Cement. The Spanish High Court annuls CNMC’s fines for lack of evidence

The Spanish High Court (Audiencia Nacional) has annulled most of the fines imposed in February 2017 by the Spanish competition authority (CNMC) on more than 13 cement companies and one of their executives for allegedly participating in a cartel in the concrete manufacture, distribution and commercialization markets in Asturias and surrounding areas.

However, the judgments are not final and can be appealed to the Spanish Supreme Court within 30 days of notification.

BACKGROUND

Following information received at the end of 2014, the CNMC carried out inspections at the headquarters of four concrete companies in January 2015. Based on the evidence gathered, the CNMC initiated administrative proceedings (S/0545/15 Hormigones de Asturias) against six of them for an alleged infringement of article 1 of the Spanish Competition Act (LDC). The proceedings were extended twice (in January and April 2016) to include another nine companies. The file was closed in 2017 by decision of the CNMC sanctioning 13 companies and an executive with fines amounting to €6.2 million.

According to the decision, the following anticompetitive conducts were proven between 1999 and 2014:

• Customer allocation among cartel members. The CNMC identified two practices: (i) works allocation agreements under which the companies undertook to jointly monitor the works awarded to each of them—acting accordingly; and (ii) the creation of unnecessary temporary joint ventures (UTEs) to bid on tenders for the sole purpose of executing the works jointly. This was allegedly the case in large works, such as the Asturias Central University Hospital.

•  Price-fixing agreements. This was the inevitable consequence of the previous practice: for the client to choose the company designated by the cartel, its members had to previously agree on a reference price which the rest had to exceed.

• Finally, information exchanges among cartel members both before commencing the works (by sharing the available contracts) and after (to monitor compliance with the agreements).

JUDGMENTS OF THE SPANISH HIGH COURT

The Spanish High Court upheld the appeals filed by the companies and annulled CNMC’s decision for lack of evidence, arguing that the existence of a single and continuous infringement over 15 years cannot be proven through mere suspicions.

The Spanish High Court recognizes the importance and usefulness of circumstantial evidence, especially in matters related to competition law, “since it is difficult for the perpetrators of collusive acts to leave a documentary trace of their restrictive or prohibited conduct.” However, the court relies on the well-established case law of the Constitutional Court and the Supreme Court to explain that for such evidence to be the only sanctioning criterion “the circumstances must not be based on mere suspicion, rumor or conjecture, but on fully proven facts. Also, between the basic facts and the one to be demonstrated there should be a precise and direct connection according to the rules of human judgment,” which is not the case in the contested decision.

The Spanish High Court criticizes the CNMC for giving exclusive probative value to some Excel sheets that supposedly reflect the market-sharing arrangements, while failing to identify “who prepared them or who supplied all the information they contain.” In the view of the court, the CNMC also failed to determine the market-sharing criteria and who carried them out. Therefore, the existence of this practice cannot be inferred from the Excel sheets.

On the other hand, the Spanish High Court refers to CNMC’s lack of “logical and sufficient reasons” to attribute the proven facts to the companies. Among other things, the court questions (i) whether a company’s continuous participation in a cartel for 15 years can be established based on a sample of only 4 or 5 years; and (ii) whether a company can be said to have knowingly participated in a global market-sharing arrangement simply because it appears in the Excel sheets.

Finally, the judgment recalls that for a sanction to be validated in court “the proven facts must be linked to the participation of the specific company,” and “its liability—based on such facts—must be duly substantiated.”

CONCLUSIONS

These recent judgments of the Spanish High Court focus again on CNMC’s use of circumstantial evidence in sanctions proceedings.

In particular, the court emphasizes the need to prove the facts, rejecting circumstantial evidence based on mere suspicion. It also criticizes the CNMC for the lack of connection between the allegedly proven facts and their attribution to the sanctioned companies.

These rulings are in line with the work the Spanish High Court has been carrying out since 2021, focused on reviewing the evidence set out in CNMC’s decisions and establishing clear and specific criteria on the evidence required to impose sanctions for competition law infringements.

For instance, last April the Spanish High Court annulled for lack of evidence the fine imposed by the CNMC on 21 companies for their alleged participation in a cement cartel. In January 2021, the Spanish High Court upheld the appeal filed by two associations of carriers and stevedores operating in the port of Santander against a fine imposed by the CNMC for alleged price fixing. The Spanish High Court has also annulled other judgments for lack of evidence in the railway infrastructure sector and in the nougat manufacturing and supply market.

In this regard, the work of the courts deserves praise, as these rulings provide useful guidelines for both companies and the CNMC in future cases—in addition to reinforcing the presumption of innocence enshrined in article 24 of the Spanish Constitution.

The list of judgments can be found below:

282/2017, Canteras del Noroeste; 299/2017, Fábrica de Hormigones Industriales (FHISA); 300/2017, FHISA’ director Moisés Ferreras Fernández; 246/2017, General de Hormigones (GEDHOSA); 296/2017, Hanson Hispania; 297/2017, Hormigones Avilés Oviedo; 289/2017, Hormigones de Avilés; 276/2017, Hormigones del Sella; 217/2017, Hormigones del Nalón; 280/2017, Hormigones Pelayo; 291/2017, Lafarge Áridos y Hormigones; and 239/2017, Panelastur.