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Spanish competition policy: a case of government's response to domestically perceived problems.

The literature on Spanish competition policy has tended to offer explanations of why competition has become an issue of public policy based upon foreign commitments.(1) These works highlight that, in the early 1960s, competition policy was a completely new issue in the Spanish legal system related to foreign pressures. Moreover, they point out that competition policy reform in the late 1980s was again related to the Spanish integration into the E.C. In so doing, the literature on the subject states that Spanish governments have only been keen to regulate competition when forced to do so by international pressures.

This article focuses on the process by which Spanish governments have come into competition policy issues during the last 30 years, and asks whether they have responded to foreign pressures. The hypothesis is that government decisions have mainly responded to problems in a sequence of domestic policy reform, and that government officials have used international commitments to reinforce their domestic reform efforts. The article tries to offer an insight into how competition policy gained sources of momentum when governments perceived that it could play a role in dealing with new economic problems that have arisen during the policy reform design and implementation. The article tests this hypothesis reviewing the evidence on the interaction between foreign and domestic pressures for designing and implementing competition policy.

The article first offers some background on the Spanish economic policy reform. Section II of the article describes the design of the Spanish competition regime in the early 1960s. Particularly, this article reviews the domestic debate and pressures that led to the design of competition policy and to its enforcement or lack of enforcement. In section III, the article turns to the effects of the political transition on the competition policy regime. In the fourth section, it focus on the competition policy reform in the late 1980s. In the fifth section, it reviews how it was only in the early 1990s that new economic problems gave competition policy a source of momentum for its effective implementation. The article concludes with some remarks on how domestic pressures matter for the design and implementation of competition policy in a process of economic reform.

I. Background on Spanish economic policy reform

Since the last decade of the 18th century, Spain, in a bid to develop into an industrialized economy, adopted an inward oriented strategy. Since 1892, domestic firms were increasingly protected from international competition through the use of tariffs and trade quantitative restrictions.

This inward looking strategy was extremely intensified during the first 20 years of Franco's regime. Since 1939 self-sufficiency was the main goal of the economic policy of the military regime. Regulatory mechanisms were spread all over the economic system. Complex mechanisms of state permits infringed upon most of a firm's decision-making processes, such as the inauguration or extension of a business enterprise. Regulatory mechanisms were mainly related to competition distorting interventions that shaped an inefficient corporate structure of domestic firms producing for a protected market. Spanish regulatory interventionism "substituted" state wealth redistribution through taxes and public expenditure.(2)

The shift from an inward and regulated development strategy toward a market oriented economy was carried out gradually during more than 30 years. Guillermo de la Dehesa has described this shift as follows:

The country has modernised, it has instituted a Western capitalist

democracy, and the economy has been almost totally integrated with

that of Europe. All of this in little more than three decades, from 1959,

when the economy began to open up to Europe....(3)

Many works on the subject have highlighted three main policy reform periods during these three decades:

1. The first period of economic policy reform was that of the early 1960s which began when the so-called Stabilization Plan was approved by the government in July 1959. The measures contained in the Stabilization Plan were intended to discourage inflation, liberalize domestic market transactions, reduce trade barriers and reestablish the international convertibility of the Spanish currency. However, the market oriented measures faced many challenges from early on. Several measures that tried to build up a market economy were blocked in the 1960s.(4)

2. The second period of policy reform took place between 1977 and 1978. The government agreed on the so-called Moncloa Agreements in July 1977 and the new constitution in December 1978 with the main new democratic parties. Through this consensus strategy, the government addressed the main macroeconomic problems by undertaking tax reform and public sector reorganization. The government linked macroeconomic adjustment and public sector and market deregulations.(5)

(3) The third period of policy reform started in the mid-1980s and was stimulated by E.C. integration in 1986. This program was developed unilaterally by socialist governments which were supported by a wide electoral majority. The program was based on opening up domestic markets, deregulating business activities and reinforcing tax and public expenditure policies.

During these three stages of policy reform, competition became an issue of public policy. Each one of these programs of policy reform brought about changes in the design and implementation of competition policy. In the early 1960s, the first competition act was passed as a result of the implementation of the measures contained in the first period of policy reform. This act was exclusively concerned with establishing a public mechanism to protect competition. However, the first competition act remained largely unimplemented and unenforced for more than 20 years. The second period of policy reform brought about many changes in the weak competition regime. The constitution of 1978 modified the design of competition policy. Nevertheless, competition policy still remained largely unenforced and, perhaps, unenforceable. The third stage of policy reform included a new competition act. However, it was only in the early 1990s when the activities of the competition institutions have marked a turning-point in the implementation of the Spanish competition policy, in the direction of activism.

II. Designing competition policy

The literature on Spanish competition policy highlights that the competition regime established by the first competition act of 1963 was completely new to the Spanish legal system and was boosted by foreign pressures. According to Cases the 1963 act "responded to foreign pressures which were asking for a liberalisation of the Spanish economy."(6) Likewise, the Court for the Protection of Competition has affirmed that the 1963 act was "a sharp legal statement derived from foreign policy requirements."(7)

There is little doubt, as Cases reminds us, that the first official statement--by which the government expressed a commitment to take into account competition issues in its economic policy--was included in the agreement with the United States of September 26, 1953.(8) Section 2 of the agreement commits the Spanish government to promoting competition and to discouraging monopoly and cartel practices that may affect prices, production or international trade.

However, this view fails to take into account that during the 1950s there emerged an interesting domestic debate concerning industry concentration and competition issues. In the 1963 type-notes of Professor Estape's lectures on Spanish economic policy we find that a group of economists called by Professor Estape the Arriba group--because they wrote in the right wing newspaper Arriba--had already discussed, during the early 1950s, the problem of industry concentration in Spain.(9)

The editor of Arriba's article of September 3, 1953 titled "The Spanish economy in very few hands" sums up very well the point of view of the Arriba group.(10) This group of economists argued that the oligopolistic structure of Spanish industry was a matter for concern. Industry concentration was widely seen as an important contributing factor to the failure of relative prices to adjust to demand. They suggested a rather optimistic public policy to change this concentrated structure. They proposed that the group of state-owned business enterprises integrated during the 1940s in the state industrial agency--Instituto Nacional de Industria (INI)--should be used to diminish the oligopolistic power of the main Spanish industrial business groups.

Likewise, the 1955 Third National Workers' Conference in its conclusions submitted a request to the government asking the following measures:

... legal measures to avoid the creation of firms (trusts, cartels, etc.)

and other financial methods of conspiracy which try to dominate production

and markets....(11)

Although the INI's role in promoting competition was early on perceived as completely ineffective, the Arriba group became a stronger voice against concentration of power in a few large industrial business groups. Therefore, it may be argued with Estape that in the late 1950s there was a rather widespread view that reproved the high level of concentration within many industries in Spain.(12)

In the early 1960s the debate shifted away from these concerns. Competition discussions were enriched by considerations related to efficiency. In 1961 Tamames published a book titled The Fight Against Monopolies, which then offered the most accurate information on the process of Spanish business concentration since 1892 and foreign trade regimes. Tamames explained how the protectionist trade policy designed in 1892, and intensified from then on, led to a process of business concentration that was dramatically reinforced since 1939. Thus, according to Tamames industrial concentration was due to foreign trade restraints, domestic regulations and national anticompetition practices.(13)

The First Trade Congress of 1961 included in its final report a list of policy issues for achieving economic growth. The eleventh policy issue put forth in this report was related to competition. Workers and employers asked for "an antitrust policy" which should "abolish administrative interventions which creates privileges." The shift away from structural concerns is clear, and even the united trade organization of employers and workers pointed to the state as the main cause of competition restraints.(14)

To sum up, it may be argued with Garrigues that the approbation of the first competition act in 1963 should be related to a domestic climate in favor of it.(15) The debate took into account a wide scope of arguments surrounding competition issues.

During the 1950s, responding to these domestic pressures the government issued the first measures that took into account some competition concerns. For instance, between 1953 and 1955 the government established that the purchasing policies of local authorities had to observe that competition was not undermined.(16) In late 1957 the Parliament passed a rather peculiar fiscal policy against antitrust practices; the act of December 26, 1957 provided that the government could establish an extra tax on profits to those firms that use anticompetitive practices such as market share agreements or cartels. It was a sort of "antitrust tax." In this way, the government tried to use fiscal policy as an instrument for promoting competition.(17) However, this "antitrust tax" was never used. Paradoxically, the act established several fiscal benefits for mergers and firm agreements as well.

A second international commitment to antitrust policy was agreed upon in 1959 as a result of the government asking the IMF and OECD for financial help to solve balance of payments problems. The literature that analyzes the early 1960s policy reform argues that although the government liberalization plans were initially very narrow, many officials, specially from the Department of Trade and the Bank of Spain, argued successfully for market oriented reform.(18) The officials who prepared for the negotiations with the international bodies had a very comprehensive conception of which economic growth model should be drawn into the agreements.(19) These officials linked growth and stability. They urged that the role of the state should be only supervising the behavior of market forces, as can be seen in the Draft of the Memorandum from the Spanish Government to the IMF and OECE.(20)

The draft of the memorandum included references to removing state interventions within domestic trade, increasing the role of price mechanisms, and establishing measures to remove competition restraints. Although the last variant of the memorandum was less unequivocal than the first draft, reformist officials managed to commit the government to the market oriented reform propositions through the negotiations with IMF and OECD.

The Stabilization Plan was the first step toward establishing a competition act. The Decree of July 21, 1959 which approved the Stabilization Plan stated that the government would propose or pass "convenient measures to prevent and repress monopolistic practices and other activities which challenge normal trade and economic flexibility."(21) The Stabilization Plan, when it shaped the goals of competition policy, focused on "normal trade and economic flexibility" from the point of view of efficiency on competition issues and not from an industrial structure view. It may be argued that between 1953 and 1959 the government's conceptualization of competition issues and aims improved significantly.

However, it was only 3 years later that the government began to implement this measure. The Decree of November 29, 1962 established that the Department of Trade would propose the measures needed to protect competition. This decree stated that competition policy should define trade restraints and dominant position abuses according to OECD regimes. The allusion to OECD regimes encouraged even more a sound policy design.

By 1962 public officials of the Department of Trade had, undoubtedly, already worked on a draft of a competition bill. This draft took into account the domestic debate on competition issues, the sections on competition of the Treaty of Rome passed in 1957, and other domestic competition policy developments of the late 1950s.

In January 1963 the journal of the Department of Trade called Revista de Economica de Informacion Comercial Espanola, published a special issue on competition policy to discuss the draft for the competition bill. The editor of this issue is particularly concerned with the difficulties that the new competition act would face early on were it not contained within a policy framework for promoting competition. The Department of Trade officials were aware that promoting competition required not only antitrust measures, but also reforms regulating the relation between state and markets.(22)

The Repression of Competition Restraint Practices Act of July 20, 1963 became effective on January 1, 1964. It created a set of institutions and mechanisms without precedent in the Spanish legal system, concerned with protecting and promoting competition among firms within domestic markets.

Undoubtedly, the 1963 act was influenced by the E.C. competition regime as to how it established the main prohibitions. The institutional framework, on the other hand, seems to have received more influences from the German and British regimes than from that of the E.C.

The Act's basic competition policy was founded on the following provisions'

1. The Act established an overall prohibition of competition restraint practices and a general prohibition of the abuse of dominant positions similar to articles 85 and 86 of the Treaty of Rome.

2. The Act provided that prohibitions would not be applicable when competition restraints were caused by legal measures.

3. The Act established that some competition restraint practices could be authorized but should be registered in the Register of the Competition Restraints.

4. The Act demanded that some mergers should be registered but did not take into account public aids.

The Court for the Protection of Competition (the Court) became the main decision-making body under the 1963 act. The Court was created as a mixed body, partly judicial and partly administrative. It was given a high degree of autonomy to implement the measures contained in the Act. Its main functions were to declare which practices were forbidden under the act; to impose fines (or, and most commonly, to propose fines to be imposed by the government); to authorize special practices which in principle were forbidden; and to publish reports and studies.

Although the Court was the most important body of the system, it depended extensively on the Department of Trade for implementing its decisions. Under the 1963 act, an administrative body called the Service for the Protection of Competition (the Service) which would work under the Department of Trade was created. This administrative body was responsible for investigating allegations of forbidden practices and following up cases that would be seen before the Court, overseeing the application of decisions adopted by the Court and maintaining the Registry of the Competition Restraints. Finally, the Act also created a consulting body called the Council for the Protection of Competition.

A large part of the literature regarding the Act agrees that the institutional setting established by the first Spanish competition law was almost completely ineffective. The Court, which was the judicial-administrative decision-making body, was too heavily dependent on the Department of Trade for implementing and enforcing its decisions. Moreover, according to the Court for the Protection of Competition, the Service suffered a diminishing trend in the areas of expenditure and personnel.(23) The Registry of the Competition Restraints had almost no inscriptions during more than 20 years, and, as Cases points out, most of the competition restraints were registered during the few years after the Act was approved.(24) Based on the low number of applications for special authorizations and mergers, the intimidating effect of the Act and the Court's activities is seen as very weak. Likewise, many sectors were legally protected from competition investigations.

The Court, eventually, became an administrative agency to which officials were promoted at the end of their professional careers. From 1965 to 1985 the Court's annual number of rulings was about fourteen, and these rulings affected very small cases in quantitative terms. Finally, the Court did not impose fines until 1988.(25)

As the Department of Trade officials had feared, the antimonopoly set of institutions established by the 1963 act did not counteract the anticompetitive attitudes of the Spanish corporate capitalist system. The rapid economic growth achieved in the 1960s, mainly related to external liberalization, and made government less enthusiastic about promoting competition. Moreover, the financial weakness of the state led to a process of expansion of new regulations, specially over labor and financial markets that restrained competition. Throughout the 1960s, the regulatory reform undertaken in 1959 was partially superseded by new kinds of regulations. The government tried to distribute the benefits of growth throughout regulations and backing-up firms' agreements on many sectors such as banking, housing and labor markets instead of raising taxes and increasing public expenditure. The activity of the Court and the Service was completely blocked by this new and spreading trend of interventionism in market performance.

It may be concluded that the institutional features of the Spanish economy under the military regime blocked the implementation of a rather early and innovative competition policy. However, as early as the 1960s reformist scholars and officials succeeded in establishing a set of rules and institutions concerned with the fight against competition restraints.

III. Competition policy and political transition

Although competition policy remained separated from the main policy issues during the political transition to the democracy, the competition regime was strongly affected by the market oriented policy reform. Additionally, the competition policy institutions created in the early 1960s were called into question.

On one hand, the main measures derived from the 1977 "Moncloa Agreements" were those relating to public taxation and expenditure. Tax reform was the key element for removing state competition restraints. Moreover, it paved the way for a deregulation program that could accommodate a more enforceable competition policy regime. On the other hand, the new constitution established the basic rules and procedures for running a market economy and the public sector according to what was common practice in Western Europe. At the same time, the new constitution deeply affected the procedures of the competition policy institutions.

The 1978 constitution conceptualized competition policy as a market regulating task that had to be developed by the state. At the same time, the rules and institutions of the existing Spanish competition regime were called into question. Many sections of the 1963 act were abolished by the constitution. Early on, the Constitutional Court confirmed these abolitions. Among other developments, it should be highlighted that the new constitution repealed the judicial nature of the Court for the Protection of Competition and the Court suffered a process of transformation into a government agency for the implementation of competition policy. Since 1978 its decisions could be taken before the Courts of Justice, and in this way the Courts of Justice began to play a role in the enforcement of competition rules as well.

The Court for the Protection of Competition has affirmed that for some years its basic right to exist was in question.(26) The post of Court chairman remained vacant since 1976. It was only in 1982 when the government decided to face some of the most challenging problems that were undermining Spanish competition policy under the new democratic regime, that the government appointed new personnel both for the post of Court chairman and for the vacancies in the Court board of directors. It also reformed the Court's rules of procedure, in order to adapt them to its new administrative nature. However, these changes did not cure the implementation and enforcement weaknesses of the Spanish competition policy regime.

During the political transition the government took only a few measures concerning competition policy. These measures tried to adapt the Spanish competition policy to the new economic regime designed during the political transition. However, during this stage of the Spanish policy reform, there was little debate on the need for an effective competition policy in the market system and little international commitments on this issue as well.

IV. Competition policy reform

According to the Court for the Protection of Competition, the political decision of maintaining an independent body as the main competition policy decisionmaker was taken in 1985:(27) The government appointed a new Court chairman and renewed the Court board of directors; the Service for the Protection of Competition was reorganized and allocated extra resources; and competition policy was considered individually in the government budget. Finally, the 1985 act of December 27 included the 1963 act in the list of those that the government should adapt to the E.C. law. Although the process of competition policy reform took a long time (1985-1989), in the late 1980s we find once more domestic pressures for reinforcing competition policy and a government international commitment.(28)

At this stage, competition policy reform cannot be understood without taking into account the role played by the Court and by the Service, in arguing for a domestically oriented competition policy and for an improved design for the new competition regime. The government created a committee, mainly of officials of the Court and the Service, to assess whether or not, and to what extent, the Spanish competition regime should be adapted to the E.C. law. In May 1986, the committee recommended that the government should not pass any decrees for adapting the Spanish competition regime because E.C. competition law was directly enforceable. However, the committee argued that it would be very convenient to pass a new competition act to replace the old 1963 act because the latter was too weak to insure that domestic competition policy could be implemented and enforced effectively?

The government accepted this strategy of policy reform and allowed the officials of the Court and the Service together with other department officials to prepare a draft of the new bill. In 1988 the Minister of Economy, Carlos Solchaga, argued before Parliament that the government was concerned with Spanish competition law because the 1963 act was outdated and was not suited to the new constitution. He also argued that the Spanish legal system lacked a consistent instrument on competition policy after the integration into the E.C.(30) The government approved the bill on January 20, 1989 and the Parliament passed the new Act for the Protection of Competition on July 17, 1989.

Although according to the literature regarding the new act, it was deeply influenced by the E.C. competition regime, once again the design of the Spanish competition regime appears to have been more related to a domestic political process, reinforced by international commitments.

Cases argues that the influence of the E.C. competition law was very clear during the parliamentary discussions.(31) The first part of the act contains the following paragraph:

The act is based on experience. On the one hand, it takes into account

the EC competition law which has performed a key role in building up

and running the common market. On the other, it starts with the aim of

bridging the gaps which hampered the enforcement of the Act of July

20, 1963 for the repression of competition restraint practices, which

has now been repealed.(32)

The new act defines competition as a key mechanism of the economic model defined by the 1978 constitution. Thereby, the sustenance of a workable competition in the marketplace became the main competition policy goal. In this sense, the act was based on the belief that competition needs to be sustained and protected by state policy. The new competition act maintains the main set of institutions which had been created by the 1963 act: the Court for the Protection of Competition as the main policy decisionmaker; and, the Service for the Protection of Competition as the administrative body for investigating allegations of forbidden practices and following-up cases. The former Council for the Protection of Competition was abolished.

The 1989 act includes the following main policy issues:

1. It defines all kinds of agreements and decisions that could undermine competition as absolutely forbidden, even if these agreements or decisions were not implemented.

2. It enables the issuing of special and overall authorizations regarding agreements or restrictive practices.

3. It prohibits the abuse of a dominant position.

4. It creates a system of voluntary notification of mergers, abolishes the old system of registration and gives the government the role of decisionmaking in this area.

5. It regulates public aids.

6. It entrusts the Court with the tasks related to advocacy of competition.

Under the new act Spanish competition policy was transformed into a model based on administrative enforcement with substantial discretion. It focuses on corporate conduct rather than market structure. Furthermore, it relies on rules that define certain conduct as being illegal "per se" but also allows consideration of noncompetition through a system of authorizations.

V. Competition policy and regulatory reform

Definitely, the enforcement of this new act marked a turning point in policy for the protection of competition in Spain.(33) Using its legal faculties to pursue competition, the Court came to foster regulatory reforms. Since the enforcement of the new act, the Court seems to have been trying to expand its role in Spanish economic policy making.

In 1989, the Court defined competition as follows:

Competition, as an economic policy instrument, not only controls the

market and protects the free activity of business, but it also promotes

the dispersion of economic power, helps to achieve monetary stability,

brings down prices, protects consumers, impulses innovation and

improves services.(34)

Although, this statement seems rather broad, it reflects that the Court felt entitled to play an influential role in Spanish economic policy making. Particularly, in the early 1990s, the focus on the debate of economic policy in Spain turned into what has been called dual inflation. This issue offered the Court a very suitable arena to develop its task to advocate competition.

In 1989 the Bank of Spain warned that inflation was growing again after many years of decline. The November issue of the Bank of Spain's Economic Bulletin pointed out that for the first time the service sector was becoming the most inflationary sector.(35) After Spanish participation in the EMS, since July 1989, the nominal convergence--i.e., the reduction of inflation and interest rates toward European core levels--was the main concern of the economic policy.

The Bank of Spain (the Bank) seriously analyzed the new inflationary concerns in 1991.(36) The Bank included in its March 1991 Economic Bulletin an article titled "Services, the inflationist core of the Spanish economy."(37) The Bank warned that the service sector had become the resistant core against a more consistent and permanent decline of inflation in the Spanish economy. The Bank pointed out that house property, health care, home care, transport and tourist services were causing growing inflationary tensions.

Since then, the so-called phenomenon of dual inflation became an issue of economic policy debate. During 1992 and 1993, particularly, the Bank of Spain brought to light that services that are less exposed to international competition were achieving the highest inflation rates.(38) The Maastricht Treaty of December 1991 ratified the concept that inflation was one of the most important issues regarding Spanish EMU membership.

This general agreement among scholars and public officials, that inflation was the main economic problem in the early 1990s, provided strong support for the Court's task of advocating competition. Even in 1992, the government asked the Court to prepare a report on "the costs of many sector regulatory schemes."(39)

Early on, different reports issued by the Court reflected how it had expanded its role considering itself an agency that should foster competition and regulatory reforms. In 1992, the Court issued a report dealing with competition restraints regarding regulations for professional activities.(40) In 1993, the Court issued another report on competition in the service sector.(41) Not surprisingly, according to the new aims pursued by the Court, the second part of the report on the service sector focused on many services that the Bank of Spain considered to be most inflationist. Moreover, the first part of the report focused on the design and implementation of policy reforms to improve competition.

As literature on regulatory constraints for growth has pointed out, reforms should be undertaken from time to time to avoid diseconomies of scale on state intervention in markets.(42) In the Spanish case, competition policy is proving itself very useful to this kind of reform and deregulation. Bodies in charge of competition policy benefit from new reform momentums by expanding their tasks, particularly in the areas of advocating competition and fostering regulatory reforms.

Particularly, it seems that international trade liberalization has become a key element for reinforcing competition policy domestically. Opening up domestic markets to foreign competition has induced producers of tradable goods and services to set prices according to competition in global markets. At the same time, sectors of nontradable goods remain unaffected by policy reform. According to Gray and Davis, "a growing realization that trade liberalization does not do the whole job--does not by itself guarantee a desirable level of competition in an economy--is generating increasing interest in developing countries competition policy options."(43) Gray and Davis also argue that "another model of the complementarity between trade liberalization and competition policy is the rapid initiative of the Eastern European countries in introducing competition laws and institutions."(44)

Hence, antimonopoly offices, operating within the framework of a West European/EU-type legislative structure, may become prestigious pressure groups. Their authority may allow them to defend the case for competition among firms and within the state apparatus, as is actually the case in Eastern Europe according to Estrin and Cave.(45) Even within the European Union, competition policy is increasing its role in fostering regulatory reforms

The current competition policy expanding role in the E.U., Eastern Europe and many developing countries seems to be related to the need to consider the extent to which market regulations are leading to inefficiency losses and welfare decreases. Competition policy is well-suited to helping solve regulatory issues in flexible, efficient ways and, in this sense, has a key role to play in fostering regulatory reforms.

VI. Concluding remarks

The evidence offered in this article leads to the conclusion that Spanish governments have not designed and implemented competition policy during the last 30 years solely in response to foreign pressures. Government decisions have mainly responded to problems in a sequence of domestic policy reforms. Competition policy design gained sources of momentum when governments perceived that competition policy could play a role in dealing with new economic problems that arose during the policy reform.

As has been argued above, the design of the Spanish competition policy regime in the early 1960s was related to the rising debate on industrial concentration and economic liberalization of the 1950s. The most common social perception of competition issues was mainly concerned with diminishing the power of large industrial groups. However, scholars and public officials shifted the focus of this debate from industrial concentration to anticompetitive restraints. In so doing, they upheld the case for competition policy in the domestic market. Scholars and officials feared early on that market oriented reform could be easily underpinned by government interventions in domestic markets. However, the institutional features of the Spanish economy under the military regime blocked the implementation of a rather early and innovative competition policy.

Although competition policy remained unimplemented and unenforced for many years, reformist scholars and officials succeeded in establishing a set of rules and institutions appropriate for a fight against competition restraints. The political transition brought about changes in the design of competition policy without much government effort, though such a program continued to be largely unenforceable.

It was only in the late 1980s that the government was strong enough to pursue a deep competition policy reform using E.C. integration as an impetus for developing a domestic competition regime. In the early 1990s, the widespread social perception of new economic problems gave competition policy a source of momentum not only for its effective implementation, but also for fostering regulatory reforms. Competition policy has been effectively implemented only when debates of economic policy in Spain turned into what has been called dual inflation. Competition policy institutions have tended to expand their roles due to the domestic debate on the problem that consumer prices and producer costs, subjected to import competition in sectors of tradable goods, grow slower than those of the sector of nontradable goods. This issue offered competition institutions a very suitable context within which to develop their tasks.

Summing up, the Spanish competition policy offers an interesting case study showing the way in which social and government perceptions of economic problems are generally key elements for the design and implementation of particular public policies.

(1) The most accurate work on Spanish competition law has been edited recently by L. CASES, DERECHO ADMINISTRATIVO DE LA DEFENSA DE LA COMPETENCIA (1995). Before the systematic work of Cases, only the COURT FOR THE PROTECTION OF COMPETITION, LA LIBRE COMPETENCIA EN ESPANA. TRIBUNAL DE DEFENSA DE LA COMPETENCIA 1986-89 (1989) had edited a survey on Spanish competition policy.

(2) Cf. A. Costas, Limites a las politicas de desregulacion en presencia de restriccion presupuestaria in LA COMPETITIVIDAD DE LA ECONOMIA ESPANOLA: DETERMINANTES MICRO Y MACROECONOMICOS 67-77 (Circulo de Empresarios 1988).

(3) Cf. G. de la Dehesa, Excerpts from Selected Countries Studies: Spain in THE TRANSITION TO A MARKET ECONOMY (OECD 1991).

(4) Cf. E. Fuentes-Quintana, Tres decenios de la economia espanola en perspectiva in ESPANA, ECONOMIA 1-75 (J. L. Garcia-Delgado ed., 1990).

(5) Cf. A. Costas & J. M. Serrano, La reforma institucional: impulsos y resistencias, RUVISTA DE ECONOMIA 1, 1989, at 63-68.

(6) CASES, supra note 1.

(7) COURT FOR THE PROTECTION OF COMPETITION, supra note 1.

(8) CASES, supra note 1.

(9) These notes were published by the University of Barcelona in 1963. F. Estape, La economia industrial espanola, CURSO DE POLITICA ECONOMICA 38, 1963.

(10) Cf. La economia Espanola en unas pocas manos, ARRIBA, Sept. 3, 1953.

(11) Third National Workers' Conference Conclusions 1955, as quoted by CASES, supra note 1.

(12) Estape, supra note 9.

(13) Cf. R. TAMAMES, LA LUCHA CONTRA LOS MONOPOLIOS (1961).

(14) Cf. ORGANIZACION SINDICAL ESPANOLA, CRITERIOS SOBRE EL DESARROLLO ECONOMICO DE ESPANA (1961).

(15) Garrigues 1964, quoted by CASES, supra note 1.

(16) CASES, supra note 1.

(17) Estape, supra note 9.

(18) Cf. A. VINAS ET AL., POLITICA COMERCIAL EXTERIOR EN ESPANA, 1931-1975 (1979).

(19) Cf. F. ESTAPE, ENSAYOS SOBRE ECONOMIA ESPANOLA (1972).

(20) A copy of this draft is included in VINAS ET AL., supra note 18, at 1063-73.

(21) Decree for Economic Arrangement of July 21, 1959.

(22) Cf. Informacion Comercial Espanola, Legislacion antimonopolio y politica de concurrencia, REVISTA DE ECONOMIA DE INFORMACION COMERCIAL ESPANOLA 353, 1963, at 25-27.

(23) COURT FOR THE PROTECTION OF COMPETITION, supra note 1.

(24) CASES, supra note 1.

(25) See id.

(26) COURT FOR THE PROTECTION OF COMPETITION, supra note 1.

(27) Id.

(28) This time, however, economic growth distracted public debate on this issue, but did not blockade those who argued for reforming the competition regime as it was the case in the early 1960s.

(29) See J. A. Rosignoli, Hacia una nueva aproximacion al derecho de la competencia en Espana, REVISTA DE ECONOMIA DE INFORMACION COMERCIAL ESPANOLA, 1987, at 9-24 and COURT FOR THE PROTECTION OF COMPETITION, supra note 1.

(30) Cf. DIARIO DE SESIONES DEL CONGRESO DE LOS DIPUTADOS as quoted by CASES, supra note 1.

(31) CASES, supra note 1.

(32) Cf. 1989 Act for the Protection of Competition of July 17.

(33) Particularly, since 1991, the volume of cases related to special authorizations, horizontal agreements, prohibited practices, reports on mergers and acquisitions and the total amount of fines imposed has risen sharply. Cf. OECD, SPAIN (1991), COMPETITION POLICY IN OECD COUNTRIES 1991-92 (1994).

(34) COURT FOR THE PROTECTION OF COMPETITION, supra note 1.

(35) Cf. Bank of Spain, Demanda, actividad, ocupacion y precios, BOLETIN ECONOMICO, Nov. 1989, at 11-18.

(36) See Bank of Spain, Economia espanola: tendencias generales, BOLETIN ECONOMICO, Jan. 1991, at 5-8.

(37) Cf. Bank of Spain, Servicios, el nucleo inflacionista de la economia espanola, BOLETIN ECONOMICO, Mar. 1991, at 13-17.

(38) See Bank of Spain, Price and Cost Convergence in the Main European Economies, ECONOMIC BULLETIN, Oct. 1992 and Bank of Spain, Quarterly Report on Spanish Economy, ECONOMIC BULLETIN, Jan. 1993.

(39) Convergence Programme 1992 as quoted by the COURT FOR THE PROTECTION OF COMPETITION, POLITICAL INITIATIVES WHICH MAY PROMOTE COMPETITION IN SERVICE SECTOR AND FACE THE DAMAGE CAUSED BY MONOPOLIES (1993).

(40) Cf. COURT FOR THE PROTECTION OF COMPETITION, REPORT ON FREE PRACTICE OF PROFESSIONS. PROPOSALS TO ADEQUATE THE REGULATIONS ON PROFESSIONAL ACTIVITIES TO THE CURRENT SPANISH FREE COMPETITION REGIME (1992).

(41) COURT FOR THE PROTECTION OF COMPETITION, supra note 39.

(42) See A. O. HIRSCHMAN, A BIAS FOR HOPE. ESSAYS ON DEVELOPMENT AND LATIN AMERICA (1971) and L. RODWIN & D. SCHON, RETHINKING THE DEVELOPMENT EXPERIENCE, ESSAYS PROVOKED BY THE WORK OF ALBERT O. HIRSCHMAN (1994).

(43) Cf. C. S. Gray & A. A. Davis, Competition Policy in Developing Countries Pursuing Structural Adjustment, ANTITRUST (Summer 1993), at 425-67.

(44) Id.

(45) Cf. COMPETITION AND COMPETITION POLICY, A COMPARATIVE ANALYSIS OF CENTRAL AND EASTERN EUROPE (S. Estrin & M. Cave eds., 1993).

JOAN-RAMON BORRELL, Joan-Ramon Borrell, Teaching and Research Assistant, University of Barcelona, Barcelona, Spain.

AUTHOR'S NOTE: The first version of this article was submitted for assessment at the University of Warwick in 1996. I acknowledge the support from the University of Barcelona and the financial backing from the Comte de Barcelona Foundation and the Catalan Autonomous Government during my 1-year stay in Warwick, and the comments received from Anton Costas, Wyn Grant, Andreas Bieler, Joel Davidow and two anonymous reviewers. None of them are responsible of the remaining errors and omissions.
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Author:Borrell, Joan-Ramon
Publication:Antitrust Bulletin
Date:Jun 22, 1998
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