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Viewing cable 05MADRID1865, SPAIN'S COMPETITION TRIBUNAL TRAVESL TO WASHINGTON

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Reference ID Created Released Classification Origin
05MADRID1865 2005-05-16 16:31 2011-08-24 16:30 UNCLASSIFIED Embassy Madrid
This record is a partial extract of the original cable. The full text of the original cable is not available.

161631Z May 05
UNCLAS SECTION 01 OF 02 MADRID 001865 
 
SIPDIS 
 
DEPARTMENT PASS FTC (JOHN PARISI) 
JUSTICE PASS CALDWELL HARROP 
 
E.O. 12958: N/A 
TAGS: ETRD EFIN ECON SP
SUBJECT: SPAIN'S COMPETITION TRIBUNAL TRAVESL TO WASHINGTON 
FOR ADVICE ON REFORM 
 
 
1. Summary: The President of Spain's Competition Tribunal 
Gonzalo Solana Gonzalez travels to Washington next week to 
meet with U.S. Foreign Trade Commission officials, the 
Department of Justice and International Financial 
Institutions (IFIs).  Solana's goal is to discuss proposed 
reforms to competition law in the with American counterparts 
on one hand, and seek funding for their work with Latin 
American competition authorities from IFIs on the other hand. 
 In recognition that Spain is behind other European countries 
in competition policy, the Minister of Economy Pedro Solbes 
has made unifying the current Competition Service of the 
Ministry of Economy and the Competition Tribunal into one 
independent administrative organ.  End Summary. 
 
Weaknesses of Current Competition Policy 
 
2. Spain's current competition policy is carried out by two 
separate organizations.  The Ministry of Economy's 
Directorate General of the Defense of Competition 
(Competition Service) conducts investigations of alleged 
breaches of competition.  The semi-independent Competition 
Tribunal then judges the cases and metes out penalties. 
These two authorities are responsible for competition policy 
at the national level.  If a monopoly or cartel only affects 
an autonomous region in Spain, regional governments have the 
authority to investigate and try the case. 
 
3. The Ministry of Economy has identified several weaknesses 
with the current competition policy system in Spain. 
Elimination of cartels in Spain in the past 15 years has been 
poor in certain sectors, notably sugar, beer, iron and 
drivers' training schools.  The division of labor between the 
investigative arm and the tribunal duplicates work and causes 
a slow process from complaint to resolution.  A recent 
telecom case required two years to resolve in which time the 
competitor bringing the complaint went out of business.  The 
final weakness noted by the Ministry is that competition 
authorities are not consulted by Parliament on all laws that 
affect competition such as electricity or telecom law, but 
only on pure competition law. 
 
Reform Proposal 
 
4. The Ministry Economy's proposed reform of Spain's 
competition authorities in early 2005 is one of the 
centerpieces in Spain's economic reforms.  The white book 
describing the reforms and the Ministry's analysis was 
released in late January.  Other ministries and corporations 
were given two months for comment.  The Ministry of Economy 
is currently considering the commentary and is preparing the 
bill for Parliament.  Once completed, the Competition 
Tribunal will provide their testimony to the Parliament.  The 
law is expected to pass and be implemented by May 2006. 
 
5. The broad changes made in the white book proposal begin 
with the unification of the investigation and resolution 
responsibilities into one independent National Commission for 
the Defense of Competition (the Commission) to increase 
efficiency and reduce duplication of work.  The ability to 
punish offenders would be conducted in an administrative 
manner, and be taken to an independent court only if 
requested.  The nomination of members of the Commission would 
be less political.  Currently the majority government names 
members of the Competition Tribunal, and the Minister of 
Economy chooses the head of the Competition Service.  The 
Ministry is considering ways of making the naming process 
more independent.  The reform will also consider clarifying 
the role of the Commission in competition policy vice the 
Telecommunications Commission and energy regulators. 
 
6. More specific technical changes that the reform proposal 
addresses include an elimination of a company's ability to 
request an individual exemption from competition law if the 
benefits to society outweigh negatives.  Such a finding will 
only be made after a complaint has been filed according to EU 
law.  Merger decisions will devolve to the Competition 
Commission that are now made by the elected government.  An 
issue that remains outstanding is if the government will 
maintain a veto over the Commission's decisions as is allowed 
in Germany. 
 
7. Two additional points the Ministry of Economy's reform 
proposes are similar to the American system.  The Ministry 
wants to introduce leniency for members of cartels that 
participate in competition proceedings.  Fifteen of the 25 
European countries currently allow leniency for cooperation 
and 80% of European cases begin in this manner.  The law will 
also propose allowing civil trials to consider competition 
law parallel to the commission.  Currently, all civil cases 
are suspended until the Competition Tribunal makes a 
decision.  After reform, a company should be able to file a 
complaint with the Commission, and sue in civil court. 
 
Trip to Washington 
 
8. The President of the Competition Authority Gonzalo Solana 
Gonzalez and his Chief of Staff Antonio Guerra are traveling 
to Washington next week to meet with representatives of the 
Foreign Trade Commission and the Department of Justice to 
receive advice on reform.  They are particularly interested 
with the U.S. experience on leniency in competition 
investigations.  Solana is also interested in learning about 
private or civil enforcement of competition law in U.S. 
courts. Finally, they want to ask about the FTC' and Justice' 
advocacy in lobbying congress on competition issues. 
 
9. Solana and Guerra will also be talking to IFIs 
institutions in Washington such as the International Monetary 
Fund, the World Bank and the Inter-American Development Bank 
to seek funding for Spain's work in Latin America.  Spain and 
Portugal have been holding an Iberoamerican Forum on 
Competition Policy with Latin American competition 
authorities for five years.  Spain funds a competition course 
for government officials each year in Madrid.  They would 
like to obtain further funding to help competition 
authorities develop further in the Latin American region. 
 
10. Comment.  The Ministry of Economy is interested in 
assuring that competition policy in Spain becomes more 
effective.  Weak competition in Spain's economy remains a 
problem and behind much of Europe.  The Ministry wants to try 
to create a more competitive and fair environment in Spain as 
well as catch up with European neighbors.  Spain needs to 
overcome the legacy of the monopolistic corporate behavior of 
the Franco years and the "national champion" policies of the 
90s that have endowed Spain with strong energy, banking and 
telecommunications competitors in Latin America, but have 
reduced competition at home. 
NEALON