Below, we have provided the full transcript of the interview with Cani Fernández, president Spanish competition authority, the Comisión Nacional de los Mercados y la Competencia (CNMC), recorded on July 7, 2021.
This is part of a series of videos that CPI is producing where we will interview the heads of various NCAs all around the world.
Thank you, President Fernandez, for sharing your time for this interview with CPI.
A video of the complete interview is available HERE.
Hello everyone and thank you for tuning in for this exclusive CPI talk. Today we have the pleasure to speak with Cani Fernandez, president of the Spanish competition authority, the Comisión Nacional de los Mercados y la Competencia, or the CNMC. Thank you for being with us today, President Fernandez.
Thank you to you. Thank you for inviting me.
I’d like to start off by asking how the CNMC dealt with the pandemic. And are there any lessons learned that you can share with us from that period?
Well, obviously, the pandemic has affected the CNMCs daily activity. We had to adapt from one day to follow into the situation of teleworking, where we hadn’t done that previously, only in some pilot programs, but not to the extent and the amount of people going home. And we had to adapt as well and give training to people to be able to work from home and everything had to continue working. For example registry, everything had to be online from one day to the following. So yeah that had an impact. But I have to say that the activity of the CNMC kept going almost as if in normal circumstances, and then the situation was improving step-by-step.
Most of the people from the CNMC RSDF are still tele-working. In fact we plan now that the situation is improving and now that vaccination is really covering a vast majority of all of us, we plan to come back to the CNMC in September. Obviously we are in parallel preparing our new tele-working program, which is a much more rational one with the disconnection and with flexibility. But I mean, a program where everybody is going to have oriented results and not this day-to-day situation of adaptation that we were feeling.
I mean, a high possibility of our other adaption is due to the commitment of all the stuff of the CNMC that I have to say. And because of that, the enforcement of competition law has remained vigorous. For example, to give you an idea, we had more open cases in 2020, than we have had since 2014. And this is due to, as I was saying, the staff commitment with organization and their obligation of public service.
Things that we did in order to cope a section of circumstances of the pandemic. For instance, in March, 2020, the competition director set up a mailbox to receive complaints related to competition in the COVID context. We received more than 700 complaints that were related to some sectors that were suffering a shock due to the pandemic, such as financial services, the insurance industry, pharmaceuticals and funeral services. So we receive several complaints and we were dealing with all of them and we opened investigations as a result of that recently. For example, we opened one in the financial sector related to the credits that were granted by the government with warranty of the government, and that were granted during the pandemic.
Moreover, the CNMC has been one of the very few competition authorities that have carried out downgrades. During the pandemic in 2020, we put in place a very strict COVID protocol. And we were also testing our previous experience in remote inspections. So I would say that all in all the CNMC has been able to successfully adapt to the situation with the pandemic. Although I have to say that it is clear that the COVID-19 crisis that has accelerated very much changes in our economies that would have taken so much longer time to happen in areas such as digitalization and environmental sustainability. And we’re coping with that situation.
I would like to remind you that the CNMC, my institution, has both antitrust but also regulatory functions. We are also the regulator for sectors, such as telecom, energy, drugs, sport, post, and other sectors. So we are in fact now, due to the COVID acceleration process, dealing with many of the challenges that our economy has to face after the pandemic. So we hope that we will be up to the task.
2020 was clearly a challenging year and sounds like a very busy year for the CNMC. What were some of your authority’s biggest recent achievements in enforcement?
Well, I think as everybody in these very dynamic and changing times, we are facing many challenges, with technology. For example, the increase of that information available, the development of new tools for data analysis, such as the use of artificial intelligence algorithms. Those are unstoppable trends. And in order to face those challenges, the CNMC created a few years ago, although it has been reinforced in the last year, the economic intelligence unit. The UIE applies to sophisticated artificial intelligence to improve ex-oficio protection of anti-competitive practices. And I had to say that we are very proud our team in this field is one of the leading teams in, well in Europe.
And we have been really forward-looking in the application of these new technologies and it has become a benchmark for all the authorities, even the use of some are already we are now testing. The economic intelligence unit analyzes the data through open business intelligence tools to let us know which sectors we must investigate more carefully. Moreover, the unit also uses these new technologies to improve our inspections in order to select the quicker and faster ways, speed up their way, which are the relevant documents that we need to focus in.
And for example, to give you some, some statistics in 2020, the unit opened 25 investigations and another additional 14 investigations were assessed and transferred to regional authorities, as we have in Spain a decentralized system of enforcement of anti-trust rules. And we have our regions also having competition authorities. So these data reflect how important it is, the economic intelligence unit as a detection tool.
Another tool that we have recently developed and shows how technology can help us in our daily activity, is a new mailbox called CICA. It’s a service for anonymous information in competition. This tool allows us to communicate with the informants in a secure way, using an alphanumeric code. So we cannot know for sure who is at the other side but the information that they provide to us in this anonymous basis allows us to proceed with investigations, checking that information, and then being able to, if contrasted open cases. This expectation for the informants, we believe will encourage citizens to collaborate with the CNMC in the detection of anti-competitive practice.
In short we have to bear in mind that these new technological developments and all of the futures related to the digital economy, such as the largest scale in the use of data may also bring about problems in the enforcement of the competition law. I mean, maybe one of the biggest problems in terms of competition is the power held by the big very big digital platforms, particularly as regards to the data they can collect and they can process. We are waiting with interest as you know, the final results of the future Data Markets Act that is currently being discussed at the European level and where we are very much involved.
Well then that sort of leads to the next question about to focus on the digital or tech sector. It is really been a big player during this time during COVID, but it is also gained increased scrutiny from competition authorities all over. What in your view are some of the current challenges posed by the digital sector beyond what you’ve already answered. And do you think there is a need for reforms?
Well, in fact yeah, I think there is a need for reforms, but for me, the question when, when we approach digital conduct is whether what we need is a replacement, or is a complement. Whether when we are discussing, for example, DMA or DSA, whether this should be envisaged as a replacement for our current enforcement tools or as a complement. And obviously I think it is a complement. I think we are equipped with competition rules but there has been frustration in the last years over how quickly these platforms are able to approach new markets and how slow we are in the enforcement of our actions. And that is why I think that the DMA is going to be a complement rather than the substitute.
And I also think that we, national competition authorities, can play a role in cooperating with the commission, for example, in this new enforcement perspective. Also, if we are envisaging an ex-ante relation, well in my capacity as both the regulator and a political authority, I think it is very welcome. And I would complement the tools, but I honestly think that we have to see it as a complement and in fact, yeah, I think reforms are going to be very helpful in the digital area.
Beyond the digital sector and the digital economy, what are some other industries that you believe merit specific and for enforcement attention? For instance, I feel like I recently saw some activity in the banking sector among others. If you could go into some detail on those other industries.
Well, in fact, you are absolutely right. We are witnessing a phenomenon of consolidation of several industries and service markets. And you point at a banking. We are witnessing that in Spain. We were analyzing and authorizing with some— we are examining the possibility of asking companies to present commitments or impose conditions, depending on whether it is phase one or phase two. We were able to analyze and approve in phase one with commitments, probably the most important banking merger o far in Spain, where Bankia and Caixabank merged, and the second one, Liberbank and Unicaja, so this is a trend that we are going to witness in the banking industry. I think we are going to see more consolidation. Also because there are new businesses, new ways of dealing with certain activities that traditionally were banking activity that are now going to be developed by new businesses and in particular big techs.
So there is this new environment, this changing environment, and this is I think because of consolidation in the traditional sector. So we will be seeing more of that. But not only, I think in the banking sector, there are other sectors that are at this point extremely relevant and very, very important for the recovery of our economies after the pandemic health and then economic crisis. And we are very much aware that we as competition and regulation authorities we will have a role to play in the implementation of the next innovation EU plan for example. There’s 750 billion Euro that is going to be funded all over Europe. This plan is aimed at repairing the economic and social damage due to the coronavirus pandemic, but this also aims to transform the European economics, the European economies and our societies through the digitalization sustainability transition. And we are there in order to be helping in this process.
So all these funds will be transferred to the markets mainly through public procurement. And that is why I believe we must remain extremely vigilant in this sector in the sector of public procurement. Fighting against bid-rigging is, has been, and will continue to b, a priority for us because I believe that ensuring competition in public tenders is of the utmost importance for the CNMC in the upcoming years. This priority involves both enforcement, where we are — through as well the intelligence unit — that allows us to web scrap and for example, detect patterns in the public procurement area that are not responding to logical behaviors in the market operation behaviors in the market. But also from the advocacy point of view, because we believe in the very important role of pedagogy with administrations, in order to help them be much more competition orienting, when for example, the signing of all documents that are going to be used in public beats for example.
Your answer reminds me that need to do a public procurement Chronicle down the road soon. What in your view is the future direction of antitrust enforcement, both domestically in Spain and internationally within Europe, and more broadly? Are you seeing more convergence or divergence or possibly something else?
Well, this is a very interesting question, mainly because in Spain, for example, I will start from home and then I will go to the international environment. We’ve recently introduced some new provisions in our competition law as a result of the ACM class directive implementation. So we have now the possibility of prioritizing our cases, which was not the case before. So we have to deal with absolutely everything that was put in global attention with very limited resources. Now we do have the possibility of prioritizing our cases, so we aligned with our strategic plan and our action plan, strategic plan is for the next five years plus the one that they’ve already been in office. Plus the action plan, which is for the next two years, we will be able to adapt our actions to those plans because of the possibility of applying priority.
So these will allow us to be, I think, much more effective and we will be able to reassess our enforcement efforts, being much more efficient because we have, as you know limited resources. So that’s something that will, I think, have a side effect regarding private enforcement, because if we center ourselves in those public enforcement issues that are of most general interest, probably those things that we are doing at the moment, but that are more into private interest will probably have this increasing result in the private enforcement action.
Regarding inspections we have a new article 14, our law, that will allow us to confirm and even explore further the possibility of carrying out remote inspections. So I think that’s the trend that has come to stay with, of course, respect to the rights of the defense and all the necessary requirements of our procedural, quarantine procedure. We will be using that, but also we will be able to carry out remote inspections, which I think will be much more efficient. And in terms of COVID, I think it is, well a must.
As I was thinking that the CNMC has also priority fighting against bid-rigging. So one of the measures that we have to encourage is the inquisition of public tender department. That’s something that we can do and that has a very persuasive effect in companies, the possibility that companies that have infringed competition rules will be disbarred from public procurement, they will not be able to engage with value procurement with administrations. So that is going to, I think, have an impact, and we are going to try to apply that as much as possible, because I was saying we have to engage as well with policy makers and public procurement bodies with competition and cultural policies.
So, from the side of enforcement over the companies, but also from the side of advocacy, towards the administration trying to help them design more competitive tender documents and detect when behaviors in the market are going to be sending a message of collusion, for example. So we are going to be very present there. And there we are also, in the field of advocacy, we are now updating some of our documents that may help administrations, for example, the guide to public procurement and competition. Or as seen as a specific tender procedures as a competition procedural body as we are, we can be asked to check and provide advice. But also training public officials in charge of public procurement at all levels. And so far, we’ve been able to train more than 2,500 public officials. On the other hand, another key initiative that our action plan has included is the detection and sanctioning of anti-competitive practices, which are especially harmful for the most vulnerable groups.
And this is the result also of the synergies of being a regulator. and also an antitrust authority because we can both from a regulatory point of view, pay attention to distortions in the market in regulated sectors but also try to combat that from a competition point of view. All in all, what we are trying to do, in fact, is sending this message of a true culture of competition in our country that benefits consumers. And last point on domestic is that we are trying to be much more efficient, but also in terms of gaining in autonomy and efficiency. And in this respect, I am trying to promote the change and modification in our creation law and the law that created the Commission for National Markets and Competition in order to allow us to be much more efficient in terms of the work we do in management and decision-making.
Internationally: Well internationally I believe that the trend that we’ve seen and we’ve witnessed lately, but it’s going to be there, to stay and increase, is more an enhanced cooperation between authorities. It is clear that global markets are almost every market nowadays and with the digital economy, this is going to be even more so. In frameworks or in environments like the European competition network or the international competition network, this is going to be a must. I think cooperation is there to stay. At the European level and thanks to the ICM plus directed provisions, it is rather clear that this is going to be a must because it is expressly included in the directive and we have implemented it. And as a token of that, I can say that only a few weeks ago, the CNMC and the Portuguese competition authority announced that we were carrying out parallel downgrades into potential anti-competitive practices. And there is going to be, and still ongoing, very close cooperation into the investigation of the cases. So I think that’s a frame that we will see more and more.
Yes. Cooperation between the agencies absolutely. Well, this has been very informative. Thank you again, President Fernandez for being with us and for sharing your insights with CPI today. Thank you so much.
Thank you. Thank you very much.