CNMC accepts commitments to end two investigations in the film distribution and agricultural markets

In the space of just two weeks, the CNMC has made use of this type of decisions to end infringement proceedings in two very different markets regarding both vertical restrictions and restrictive agreements between competitors.

Commitments in the agricultural market

On 14 September 2021, the Spanish Competition Authority (“CNMC”) adopted a commitment decision to end infringement proceedings brought against a harvesting equipment company in October 2020, for vertical restrictions included in the agreements reached with its official distributors for the commercialisation of products that would be contrary to Article 1 of the Spanish Competition Act (“LDC”).

In particular, the CNMC was investigating whether this company was:

a) illegally restricting passive sales, which were subject to a compensation from the distributors. According to the CNMC, the distribution agreements linked the passive sales to an indemnity to be paid by the distributor, which discourages and could be a barrier to performing passive sales outside the assigned area; and

b) engaging in resale price maintenance. The CNMC highlights that the investigated company was setting a de facto minimum resale price by establishing a range with a minimum and a maximum price, forcing the distributors to sell the products at a price between the purchase price and the maximum set by the manufacturer.

On this basis, the investigated company requested the CNMC the adoption of a commitment decision, by offering the following commitments:

(i) including in the distribution agreements the express authorisation of performing passive sales outside of the distributors’ exclusive area and eliminating the mentioned compensation linked to such sales; and

(ii) removing the clause related to minimum retail prices, leaving only the reference to maximum retail prices.

The CNMC finally concluded that these commitments effectively solved the competition concerns identified and the problematic clauses limiting the distributors’ freedom to set their retail prices are no longer in force.

Commitments in the film distribution market

Two weeks later, on 29 September 2021, the CNMC adopted another commitment decision to end infringements proceedings formally opened in October 2019 against the major film distributors operating in Spain, an audience measurement company (Rentrak), and a cinema integrator company (Ymagis).

In this case, the CNMC considered that there was sufficient prima facie evidence suggesting that the investigated companies were carrying out two different restrictive practices:

a) an alleged concerted practice carried out between Ymagis and the film distributors that would have been aimed at standardising their commercial policies in the context of cinemas’ digitalisation process; and

b) the exchange of commercially sensitive information (on release dates, audiences, box-office takings, etc.) between the film distributors –with the intermediation of Rentrak– in a disaggregated and individualised manner, and in real time, that could have restricted competition.

With respect to first practice, the CNMC decided to close the proceedings, as no restrictive practices were proven on the basis of the evidence available in the file.

Regarding the exchange of sensitive information, the investigated companies requested the adoption of a commitment decision, by offering two commitments that, according to the CNMC, solve the competition concerns identified in the investigation:

(i) the film distributors will not provide the audience measurement companies with (non-public) information on the films’ expected release dates; and

(ii) Rentrak will not provide film distributors with information from other distributors on box-office takings disaggregated by screen in real time, and on the number of cinemas planned for release.

The future of commitments decisions and the differences with the European settlement procedure

With these two decisions, the CNMC has opted for putting an end to infringement proceedings based on commitments only in a total of 11 cases in the last five years, four of them so far this year. This leads to the conclusion that the CNMC may be relaxing the requirements to accept a request for the adoption of a commitment decision, which traditionally were not easy to meet.

It should be noted that the Spanish commitment decision procedure differs from the settlement procedure for cartel cases and the cooperation procedure for other types of infringements available before the European Commission, whereby the investigated company can acknowledge its participation in an anticompetitive conduct and collaborate with the Commission in exchange of a fine reduction.

Unlike the settlement and cooperation procedure, commitment decisions do not establish a competition law infringement and no fine is imposed on the companies involved. Furthermore, commitment decisions are not considered appropriate for cartel cases. In fact, most of the decisions adopted by the CNMC were intended to eliminate vertical restraints that were damaging to competition.

Despite the fact that there is currently no settlement procedure in place in Spain, the CNMC has manifested its interest in introducing this procedure in the Spanish legal system, and indeed, the recent transposition of the ECN+ Directive provided an opportunity to do so. The preliminary amendment that was submitted to public hearing in summer 2020 proposed to make the settlement procedure available to the CNMC, but finally – as discussed in our Competitive Edge May 2021– this relevant modification has been left out at least for the moment.

For further information, please refer to the CNMC’s decision on the agricultural industry here and on film distribution here (in Spanish).

For more information, please contact Candela Sotes.