Spanish and Portuguese regulators placing pressure on abusive practices

Spain´s competition regulator, the CNC, has fined five electricity companies more than €36m for attempting to block UK-based Centrica from marketing its services ahead of the partial liberalisation of Spain´s retail electricity market on July 1.

The CNC found that Iberdrola, Endesa, Unión Fenosa, Viesgo and Hidrocantábrico each “abused their dominant position in the electricity distribution market” by preventing newcomers from having free access to their client databases, something allowed under Spanish Royal Decree 1435/2002. The generators, advised by law firms including Cuatrecasas, Gonçalves Pereira and Clifford Chance, insisted that Centrica and others had to make individual applications for every customer they had – effectively preventing the newcomers from preparing a sales campaign to win clients.

The fines for Endesa, Iberdrola and Unión Fenosa (€15.3m, €15m, and €5m respectively) were higher than those for Viesgo (€0.5m) and Hidrocantábrico (€0.83m) because the CNC found that these companies had passed the information denied to Centrica on to their own retail units. The companies’ legal advisers have already submitted appeals. Centrica is expected to aim for a substantial share of Spain´s 23 million domestic and business electricity customers when market liberalisation comes into force.

Spanish electricity companies have been fined frequently for abuse of market dominance. The largest fine to date, €38.7m, was imposed on Iberdrola in 2007 for repeatedly restricting the availability of energy supply to the daily market so as to drive up the price. In 2008 it was fined a further €15.4m for the same practice.

The CNC has also fined Barcelona-based Abertis Telecom €22.7m for trying to restrict the market for digital terrestrial television. Clifford Chance defended Abertis against the claim lodged by Andalusian broadband operator Axion and is now preparing an appeal.

Abuse of market dominance is also an area of regulatory focus in Portugal. The national competition regulator, the AdC, has been preparing a case against Portugal Telecom (PT) since 2004 for alleged abusive practices, including predatory pricing, price discrimination and margin squeezes. PT is waiting to respond with a Statement of Objections, but was also fined €38m in 2007 for dominant abuse in a long running case brought by cable TV operator Cabovisão, advised by Uría Menéndez. Garrigues is among those advising PT.

The fines being levied by the national authorities for abuse of market dominance while large are nonetheless modest compared with those imposed by the European Commission – for example, €497m on Microsoft and €151m on Telefónica. However, the time taken for national cases to be resolved (and which are nearly always followed by an appeal) means that Iberian competition lawyers, to the envy of peers in other departments, can charge against the same file for years at a time.