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COMPETITION ACT 16/1989 of 17th July. (Official State Gazette Nº. 170, of 18th July 1989) ( Nom-official consolidated text) This text has been amended with the standing legal provisions regarding the defence of competition, including the change that was incorporated by Act 62/2003, of 30 December (“Official State Gazette” No. 313 of 31 December), which changed certain articles in Competition Act 16/1989, of 17th July, (“Official State Gazette” No. 170 of 18th July) EXPLANATORY STATEMENT Compe
   COMPETITION ACT 16/1989 of 17th July.   (Official State Gazette Nº. 170, of 18th July 1989)  ( Nom-official consolidated text)       EXPLANATORY STATEMENT  Competition, as the guiding principle of any market economy, is an inseparable element in our society’smodel of economic organisation. In the sphere of the individual liberties, it is the first and foremost wayin which corporate liberty is exercised and manifested. Therefore, in accordance with the requirements of the general economy and if needs be, of planning, defence of competition must be conceived as amandate for the public authorities, directly related to article 38 of the Constitution.The present Act was drawn up to meet this specific objective: to ensure the existence of sufficientcompetition and protect it against any attack that is contrary to the public interest. It is compatible withthe other laws that regulate the market according to other legal or economic requirements, be they publicor private.The Act is built upon the solid pillars of experience. On the one hand, it is inspired by the communityregulations on competition policy, which have played a transcendental role in creating and operating thecommon market. On the other hand, this Act is born with the purpose of rectifying the faults thatthwarted the full implementation of Act 110/1963, of 20 th July, on the Suppression of RestrictivePractices in Competition, which is hereby repealed.Under the first title, Free competition , the first chapter, Restrictive or abusive agreements and practices” lays down a system for flexible control of the agreements that limit competition on thedomestic market, prohibiting the abuse of economic power and unilateral conduct that may distortcompetition by disloyal means. The second chapter, Economic concentrations , establishes a system tocontrol the concentrations that might alter the structure of the national market to the detriment of the public interest, due to the importance and effects of such an event. The third chapter, State aids ,establishes a system for analysing them according to the criteria of competition and if necessary, for  preventing their undesirable effects from the perspective of the general interest.The application of the Act, which aims to vouch for the constitutional economic order in the marketeconomy with a view to defending the public interests, is entrusted in the second title to the followingadministrative bodies: The Competition Court ( Tribunal de Defensa de la Competencia ), with thefunctions of legal ruling and in some cases, proposals, and the Competition Service ( Servicio de Defensade la Competencia ), in charge of instructing the proceedings. The latter shall be given special proceedings status, both due to the essential complexity of the issue and due to the need to provide thesystem with the necessary independence from the active Administration, without prejudice to legalcontrol over its activities.The applicable procedure, described in the third title, abides by the principles of economy, promptnessand efficiency and guarantees the rights of defence of the interested parties. It includes the special This text has been amended with the standing legal provisions regarding the defence of competition, includingthe change that was incorporated by Act 62/2003, of 30 December (“Official State Gazette” No. 313 of 31December), which changed certain articles in Competition Act 16/1989, of 17 th July, (“Official State Gazette” No. 170 of 18 th July)     proceedings required by its very nature, envisaging in some cases the intervention of the AutonomousCommunities and the Council of Consumer Associations.Finally, a sanctionary regime is laid down to ensure compliance with the formal and substantive aspectsof the Act. TITLE I   Free competition   CHAPTER I   Restrictive or abusive agreements and practices   Section 1   Prohibited and authorised conduct.   Article 1. Prohibited Conduct.   1. Any collective agreement, decision or recommendation or any concerted or consciously parallel practice aimed at producing or enabling the effect of impeding, restricting or distorting competition in allor any part of the domestic market, are prohibited, particularly those which:a) Directly or indirectly fix prices or other trading or service conditions. b) Limit or control production, distribution, technical development or investment.c) Share markets or sources of supply.d) Apply dissimilar conditions to equivalent transactions in commercial or Service relations, thereby placing some competitors at a competitive disadvantage.e) Make the conclusion of contracts subject to the acceptance of supplementary obligations which, bytheir nature or according to commercial usage, have no connection with the subject of such contracts.2. Such agreements, decisions and recommendations as are prohibited pursuant to item 1 and notcontemplated in the exemptions foreseen in the present Act shall be automatically void.3. The competition defence bodies may decide not to initiate or to stay the proceedings foreseen in thisAct in the case of conduct whose relative unimportance prevents it from having a significant effect oncompetition. Article 2. Legally Authorised Conduct.   1. Without prejudice to the application of community provisions on the matter of defence of competition, the prohibitions in article 1 shall not be applied to such agreements, decisions,recommendations and practices as result from the application of a law.On the contrary, they shall be applicable to the situations of restricted competition that are derived fromthe exercise of other administrative powers or that are caused by the action of the public authorities or  public companies without such legal protection.2. The Competition Court may formulate a motivated proposal to the Government, through the Ministryof Economy, requesting it to adopt or, as the case may be, urge the competent public authority to modifyor suppress the restricted competition situations that have been established according to the legal  regulations. Article 3. Authorised Cases.   1. Such agreements, decisions, recommendations and practices as referred to in Article 1, or categoriesof them, which contribute to improving the production or distribution of goods and services or to promoting technical or economic progress may be authorised, as long as they:a) Allow consumers or users a fair share of the resulting benefit. b) Do not impose on the undertakings concerned restrictions that are not indispensable to the attainmentof these objectives;c) Do not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products or services in question.2. Similarly, agreements, decisions, recommendations and practices as referred to in Article 1, or categories of them, inasmuch as they are justified by the general economic situation and the publicinterest, may be authorised, if they:a) Aim to defend and promote exports, as long as they do not alter competition in the internal market andare compatible with the obligations resulting from the international Agreements that have been ratified by Spain, or  b) Lead to a sufficiently important increase in the social and economic level in underprivileged areas or sectors, or c) Are relatively unimportant and unable to exert a significant effect on competition. Article 4. Individual Authorisations from the Court.  1. The Competition Court may authorise the agreements, decisions, recommendations and practicesreferred to in Article 1, in the cases and according to the requirements foreseen in Article 3.2. The Court Authorisation shall determine the date after which it shall enter into force, whereas thisdate may not be prior to the request for such authorisation. Similarly, it shall determine the period of time for which the authorisation is granted and may lay down modifications, conditions or obligations,following consultation with the undertakings involved and the Competition Service during a commonterm of ten days.3. The authorisation shall be renewed at the request of the interested parties if the Court deems that thecircumstances that motivated the authorisation are still present.The authorisation may be amended or repealed if there is a fundamental change in the circumstances thatwere taken into account when it was granted.The authorisation may also be repealed if the beneficiaries fail to comply with the conditions or obligations set down by the Court or if it is proven that the concession was based on relevant data provided in an incomplete or inaccurate manner by the parties.In all such cases, the interested parties and the Service shall be summoned for mandatory hearings.4. If a period of three months elapses after the request for the authorisation of agreements, decisions,recommendations or practices and the Court has not given notice as to any decision in this regard, the participant undertakings may proceed to provisional application. If the agreements are not authorised bythe Court, the latter shall determine in its resolution the date after which such provisional applicationshall cease, but no retroactive effects may be produced regarding the agreement notified by the period of  provisional application.  Article 5. Block exemptions.   1. The Government may draw up Exemption Regulations, in which preparation the Competition Courtmust issue a mandatory report, to authorise the categories of agreements, decisions, recommendations,concerted or consciously parallel practices foreseen in Article 3.1, when:a) Only two or more undertakings are participating and imposing restrictions in the distribution and/or supply of certain goods or Services for sale or resale or regarding the acquisition or use of industrial or intellectual property rights, or secret industrial or commercial knowledge, or  b) The only objective is the preparation and uniform application of standards or types, or specialisationin manufacturing certain products, or joint research and development, or c) The objective or effect is to increase the plausibility and competitiveness of the Undertakings,especially in the case of small and medium size undertakings.2. Similarly, the Government may draw up Exemption Regulations, in which the Competition Courtmust issue a mandatory report, to authorise the categories of agreements, decisions, recommendationsand practices referred to in Article 3.2. Article 6. Abuse of dominant position.   1. Abusive exploitation by one or more undertakings is prohibited, namely the abusive use:a) Of a dominant position in all or part of the domestic market. b) Of the situation of economic dependence customer or supplier companies may be in, if they do nothave an equivalent alternative to carry out their activities. This shall be presumed to be the case when asupplier must grant its customer other additional benefits as well as the usual discounts on a regular  basis, which are not granted to similar purchasers.2. Such abuse may consist, specifically, of:a) Directly or indirectly imposing unfair prices or other unfair trading or service conditions. b) Limiting production, distribution or technical development, to the unjustified prejudice of Undertakings or consumers.c) Unjustifiably refusing to meet the demands to purchase products or Services.d) Applying dissimilar conditions to equivalent transactions in trading or service relations, thereby placing some competitors at a competitive disadvantage compared to others.e) Making the conclusion of contracts subject to acceptance by the other parties of supplementaryobligations, which, by their nature or according to commercial usage, have no connection with thesubject of such contracts.f) Breaking up, albeit partially, an established commercial relationship without precise prior notice inwriting at least six months in advance, except in the case of a intentional failure to comply with theconditions accepted by the supplier or in the case of force majeure.g) Threatening to break up commercial relations in order to obtaining or try to obtain prices, settlementconditions, modes of sale, the payment of additional charges and other commercial cooperationconditions that are not included in the general sale conditions agreed upon by the parties.3. This prohibition shall also be applied to such cases as where the dominant market position of one or several undertakings was established by a legal provision.
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