices
Defense of Free Competition
Regulated by Law 15/2007 of Antitrust. Collusive behavior is prohibited under this law, which prohibits any agreement, decision, collective recommendation, or concerted practice that has the object, produces, or can produce the effect of preventing, restricting, or distorting competition in all or part of the domestic market.
The following agreements are prohibited:
- Fixing prices or market conditions.
- Limiting or controlling production, distribution, or R&D.
- Market-sharing or lack of supply.
- Applying dissimilar conditions to equivalent transactions.
- Subordinating the conclusion of contracts subject to acceptance of extra benefits unrelated to the contract.
Abuse of Dominant Position
The abuse of a dominant position by one or more undertakings in all or part of the national market is prohibited. A company or group of companies is considered to have a dominant position when holding a 30% market share.
It is considered an abuse of the market when prices or other unfair trading conditions are fixed.
Also prohibited is the restriction of production to the detriment of consumers, refusing to meet certain demands or orders, applying unequal trade conditions on trade relations, and subordinating a contract for acceptances of fringe benefits.
Actions for Collusive Activities
The National Competition Commission and their equivalents can initiate an investigation and subsequent disciplinary proceedings, which could lead to penalties of more than ten million euros when the overall turnover of the company in Spain in the last accounting year exceeds 240 million.
Protection Against Unfair Competition
Requires a minimum of correction in relation to competitors. In Spain, this protection is regulated by Law 3/1991, which has been amended by Law 29/2009. This law allows companies to compete fairly. It prohibits a range of business conduct to prevent unfair competition, including:
- Acts of Confusion: Prohibited by Article 6, behavior suited to create confusion with the activities, services, or facilities of others.
- Acts of Deception: Prohibited by Article 7, incorrect or false information, omission of facts, or any other practice that may mislead the recipient about the characteristics of the product.
- Article 8 prohibits obtaining and improving business figures through gifts, bonuses, and similar cases that put the consumer in the commitment to hire the initial benefit. When the actual cost of the gift exceeds 15% of the initial benefit, the consumer has been put in a compromise.
- Acts of Denigration: Prohibited in Article 9. Unfair dissemination of statements about a third party aimed at undermining their credit. Product demonstrations from a third party can be disseminated if they are accurate, true, and relevant.
- Acts of Comparison: Prohibited by Article 10 when extreme comparisons are not relevant, similar, or comparable.
- Article 11 prohibits acts of imitation. A benefit can be mimicked if not protected by exclusive rights. Imitations are forbidden when designed to achieve an unfair advantage of another’s reputation or when it is a systematic imitation.