Constitutionality of the Financial Liability of Firm Executives and Publication of Their Names on Infringement Decisions

Competition Act, Art. 63.2; Law Creating the National Commission of Markets and Competition, Art. 37 – Amurrio

Headnotes by the Editorial Office

1. The term ‘management body’ in Art. 63.2 of the Law on Defense of Competition (LDC) on sanctions to natural persons for infringement of competition law covers any of its members ‒ individuals or collectives ‒ who contribute to establishing, shaping and/or directing the company’s activity, regardless of whether they exercise legal or voluntary representation of a company.

2. Publishing the names of the executives fined in accordance with Art. 63.2 LDC does not infringe upon the rights conferred by Art. 18 of the Spanish Constitution, since a competition law infringement is not committed in the context of a person’s private life and good name. On the contrary, the sanction is a consequence of voluntary conduct within his/her professional life as a member of the infringing undertaking.

Supreme Court (Tribunal Supremo), judgment of 28 March 2019 – 430/2019

FACTUAL BACKGROUND

FIRST. - In the contentious-administrative appeal followed by the special procedure for the protection of the fundamental rights, Case No. 10/2016, the First Section of the Contentious-Administrative Chamber of the National Court handed down a judgment on 14 September 2017, whose ruling states as follows:

‘To dismiss the contentious-administrative appeal followed by the special procedure for the protection of the fundamental rights, Case No. 10/2016, filed by the attorney Mr. Argimiro Vázquez Guillén on behalf of Mr. Cesar against the decision of 30 June 2016, of the Competition Chamber of the Council of the National Commission of Markets and Competition, through which a fine of 6,650 euros was imposed. With express imposition of costs to the plaintiff.’

SECOND. - Against the aforementioned judgment, the legal representation of Mr. Cesar prepared and filed an appeal before the Sixth Section of the Contentious-Administrative Chamber of the National Court, which confirmed receipt by Order of 23 November 2017, and within the prescribed period of time, ordered to refer the proceedings before the Supreme Court, prior to the summons of the litigants.

THIRD. - Once the proceedings were received and the parties summoned, the First Section of the Contentious-Administrative Chamber of the Supreme Court issued an Order on 2 April 2018, whose operative part states as follows:

‘First. To admit the appeal prepared by the legal representation of Mr. Cesar against the judgment of 14 September 2017, of the Contentious-Administrative Chamber of the National Court (Sixth Section), issued in the orders of the special procedure for the protection of fundamental rights No. 10/2016.

Second. To specify that the question, in which there is an objective appeal interest for the formation of jurisprudence, is the following: (i) if Art. 63.2 of the Law on the Defense of Competition (LDC) – in relation to Art. 25 of the Spanish Constitution (SC) – allows to integrate in its formulation and, therefore, to sanction personally the executives of the infringing legal entity or if the regulatory provision only applies to the associated bodies of administration referred to in the second paragraph of the provision; and (ii) if Art. 37.1 of the Law Creating the National Commission of Markets and Competition (LCCNMC) requires, in accordance with Art. 18 SC, not to make public the names of the natural persons referred to in Art. 63.2 LDC.Third. To identify as legal provisions that in principle require interpretation: Arts. 18 SC, 25 SP, 63.2 LDC and 37.1 LCCNMC.

Fourth. To publish this order on the website of the Supreme Court.

Fifth. To communicate immediately to the National Court the decision taken in this order.

Sixth. To refer the proceedings for processing and decision to the Fourth Section of this Chamber, competent in accordance with the rules of distribution.’

FOURTH. - Once the appeal is admitted, due to an order of diligence of 25 April 2018, the appellant is granted a period of 30 days to submit the filing writ, which was done by the attorney Argimiro Vázquez Guillén on behalf of Mr. Cesar in writing dated 23 May 2018, in which, after detailing the grounds of appeal, he concluded with the following request:

‘1º) that upon approval of the appeal, the contested judgment be annulled, imposing the costs of the appeal on the respondent;

2º) that as a result of the approval of the appeal and the subsequent annulment of the contested judgment, the Supreme Court places itself in the proper procedural position of the Chamber of Instance and enters into the examination of the merits of the case, proceeding to the resolution of the dispute in the terms in which the procedural debate was raised in the previous instance;

3º) and consequently, to approve the contentious-administrative appeal filed by this party against the National Commission on Markets and Competition (CNMC) decision of 30 June 2016 in the file S/DC/0519/14, Railway Infrastructures, in particular establishing:

• The nullity of the aforementioned decision, for infringing Art. 25 SC insofar as it imposes a sanction on Mr. Cesar under Art. 63.2 LDC, without him corresponding to any of the cases provided for in said article: (a) he is not Amurrio’s legal representative, having sanctioned him in the said Decision only as “representative”, and he (b) is neither a part of any governing body, nor has he intervened in any corporate agreement related to the practices sanctioned by the CNMC; and

• The nullity of the Decision of the CNMC for not having removed prior to its publication, as required by Art. 37.1 LCCNMC, the name and surname of our client, in violation of Article 18 SC, condemning in this regard the CNMC as requested in the secondary petitions of the lawsuit filed before the National Court, namely: to give the same publicity to the approving judgment that it gave to the decision of 30 June 2016 by publishing a press release on the website of the CNMC, the publication in the same of the full judgement and the removal of the name and surname of our client from the Decision published on the CNMC's website and the press release on the same.’

FIFTH. - By order of 6 June 2018. It is agreed to notify the filing writ to the respondent, the State Administration and the Prosecutor's Office, so that, within the common period of 30 days, they can oppose the appeal, which the State Attorney did in writing filed on 10 July 2018, in which after making the declarations that he considered appropriate, he concluded it with the following REQUEST: ‘… that the appeal be dismissed, upholding the judgment under appeal. With costs’.

Likewise, the Prosecutor formulated an opposition in writing filed on 11 July 2018, in which, after making the declarations that he considered appropriate, he called for the complete dismissal of the appeal.

SIXTH. - In accordance with Art. 92.6 of the Contentious-Administrative Jurisdiction Law, by means of an order of 30 January 2019, this appeal is indicated for deliberation and ruling on 19 March 2019.

LEGAL CONSIDERATIONS

FIRST. - Disputed terms and challenged decision.

Counsel for Mr. Cesar filed an appeal pursuant to the special procedure for the protection of fundamental rights, against the judgement of 14 September 2017 issued by the Sixth Section of the Contentious-Administrative Chamber of the National High Court that dismissed the appeal No. 10/2016, against the resolution of 30 June 2016 of the CNMC in the file S/DC/0519/14 Railway Infrastructures, which imposed a fine of 6,650 euros on the appellant.

The first legal consideration of the appealed decision explains that the CNMC's resolution set forth a single and continuous infringement of Art. 1 LDC and Art. 101 of the Treaty on the Functioning of the European Union (TFEU), consisting of a series of agreements and concerted practices for market sharing, price fixing and other trading conditions, and exchanging commercially sensitive information, all of them in several procurement procedures of the GIF/ADIF [Administrator of Railway Infrastructures] for the supply of railroad switches, carried out at least between 1 July 1999 and 7 October 2014. The CNMC's resolution held several companies and individuals – including the appellant – liable for the infringement and set fines for each one.

The second legal consideration analyzes a supposed violation by the CNMC of the principle of legality in sanctioning matters (Art. 25.1 SC), as the CNMC takes recourse of a broad definition of ‘undertaking’ for guaranteeing an effective application of competition laws. The analysis relies on the Supreme Court case law for favoring an interpretation that considers the individual’s real position within the company. After these general considerations, the appealed decision stresses that each sanctioned individual was authorized by its respective company to take decisions on its behalf, and was empowered to represent, manage and control the company, being able both to enter into binding obligations for the company and prevent it from behaving in certain ways.

The third legal consideration refers to Art. 63.2 LDC, which serves in the present case to sanction the appellant.

It states that ‘the provision establishes two cases were an individual can be sanctioned: first, when the individual is the legal representative of the infringing company; and second, when the individual is part of the management bodies that have intervened in the agreement or decision’.

It then explains – and sets forth as true – the appellant’s claim of not being a legal representative of the sanctioned firm Amurrio Ferrocarril y Equipos, S.A., as he was merely the Vice Secretary of the Board of Directors, a position without legal representation according to Art. 223 of the Consolidated Text of the Corporate Enterprises Act (CTCEA).

It holds that the concept of ‘legal representative’ should be interpreted strictly when it comes to establishing an infringement, due to the principle of legality of Art. 25 SC.

In the fourth legal consideration, it analyzes ‘whether the individual participates in the management body that has intervened in the agreement or decision, according to Art. 63.2 LDC when it refers to the individuals’ liability, as the CNMC resolution also imputes liability under this second scenario.’

It states the appellant’s argument that he – as Vice Secretary of the Board of Directors – does not meet the second case of Art. 63.2 LDC, because he did not intervene in the agreement or decision in the terms required by the provision. He argues that the agreement referred to in the provision is the one adopted within the Company’s Board of Directors and not the infringing agreement itself. He supports this distinction in the supposed origin of the provision, which he claims is Art. 133.2 of the Consolidated Text of the Public Limited Companies Act (CTPLCA), and a systematic interpretation of paragraph two of Art. 63.2 LDC.

However, the Chamber disagrees ‘with a conclusion leading to an unjustified restriction of the concept of “management body” which is not made by the law’.

It then points out that:

‘[f]rom the enforcement perspective, there is no legal definition of “management body” that narrows this concept, ultimately leading to the appellant’s conducts as Vice Secretary of the Board of Directors not being considered illegal.

Lacking such a definition, we understand that a legal entity’s “management body” is any of its participants able to contribute in establishing, shaping and/or directing the firm’s activity. Accordingly, there is a factual component required by Art. 63.2 LDC: liability may be claimed in this scenario when it becomes clear that the management body – in the form as we have pointed out – has intervened in the agreement or decision. And this agreement or decision is certainly the anti-competitive one.

Therefore, once it is proven that someone with a management position – such as the Vice Secretary of the Board of Directors – has intervened in the infringing decision, his liability may be alleged pursuant to Art. 63.2 LDC, irrespective of any other formal consideration and without the need to prove the existence of a specific agreement. In the present case, there is enough evidence of the appellant’s participation and influence in the infringing conduct of the firm, consisting of the meetings referred to above to discuss market sharing and/or price agreements.

The content of the meetings and emails prove the degree of participation (e.g. page 532 of the file shows that on 1 July 1999 representatives of three companies – including Amurrio – met in Madrid, and one of the participants was ‘Cesar …’; or a meeting with representatives of the firms Amurrio, Jez and Alegría that took place at the latter’s headquarters on 21 September 2000, where ‘Cesar …’ participated in setting the share of the market for conventional railroad switches and dilatation devices, as well as the prices of these components for the Madrid-Lleida section).

Despite the appellant’s interpretative efforts, the second paragraph of Art. 63.2 LDC should be interpreted differently, as it contains a very specific assumption to exclude liability, i.e. when the natural person who forms part of the collegiate administrative bodies, has not attended the meetings or has voted against or withheld his vote. This case refers to only one of the many possible actions leading to establishing, shaping and/or directing the company's activity. However, it is not the case here, because the appellant has intervened as an executive of the management body in setting up the anti-competitive agreements, and this participation is irrespective of which type of representation – organic or voluntary – he was vested with. This, because both are perfectly compatible, as each one is exerted within its own scope. In fact, his investment as a member of the Board of Directors (organic) stems from the General Meeting, and his investment with powers of attorney (voluntary) stems from the governing body, i.e. from the Board of Directors itself.

In fact, the appointment of the directors is under the powers of the General Meeting (Arts. 160 and 214 CTCEA). One of the ways to organize the corporate governance is the Board of Directors (Art. 210 CTCEA). Further, the Board of Directors can grant powers of attorney at its convenience (Art. 249 CTCEA), in addition to the delegation of powers and the appointment of executive committees.

This conclusion does not change, despite the fact that the appealed decision held Mr. Marcial liable for his participation in the anti-competitive conducts as a “representative” of Amurrio, from January 2008’.

Regardless of the ambiguous wording, there is no doubt that the appellant’s intervention in the adoption of the anti-competitive agreements was as part of the management body on behalf of Amurrio, despite not being a legal representative.

Finally, the fifth legal consideration analyzes the alleged injury to the right to honor and one’s own image (Art. 18 SC).

The Chamber transcribes the content of Art. 37.1 LCCNMC, and Art. 27.4 LDC, repealed by the former Law.

It concludes that:

‘A correct reading of these provisions shows the obligation to publish the final decisions that conclude the trial, including those concerning sanctions.

Therefore, even if the sanctioning of the appellant is found in the substantial part of the decision, nothing justifies that it is not published in an integral manner according to the provisions that regulate the publicity of the CNMC's actions; and this, independent of the discussion about whether the appellant should be considered as an infringer or only a subject of a sanction according to Art. 63.2 LDC. In effect, it cannot be ignored that the decision does not attribute to him the condition of infringer, but only that of being sanctioned.

At this point, all that remains is the analysis of whether the publication leads to a violation of the rights recognized in Art. 18 SC.

The appellant’s claim on this point is to keep confidential certain information which, by virtue of an express statutory provision, is not deemed to be confidential; however, it does not provide any additional argument for considering that his particular interest prevails over the general interest that requires the publication of the decision by virtue of the law’.

SECOND. - Preparation and admission of the appeal.

After the admission of the appeal, it was stated as the issue with objective appeal interest for the formation of jurisprudence:

• whether Art. 63.2 LDC in relation to Art. 25 SC allows to integrate in its formulation and to sanction the executives of the infringing legal entity or whether, on the contrary, the provision only applies to the collegiate administrative bodies referred to in the second paragraph Art. 63.2.

• whether Art. 37.1 LCCNMC requires – according to Art. 18 SC – not to make public the names of the individuals referred to in Art.63.2 LDC.

THIRD. - The appeal.

1.- The appeal claims that the National High Court decision violates Art. 25 SC, because: (i) it upholds the sanction against a non-legal representative pursuant to Art. 63.2 LDC; and (ii) it made a broad and incorrect interpretation of the phrase ‘individuals that comprise the management bodies that have intervened in the agreement or decision’ contained in the same provision.

It insists on the appellant not being the firm’s legal representative, and therefore it claims that upholding the sanction means applying Art. 63.2 LDC to a case not contemplated in the law, which violates Art. 25.1 SC.

2.- It claims that the appealed decision made a broad interpretation of Art. 63.2 LDC.

It considers that a correct interpretation requires examining the origins of the regulation, i.e.: (i) the CTCEA, (ii) the previous CTPLCA, and (iii) the Law No. 19/1989 of 25 July 1989, relating to Partial Reform and Adaptation of Commercial Legislation to EC Company Law Directives. From there on, it claims that it can clearly be deduced that the wording ‘agreement’ in Art. 63.2 LDC is the one adopted by the management bodies, and not the infringing agreement of Art. 1 LDC.

The literal wording of Art. 79.3 Law 19/1989 – then Art. 133.2 CTPLCA and now Art. 237 CTCEA ‒ was the following:

‘All members of the governing body adopting the detrimental decision or performing the respective act shall answer jointly and severally, unless they prove that having taken no part in its adoption or implementation, they were unaware of its existence or, if aware, took all reasonable measures to prevent the damage or at least voice their objection thereto’.

Both Law 19/1989 of the Partial Reform of Commercial Legislation and Law 16/1989 of the Defence of Competition are dated July 1989, so their parallel discussion and passing, as well as their similar drafting, lead to the conclusion that they have the same origin.

It argues, thus, that the literal wording of this provision allows to conclude that the ‘agreement’ referred to in Art. 63.2 LDC from which the members of the management body can be held liable, is the one adopted by the management body. This is why Art. 63.2 does not make any reference to ‘agreements, collective decisions or recommendations, or concerted or consciously parallel practices’, these being the practices prohibited under Art. 1 LDC, but only refers to an ‘agreement or decision’, this being the one taken within the legal entity.

It holds that this interpretation is reaffirmed by a systematic interpretation of the law, when it comes to interpreting para. 2 of Art. 63.2 LDC, which states that ‘excluded from the sanction are those persons who, forming part of the collegiate administrative bodies, have not attended the meetings or who have voted against or saved their vote’. This paragraph leaves no doubt that the wording 'agreement or decision’ in para. 1 is the one adopted by the management body and not the anti-competitive agreement, because there can be a violation of Art. 1 LDC without any meeting or voting (e.g. concerted practices or conscious parallelism). This is why para. 2 only makes sense if ‘agreement or decision’ in para. 1 is understood as the agreement of the Board of Directors.

For this reason, the ‘management bodies’ of Art. 63.2 para. 1 should be understood as the same as the ‘collegiate administrative bodies’ of Art. 63.2 para. 2.

If both are the same, the management bodies whose members may be sanctioned by Art. 63.2 are necessarily collegiate administrative bodies.

A subsidiary question of constitutionality is raised, arguing that Art. 63.2 is contrary to Art. 25.1 SC because the concept ‘management bodies’ contained therein has no legal definition, which violates the principle of legality in sanctioning matters guaranteed by the constitution.

3.- It also claims that Art. 37.1 LCCNM has been incorrectly applied, breaching therefore Art. 18 SC, because the CNMC's decisions must be published ‘after removing the personal data referred to in Art. 3.a) of the Organic Law 15/1999 on Protection of Personal Data (LOPD)’, which defines personal data as ‘any information concerning identified or identifiable natural persons’.

It states that – as an exception to this general rule – Art. 37(1) LCNMC and Art. 27(4) LDC allow to retain as public the names of the ‘infringers’, yet the appellant cannot be deemed as ‘infringer’ within the meaning of those provisions.

The reason is that the CNMC’s sanction is grounded on a special type of infringement that can only be committed by ‘undertakings’ (Art. 1 LDC and Art. 101 TFEU), as it requires the subject to have a specific quality for its commission – i.e. to be an ‘undertaking’ (the ‘active subject’, as stated in Art. 31 Criminal Code). Logically, individuals can be deemed ‘undertakings’ as long as they offer products or services on the market. This would be the case of a self-employed professional, such as a lawyer or a plumber, but is not the case of the appellant.

Therefore, he argues, the decision can only make public the identities of the infringing companies according to Art. 37(1) LCNMC, which is not the case of the appellant.

FOURTH. - State Attorney’s Response.

1. It rejects the appellant's argument regarding who composes the management bodies, pointing out that in the absence of an express legal concept of ‘management body’, it should resort to the literal meaning of the words. According to the dictionary of the Royal Spanish Academy:

• ‘organ’ means ‘a person or group of persons acting on behalf of an organization or legal person in a determined area of competence’.

• ‘representation’ means the ‘action and effect of representing’.

• ‘to represent’ means ‘to substitute someone or to act in his or her place, to carry out their function or that of an entity, company, etc.’

• ‘manager’ as an adjective means ‘having the power or virtue to direct’.

• ‘to manage’ means ‘to govern, to rule, to give rules for the management of a business, enterprise or agency.’

To sum up, ‘management body’ is the person who undertakes the decisions or agreements.

The representation of someone else does not have to be of a legal nature, but can also be of a voluntary nature (because the provision refers to ‘management bodies’ apart from ‘legal representatives’) referred to in Arts. 1709, 1710 and 1727 of the Civil Code.

This is the reasoning of the appealed decision in its Fourth Legal Consideration.

It argues that, consequently, the representation referred to in Art. 63.2 can be both legal and voluntary.

2.- It finds absurd the reasoning of the origins of Art. 63.2 LDC used by the appellant to link Art. 10.3 of the former Law 16/1989 on the Defense of Competition with Art. 79 of Law 19/198 the Partial Reform of Commercial Legislation.

3.- It rejects, therefore, the assimilation of ‘collegiate administrative body’ and ‘management body’. Legally, the word ‘body’ includes both an individual and a group of individuals. This can be seen in the amendment of Law 19/1989 to Art. 8(h) of the Law of 17 July 1951 on the Legal Regime of Public Limited Companies. The provision states that the company's statutes shall define the structure of the body to which the company's administration is entrusted, which may be one or more persons who, acting together, will form a Board of Directors (Art. 73). Likewise, the CTCEA refers in several articles to the ‘administrative body’ (Arts. 11, 11^bis, 105, 161, 196, 209, 228, 230, 237, 238, 249, 260, 282, 283, 301, 305, 307, 310, 311, 314, 331, 445, 447, 523). Particularly, Art. 209 refers to the powers of the administrative body.

It concludes that the persons who make up the governing bodies are both the individual and the collegiate.

4.- It also rejects an infringement of Art. 18 SC. The infringement is one matter, i.e. the commission of the collusive behavior prohibited by Arts. 1 LDC and 101 TFEU; and who is liable for such infractions is another matter. With respect to offenders Art. 61 LDC states:

‘1. The natural or legal persons who carry out the actions or omissions typified as infringements by this Act shall be subject to the infractions.

2. For the purposes of the application of this Act, the action of an undertaking is also attributable to the undertakings or persons that control it, except when its economic behavior is not determined by any of them’.

Thereby the imputation is also attributable to the persons who control the natural or legal persons who perform the actions or omissions.

The contentious-administrative law can hold a person liable who directly infringes and those who infringe on behalf of another, both cases without exempting from responsibility the person who executes the act or omission typified as an infringement.

FIFTH. - Prosecutor’s Response.

I) Regarding the infringement of Art. 25 SC.

i) It considers irrelevant whether the appellant was a legal or voluntary representative of the sanctioned undertaking, since those concepts were not included in the admission order.

It clarifies that the wording of the legal provision clearly contrasts two categories: the legal representatives of legal entities; and the members of the management bodies that have intervened in the agreement.

The fact that the appellant acted on behalf of Amurrio does not redirect the discussion on the sanction imposed towards the first paragraph of Art. 63.2 LDC (legal representative), but rather describes a factual situation that, by definition, is implicit in the second paragraph of said provision.

ii) It refutes that the LDC sanctions require a rule equivalent to Art. 31 of the Criminal Code, since the imputation model for special infractions is not a matter discussed here. The relevant issue is to determine whether Art. 63.2 contains the possibility of an executive (even if he/she is not part of a collegiate body) to be sanctioned for his/her personal conduct, if such conduct has contributed to the violation of competition as typified in Art. 62 LDC.

iii) It considers the grammatical criterion of interpretation unclear and discards the usefulness of the historical and legislative backgrounds. It invokes Art. 3 of the Civil Code, which requires the interpretation of law in accordance with ‘the social reality of the time in which it is to be applied, taking into account fundamentally its spirit and purpose’.

In that regard, it stresses that the appellant's thesis would be inconsistent with the purpose of the provision, because the outcome would be that a member of a legal entity could only be sanctioned for an anti-competitive infringement when the decision to engage in the infringing conduct was formally agreed in an collegiate body and the member voted in favour of it.

Yet, to intervene in an agreement or decision is clearly something much broader than just attending a meeting or voting.

II) Regarding the infringement of Art. 18 SC.

(i) The Prosecutor considers the appealed decision to be in accordance with the Constitution.

He finds it logical that the rule on publicity of the offenders' identity is explicitly contemplated in Art. 37.1 LCCNMC and Art. 69 LDC, because its purpose is related to the general and special prevention of the competition law sanctioning regime, as can be observed in the LDC's explanatory statement.

(ii) He rejects the appellant's arguments based on Art. 31 of the Criminal Code.

(iii) He argues that the attempt to dissociate the concepts of ‘infringer’ and ‘sanctioned’ in order to maintain that a person can be sanctioned for an infringement of which he/she is not the author (infringer) is in direct conflict with the principles of legality in sanctioning matters and culpability of Arts. 24 and 25 SC. Even more, it clashes with Art. 27, para. 2, of Law 40/2015 of 1 October on the Legal Regime of the Public Sector, which, in application of these principles, establishes that ‘sanctions can only be imposed for the commission of administrative offences’.

The application of these principles (legality in sanctioning matters and culpability) to the exercise of administrative sanctioning power has been repeatedly affirmed by this Chamber (Supreme Court decision of 9 October 2009, Case No 3526/2005).

(iv) In fact, who executes the infringing conduct is not the legal entity but the natural persons, because the former lacks the material capacity to carry out any conduct on its own. This mechanism of double imputation and sanctioning is perfectly reflected in the CNMC’s resolution, which describes in detail the conduct of the appellant (emails, participation in meetings, etc.) as constituting the sanctioned infringement that gives rise to his liability ‘in addition’ to that of Amurrio.

In contrast to the appellant’s affirmation, Art. 101 TFEU does not impede an interpretation of Art. 63.2 LDC provided by in this State Attorney’s Response.

SIXTH. - Legal analysis. The framework of EU law.

This appeal relates to the special procedure for the protection of fundamental rights by virtue of Arts. 114-122 of the Contentious-Administrative Jurisdiction Law (LJCA) and Art. 53.2 SC.

The appeal seeks the annulment of the CNMC's Resolution because the sanction imposed pursuant to Art. 63.2 LDC would violate Art. 25 SC. In addition, it seeks its nullification because the name and surname of the offender was not removed from the resolution prior to its publication, which would violate Art. 18 SC.

Article 63.2. LDC provides:

‘2. Besides the sanction set out in the previous section, when the offender is a legal person, a fine of up to 60,000 euros may be imposed on each of its legal representatives or on the persons that comprise the management bodies that have participated in the agreement or decision.

Excluded from the sanction are those persons who, forming part of the collegiate administrative bodies, have not attended the meetings or who have voted against or withheld their vote’.

Article 37 LCCNMC, in relation to the publicity of actions, states:

‘1. The National Markets and Competition Commission shall make public all provisions, resolutions, decisions and reports issued under the law regulating them, once they have been notified to interested parties, after taking a decision – where appropriate – on the confidential aspects of said resolutions, decisions and reports, and following removal of the personal data referred to in Article 3(a) of Organic Law 15/1999 of 13 December 1999, except the names of the infringers. In particular, the following shall be publicly released:’

The above paragraph is analogous to the repealed Art. 27.4 LDC:

‘4. The resolutions, decisions and reports shall be made public by IT and telematic media once the interested parties have been notified, after resolving, as the case may be, the confidential aspects of their content and prior removal of the personal data referred to in Article 3.a. of the Personal Data Protection Act 15/1999, of 13 December, except with regard to the names of the offenders.’

Council Regulation (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition as laid down in Arts. 81 and 82 of the Treaty, does not refer to the individuals who integrate the undertakings under investigation for collusion. However, Art. 20 refers to the cooperation of the representatives or staff of the undertaking with the CNMC’s investigations, Arts. 27 and 28 guarantee commercial and professional secrecy, and Art. 30 sets forth commercial secrecy when publishing the decisions.

As noted, the provision uses the concept of ‘representative’ in a broad sense, including ‘voluntary representation’, as it does not refer to a ‘legal representative’ and there is no requirement for workers to hold any particular position in the company.

More explicit is Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No. 2006/2004 of the European Parliament and of the Council (Unfair Commercial Practices Directive), whose Art. 2 defines ‘trader’ as: ‘any natural or legal person who, in commercial practices covered by this Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of the trader’.

Hence, the rule considers anyone acting in the name of the trader.

SEVENTH. - The Chamber’s decision. No violation of Arts. 18 and 25.2. SC.

Taking in to account the national regulation and the framework of EU law, we consider the interpretation of the National High Court to be consistent with our constitutional system, thereby no question of constitutionality is to be raised.

The National High Court makes a correct interpretation when considering the appellant to be a member of the company’s management body for having attended in the role of Vice Secretary of the Board of Directors – together with other executives and/or representatives of other companies – the meetings where the collusive conduct was agreed.

It is absurd to argue that there is no agreement of the Board of Directors approving the collusive practices. It is evident that an infringement of this nature, i.e. the market sharing through the systematic constitution of joint ventures to bid for and award public contracts based on prior agreements on prices, will not be recorded in the firm’s minutes.

Therefore, pretending a restrictive interpretation of trade law is inappropriate, even though the discussion is framed in the contentious-administrative law.

Moreover, there is no evidence of the company having rejected the commissioning of the appellant’s action, nor proof that it did not benefit from ADIF’s contracting procedures. For this reason, qualifying the appellant as a member of the management body does not contravene Art. 25.2. SC.

The Constitution is also not violated in its Art. 18 due to the publication of the entire decision, i.e. without removing the information of the infringing company and the member who agreed/decided the collusion.

This Chamber supports the reasoning of the National High Court regarding the appellant’s unjustified claim to maintain the confidentiality of his personal information.

Furthermore, the right to privacy guaranteed by Art. 18 SC is not in dispute, as the infringement was not committed in the context of the appellant's private life and good name. On the contrary, the sanction is a consequence of voluntary conduct within his professional life as member of the infringing company.

As stated in Bank Austria v Commission, para. 72 (judgment of the Court of First Instance of 30 May 2006, Case 198/2003), ‘[T]he Community legislature has balanced the public interest in the transparency of Community action against interests liable to militate against such transparency in various acts of secondary legislation’.

Paragraph 94 rejects the sanctioned company’s arguments on the fact that the decision allows for the identification of the persons who participated in the meetings (para. 93), since the publication of this information is not considered a violation of their own rights, which were not even initially alleged to have been violated.

More relevant is para. 78, which states that:

‘Moreover, the interest of an undertaking, which the Commission has fined for breach of competition law in the details of the offending conduct of which it is accused, in not being disclosed to the public does not warrant any particular protection, given the public interest in knowing as fully as possible the reasons behind any Commission action, the interest of the economic operators in knowing the sort of behaviour for which they are liable to be penalised and the interest of persons harmed by the infringement in being informed of the details thereof so that they may, where appropriate, assert their rights against the undertakings punished, and in view of the fined undertaking's ability to seek judicial review of such a decision’

It is noted that the Explanatory Statement of the LDC, as argued by the Public Prosecutor, has a clear precedent in EU law, when it states that ‘it also envisages the publicity of all of the penalties imposed in application of the Act, which will strengthen the deterrent and exemplary power of the resolutions that are adopted’.

More recently, in Evonik Degussa v Commission (judgement of the Court of 14 March 2017, Case 162/2015), para. 117 states:

‘The Court points out that the General Court held, in paragraphs 125 and 126 of the judgment under appeal, that the right to protection of private life guaranteed in Article 8 of the ECHR and Article 7 of the Charter cannot prevent the disclosure of information, the publication of which is envisaged in the present case, which concerns an undertaking’s participation in an infringement of EU law relating to cartels, established in a Commission decision adopted on the basis of Article 23 of Regulation No. 1/2003 and intended to be published in accordance with Article 30 of that regulation, since a person cannot, according to the well-established case-law of the European Court of Human Rights, rely on Article 8 of the ECHR in order to complain of a loss of reputation which is the foreseeable consequence of his own actions’.

As regards the ECtHR, para. 98 of Demisov v Ukraine (No. 76639/11, 25 September 2018) quotes Axel Springer AG v Germany (No. 39954/08, § 83, 7 February 2012), which refers to the commission of a criminal offence, stating that Art. 8 ECHR cannot be relied upon in order to complain of a loss of reputation, which is the foreseeable consequence of one's own actions, adding that this principle should cover not only criminal offences but also other misconduct entailing a measure of legal responsibility with foreseeable negative effects on ‘private life’. This is reiterated in paras. 121 et seq.

EIGHT. – The Chamber’s Doctrine.

For the purposes of Art. 93.1 LJCA and based on the aforementioned grounds, it is hereby stated the interpretation of the provisions that required the judgment of this Third Chamber of the Supreme Court and, in accordance with this, it is declared that:

• The application of the provision contained in Art. 63.2 LDC to executives of the infringing company, does not infringe Art. 25 of the Constitution.

• The publication of the names of the individuals referred to in Art. 63.2 of the LDC does not infringe Art. 18 of the Constitution.

[…]

DECISION

Considering the foregoing, on behalf of the King and by the authority conferred on it by the Constitution, this Chamber has decided:

1. To dismiss Mr. Cesar’s appeal on the law against the decision of 14 September 2017 issued by the Sixth Section of the Contentious-Administrative Chamber of the National High Court, in contentious-administrative procedure N° 10/2016.

2. Regarding the costs, to observe the Final Legal Consideration.

3. The established doctrine is on the Eight Legal Considerations.

Translated from the Spanish by Germán Oscar Johannsen.

Case note by Germán Oscar Johannsen*

Background

On March 2019 the Supreme Court of Spain dismissed an appeal filed by an executive of Amurrio Ferrocarril y Equipos, SA (‘Amurrio’) against a decision of the National High Court that, in turn, had rejected an appeal against a resolution issued by the National Commission on Markets and Competition (CNMC) that found several companies and executives ‒ including the appellant ‒ guilty of the infringement of Art. 1 Law on the Defense of Competition (LDC) and Art. 101 Treaty on the Functioning of the European Union (TFEU), sanctioning them according to Art. 63.1 LDC (legal entities) and Art. 63.2 LDC (natural persons).

The background of the case concerns an investigation concluded in June 2016, where the CNMC determined a single and continuous infringement consisting of a series of agreements and concerted practices involving market sharing, price fixing and other trading conditions, and the exchange of commercially sensitive information, all of them in several procurement procedures of the GIF/ADIF (the Administrator of Railway Infrastructures) for the supply of railroad switches, carried out at least between 1 July 1999 and 7 October 2014. The appellant was personally sanctioned for his intervention as an executive of Amurrio in the collusive agreements.

The action brought under the special procedure for the protection of fundamental rights sought the annulment of the CNMC’s decision on the grounds that it violated two constitutional guarantees. First, the principle of legality in sanctioning matters protected by Art. 25 of the Spanish Constitution (SC), as the executive sanctioned under Art. 63.2 LDC claims not to be in any of the cases contemplated in said article, since: (a) he is not Amurrio’s legal representative (first paragraph); and (b) he is not a member of any management body that has intervened in any corporate agreement related to the practices sanctioned by the CNMC (second paragraph). Second, the appellant also claims a violation of the right to privacy protected by Art. 18 SC, since the CNMC did not remove his name from the decision prior to its publication, as Art. 37.1 of the Competition Law of the National Commission of Markets and Competition (LCCNMC) would require.

Regarding the first assumption, as Art. 223 of the Consolidated Text of the Corporate Enterprises Act (CTCEA) provides that the Deputy Secretary of the Board of Directors does not possess legal representation, the National High Court states that the appellant ‒ who holds this position ‒ should not be deemed to legally represent the firm for the purposes of Art. 63.2 LDC para. 1. The incorporation of the concept of ‘legal representative’ within this provision only allows a restrictive interpretation, in conformity with Art. 25 SC. Therefore, a less formalistic interpretation, like the CNMC’s, focused on the ‘real scope of the position that the individual holds in the company and of the activities that he has carried out as a representative of the company, which must be analyzed on a case-by-case basis’, has to be rejected.

The second assumption serves as the basis for the National High Court to sanction the appellant, because the latter is considered to be a member of a management body that intervened in the adoption of the anti-competitive agreement or decision in the terms provided for in Art. 63.2. As the sanction is part of the CNMC’s resolution, it was contained in its full publication in accordance with the provisions regulating the publicity of the CNMC’s actions.

The judgements of the Supreme Court of Spain

The specific questions to be ruled on by the Supreme Court are: firstly, whether the second paragraph of Art. 63.2 LDC, in accordance to Art. 25 SC, allows to integrate in its formulation and therefore to personally sanction the executives of the infringing legal entity, or whether the provision only applies to the collegiate administrative bodies of the company; and secondly, whether Art. 37.1 LCCNMC, in accordance with Art. 18 SC, requires to not make public the names of the natural persons referred to in Art. 63.2 LDC.

Regarding the first issue, the Supreme Court rejects the appellant’s argument that ‘management bodies’ in Art. 63.2 only refer to the collegiate administrative bodies of the firm and not to the executive’s actions as a natural person, and thereby the term ‘agreement’, in the context of Art. 63.2, would mean one adopted within the company’s Board of Directors and not the collusive agreement itself. This conclusion stems from identifying ‘management body’ with the concept of ‘collective administrative bodies’ contained in the case to exclude liability provided for by Art. 63.2, i.e. ‘when the individual who forms part of the collegiate administrative bodies has not attended the meetings or has voted against or saved his vote’.

By contrast, the Supreme Court rules that a legal person’s ‘management body’ may be any of its participants ‒ individuals or collectives ‒ who contribute to establishing, shaping and/or directing the company’s activity. Accordingly, the above case to exclude liability refers to only one of the many ways of contributing to the company's activity. Therefore, once it is proven that an executive, irrespective of which type of representation ‒ organic or voluntary ‒ he was invested with, has intervened in the infringing agreement or decision, his liability may be alleged pursuant to the second paragraph of Art. 63.2 LDC regardless of any other formal consideration and without the need to prove the existence of a specific corporate agreement within the company.

As regards the second question, the Supreme Court holds that Art. 37.1 LCCNMC expressly provides that personal data must be removed when publishing the decisions ‘except in respect of the name of the infringer’. Moreover, the right to privacy guaranteed by Art. 18 SC is not in dispute, as the infringement was not committed in the context of the appellant’s private life and good name, but as a consequence of a voluntary conduct within his professional life as a member of the infringing company. Moreover, the appellant did not provide any argument to consider that his particular interest should prevail over the general interest protected by those provisions.

This general interest is recognized in several precedents cited by the Supreme Court. Notably, Bank Austria v Commission (para. 78) held that ‘the interest of an undertaking which the Commission has fined for breach of competition law in the details of the offending conduct of which it is accused not being disclosed to the public does not warrant any particular protection, given the public interest in knowing as fully as possible the reasons behind any Commission action, the interest of the economic operators in knowing the sort of behaviour for which they are liable to be penalised and the interest of persons harmed by the infringement in being informed of the details thereof so that they may, where appropriate, assert their rights against the undertakings punished, and in view of the fined undertaking’s ability to seek judicial review of such a decision’.¹

Based on the previous considerations, the Supreme Court establishes as doctrine: first, that the application of the provision contained in Art. 63.2 LDC to executives of the infringing company does not infringe Art. 25 SC; and second, the publication of the names of the persons referred to in Art. 63.2 LDC does not infringe the right to privacy guaranteed in Art. 18 SC.

Conclusion

In this ruling, the Supreme Court defines the scope according to which executives who are not legal representatives of a company can be sanctioned for participating in an anti-competitive agreement. Thus, anyone acting on behalf of a company who contributes to establishing, shaping and/or directing the company’s activity can be held liable if he/she has intervened in the collusive agreement or decision, without it being necessary to prove an agreement of the Board of Directors approving of the collusive practices. The latter would be an absurd prerequisite as ‘it is evident that an infringement of this nature, i.e. the market sharing through the systematic constitution of joint ventures to bid for and award public contracts based on prior agreements on prices, will not be recorded in the firm’s minutes’.

In fact, those who attempt collusion constantly learn to leave no trace of their infringing behavior, which in turn makes it difficult to obtain evidence of the anti-competitive agreement or decision. Competition law should therefore be flexible enough not only to cope with market dynamics, but also to tackle the different mechanisms employed by market players to infringe the law. To this end, a teleological interpretation of competition law is essential. This is the approach of the Supreme Court, which holds to define the scope of Art. 63.2 LDC ‘to seek a restrictive interpretation of commercial law is inappropriate, even if the discussion is framed in contentious-administrative law’.

The second issue decided by the Supreme Court dismisses a violation of the right to privacy and favors the general interest of publishing the entire CNMC resolution, i.e. including the names of the sanctioned executives. It thus confirms the relevance of the publicity of infringements as an effective deterrence mechanism against cartels (in addition to fines), as it could cause reputational damage. This is consistent with the ECtHR, which in Evonik Degussa v Commission states that the disclosure of information regarding cartels cannot be prevented by the right to privacy ‘since a person cannot, according to the well-established case-law of the ECtHR, rely on Article 8 of the ECHR in order to complain of a loss of reputation which is the foreseeable consequence of his own actions.’²

Footnotes