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In a recent judgment, available here, the Spanish Supreme Court (“SC”) analyzed the exclusive supply agreement between Repsol Comercial de Productos Petrolíferos S.A. (“Repsol”) and Gasorba, S.L. (“Gasorba”) entered into in 1993 for 25 years, declaring its inefficiency due to incompatibility with competition law.
The SC’s judgment derives from the judgment of the Court of Justice of the European Union (CJEU) in preliminary ruling C-547/16: Gasorba SL and Others, which the SC had raised, as we indicate here.
In 2006, Repsol assumed certain commitments with the European Commission (EC), which the EC declared binding, to end the proceedings against Repsol in relation to long-term exclusive distribution agreements. Later, in 2008, Gasorba brought action against Repsol requesting a declaration of invalidity of the agreements entered into basing is application on competition rules and considering that the duration of the agreements was excessive. Given the question regarding the compatibility of Gasorba’s legal action with the commitment decision, the SC raised the preliminary matter with the CJEU.
in its judgment, the CJEU concluded—as was foreseeable—that a commitment decision by the EC does not prevent a national court from analyzing the compatibility of a specific agreement with competition rules. This is exactly what the SC did, declaring the invalidity of the contractual relationship based on the duration of the exclusive supply agreement.
The exclusive supply agreement was enforceable under EC Regulation 1984/83, on the exemption of certain categories of vertical agreements, which was in force when Repsol and Gasorba signed the agreements. However, this regulation was replaced by EC Regulation 2790/1999, under which the exemption from the competition rules did not apply to the long-term exclusivity agreement.
The SC again turns to the CJEU’s judgment under which, and as we highlighted at the time, the national court must “take into account the preliminary assessment carried out by the Commission and regard it as an indication, if not prima facieevidence, of the anticompetitive nature of the agreement at issue in the light of Article 101(1) TFEU.” After the corresponding analysis, the SC concluded that “the European Commission’s commitment decision did not validate the approval of the practice object of its declarations.”
Therefore, the SC considered that the exclusivity agreement became inefficient on January 1, 2002, after a provisional period of the exemption established under EC Regulation 1984/83. Even if that does not mean the invalidity of the contractual framework, the SC understands that the regulatory change affected a structural element and the business economics, whose elimination made it impossible to continue the contractual relationship valid under the terms initially agreed to. Therefore, the SC establishes that “the inefficiency arising from the clause on the duration of the exclusive supply agreement cannot only determine the invalidity of that clause since January 1, 2002, and must affect the contractual framework.
The SC’s judgment, like the CJEU’s judgment, is innovative, but that is not what made it unforeseeable. We must remember that the implications of a decision declaring a breach are not the same as the implications of a commitment decision. We believe that this difference explains why the CJEU indicates that the analysis of a commitment decision must be considered an indication or prima facieevidence of the anticompetitive nature of the agreement, and that, in application of this, the SC considers that, in the case in question, Repsol did not disprove this indication. In any case, despite the theoretical distinction between a decision declaring a breach and a commitment decision, based on the SC judgment under discussion, we can deduce that the effects of both kinds of decision (beyond the penalty itself) are imminent: a company subject to a commitment decision has, in practice, very little margin to disprove the analysis of that decision in the framework of a later lawsuit on whether an agreement is efficient or invalid for breaching competition rules.
This post is also available in: Español