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On October 24, 2018, the Central Criminal and Administrative Court (“CCAC”) issued a judgment that annuls the resolution of February 26, 2015, of the National Markets and Competition Commission (“CNMC”) in file S/0425/12, Dairy Industries 2, due to certain formal shortcomings in the processing of the disciplinary proceedings.
To understand this judgment of October 24, 2018, we must re-examine certain events that occurred during the processing of this file.
During the pre-trial phase, the CNMC reported the Statement of Facts Document (“SFD”) and granted a pleading stage to the companies in the case. Once the parties had submitted their claims, the CNMC reported the closing of the pre-trial phase. Subsequently, through resolution of April 24, 2014, the CNMC (i) re-opened the pre-trial phase; (ii) reported a new SFD in which the temporary participation of certain companies was extended, exercising their power to correct material errors; and (iii) granted a new pleading stage to the companies.
One of the companies affected by this modification of the SFD was Nestlé España, S.A. (“Nestlé”), which appealed the resolution of April 24, 2014 with the CNMC, but the appeal was dismissed by the resolution of July 31, 2014. Nestlé appealed the resolution of July 31, 2014, which led to a CCAC judgment of July 11, 2016 (appeal number 343/2014) and to another of the Supreme Court (“SC”) of July 24, 2018 (appeal number 2665/2016).
Both courts concluded that the resolution of April 24, 2014 was void, as it did not only involve a legal assessment, but rather, when the pre-trial phase was re-opened, this also involved a procedural irregularity. Therefore, it was ordered to take the procedure back in time to the moment immediately before the date on which the CNMC re-opened the investigation of the case, to modify and expand on the charges that had already been established.
In its recent judgment of October 24, 2018, the CCAC analyzed whether it should apply the criterion established by the SC in the Nestlé appeal to the companies sanctioned in the same disciplinary action, which were limited to appealing the disciplinary resolution and not the resolution that re-opened the pre-trial phase, which was indeed the action that Nestlé took.
The CCAC concluded that, considering the disciplinary proceedings in matters of protection of competition a “unique procedure,” the procedural actions undertaken by the CNMC are unique and common for all participants. Therefore, despite the re-opening of the pre-trial phase not involving a new legal assessment of the conduct of all those investigated, the procedural irregularity affects all of them and that established for the SC is valid for all companies.
In this way, the CCAC annulled the resolution given in the Dairy Industries 2 proceedings, which imposed fines of €88 million, and ordered to take the procedure back in time to the moment immediately before the resolution of April 24, 2014 was given.
Lastly, as the court has done on previous occasions (for example in the judgment of May 28, 2014, appeal number 202/2010), it recognized the “right of the claimant for the CNMC to publish this judgment in which its appeal is upheld and a press release, at its expense, giving it the same degree of publicity as that given to the disciplinary resolution and the resulting press release,” with the aim of settling or at least mitigating the reputational damage caused to the claimant.
Again, the courts reiterate the crucial importance of observing the guarantees of the investigated party in disciplinary proceedings. This is not the first time that a CNMC resolution has been annulled due to formal shortcomings in the processing of the proceedings, as we explain here and here.
We cannot rule out the possibility that this and the other judgments that affect these proceedings could be appealed by the state legal service. n any case, it will be interesting to follow the development of the proceedings and, therefore, to follow the CNMC’s reading of the judgments issued to date.
Read the CCAC judgment here.
This post is also available in: Español