Spain: CNC Commences Formal Investigation Proceedings Against Correos For Breach Of Conventional Termination Agreement Previously Agreed With The CNC

On 15 September 2005, the Director of the CNC Investigations Divisions, and the Chairmen of the Spanish Post Office (Sociedad Estatal Correos y Telégrafos, S.A. – 'Correos') and the Professional Association of Mail Distribution and Handling Companies (Asociación Profesional de Empresas de Reparto y Manipulado de Correspondencia – 'ASEMPRE'), signed a Conventional Termination Agreement ('CTA') in relation to case 2458/03, in which the application of predatory prices by Correos was being investigated. The CTA was signed in accordance with the provisions of article 36 bis of the former Spanish Competition Act 16/1989.

Under this CTA, Correos assumed certain binding commitments in relation to the conditions for the provision of postal services to large customers, in order to ensure that after application of the relevant discounts, Correos' prices covered the real costs of the service provision.

In the framework of the monitoring arrangement for the CTA set out on 15 September 2005, the CNC's Investigations Division detected prima facie evidence of the fact that Correos could be breaching the terms of the commitments.

After completing the required procedures, on 3 December 2010 the Investigations Division sent to the CNC's Council a Monitoring Report in which it concluded that Correos could be in breach of the CTA, particularly with respect to the discounts agreed in 2009 in relation to 33 of the 204 contracts with large customers.

On 25 February 2011 the Investigations Division of the CNC, at the request of the CNC's Council, commenced formal proceedings against Correos for a breach of the CTA and, therefore, for a breach of the provisions of article 62.4(c) of the Spanish Competition Act 15/2007.

The opening of the proceedings does not pre-judge the final outcome of the investigations. The CNC now has up to a maximum period of 18 months to investigate the case and issue a decision.

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