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In its Judgment of December 10, 2019, the Supreme Court (“SC”) rejected the cassation appeal brought by Mémora Servicios Funerarios (“Mémora”) against the Catalonia High Court of Justice’s judgment of June 29, 2018 (rec. 360/2015), which confirmed that Mémora had abused its dominant position in the city of Artés. The Supreme Court’s judgment of December 10, 2019 defined the necessary conditions for imposing on a dominant operator the obligation to grant third-party competitors access to its facilities.
In November 2011, Mémora, the sole owner of the only funeral home in the city of Artés, refused to allow Funerària del Bages access to its privately-owned funeral home facilities.
In its Decision of July 2, 2015, the Catalan Competition Authority (“ACCO”) found that Mémora had abused its dominant position in the funeral services market by denying third-party competitors access to provide this type of services at the Artés funeral home. It also ruled that the reiterated behavior was an aggravating circumstance, so it fined Mémora for €100,000.
Mémora appealed the decision in the High Court of Justice of Catalonia, which upheld the ACCO decision on the infringement and its local geographic scope. However, it reduced the fine by 50% because, unlike the ACCO, it found that no aggravated circumstance due to repeat offenses was applicable.
Mémora filed a cassation appeal against the judgment that the Supreme Court dismissed based on its previous Decision of December 2016 on abuse of position in the funeral industry. In its judgment, the Supreme Court confirmed the local scope of funeral services, and therefore, Mémora’s dominant position in Artés funeral home services.
The Supreme Court’s judgment also clarified the three circumstances in which a dominant operator in the funeral services market is required to provide third-party competitors access to its facilities:
- The refusal must be of a product or service that is objectively necessary to be able to effectively compete in a downstream market, such as the funeral home, and that is essential for providing funeral services;
- The refusal to provide access must be likely to eliminate effective competition in the downstream market, as would occur in this market, where going to another funeral home in another town, or opening a second one, are not viable alternatives; and
- The refusal must be likely to harm consumers, because it will most probably create a de facto monopoly
Lastly, the Supreme Court rejected the appellant’s argument about the economic damages that it would incur by allowing third-party competitors access to its funeral home to provide funeral services. The Supreme Court found that the argument was not backed up by evidence, and it accepted the Catalonian Regional Government’s counter-argument that there were ways to make the Artés funeral home profitable, without excluding its competitors. For example, a rental price could be established to pay off for its facilities, i.e., to cover costs and make a reasonable commercial profit.
Nevertheless, the Supreme Court clarified that Mémora was not required to provide its competitors access to its funeral home simply because they offered economic remuneration. For an obligation to grant access, the refusal must be unjustified, i.e., the conditions indicated above must be met (a refusal of a necessary product or service that eliminates effective competition in a downstream market to the detriment of consumers).
Being able to provide this way, just in economic terms, constitutes sufficient grounds for a dominant company such as Mémora to be required to allow access to its facilities. This obligation will only exist if the above circumstances and conditions that make its refusal to provide access unjustified are met.
With this judgment, the Supreme Court has provided greater clarity to a sector, the funeral services sector, that has been subject to various investigations by competition authorities. Of note in relation to section 2 of the Spanish Competition Act are several decisions of the Andalusia Competition Commission and of the Competition Court of Castilla y León in the last two years:
- Dismissed resolutions because the alleged conducts were ruled not to be an abuse of dominant position, such as Decision S/01/2019 Tanatorio Carboneras that analyzed the limitation on handling floral arrangements from florists under contract with the funeral home; and Decision TDC-SAN-3-2018 Funeraria Sta. Inés, which analyzed the refusal to rent out a room at a funeral home by the funeral home’s sole proprietor.
- Decisions that ended in settlements after the compromises proposed by the parties were ruled valid, such as in Decision S/03/2018 Parque Cementerio Fuengirola, which tended to accept provision of funeral services by any legally established funeral company, without it having to be authorized by the City of Fuengirola; and Decision TDC-SAN-6-2018 Funeraria Sta. Inés y Ayto. Linares de Riofrío, which limited increasing fees for funeral services to those officially approved by the city.
- Sanctions decisions that ruled the analyzed conducts were abusive, such as the unjustified refusal to grant a request for funeral home services in Decision S/05/2018 Tanatorios Belalcázar; and Segovia’s only funeral home’s restriction on providing cremation services only for those who had purchased all of the supplemental funeral services from the respondent company in TDC-SAN-1-2018 Funeraria Santa Teresa.
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