New Spanish Regulations exchange of information about creditworthiness

06 July 2006

María Gómez Rodriguez, Javier Fernández-Samaniego

On May 19, 2006, Royal Decree 602/2006 (the “Decree”) was approved. THIS DECREE PROVIDES AN EXEMPTION TO THE LAW WHICH REGULATES AGREEMENTS FOR THE EXCHANGE OF INFORMATION REGARDING FINANCIAL SOLVENCY AND CREDITWORTHINESS.

The Decree is an “exemption Regulation[1]” which sets out the consolidated doctrine of the Competition Court with regards to agreements for the exchange of information about financial solvency and creditworthiness within the same market. Previous decisions of the Competition Court had already stated that so-called Bad Debtors’ datafiles could act as a safeguard and consequently benefit consumers (Ruling A356/2006 of the Competition Court of April 7, 2006). It had already been stated that such registers can substantially help to reduce the level of bad debts for businesses. A competitive market will help to transfer the benefit of this reduction on to consumers (Ruling A341/03 of the Defense of Competition Court of February 17, 2004).

The Decree sums up the above mentioned consolidated doctrine and sets out certain governing rules that should be fulfilled by the Bad Debtors’ datafiles in order for the exemption to apply:

  • The person responsible for the management of the datafile must be identified.

  • Other companies operating in the market must be able to place data on file.

  • Organisations may only have access to debtors’ data files if they are contributing users – i.e. if they themselves file default information.

  • Contributing users of the data file must be able to post details of their policy towards defaulting debtors.

  • The information included in the register and disclosed to users should be objective, and concern due and payable debts, for which payment has previously been required. The information should exclusively concern financial solvency and creditworthiness.

  • Datafiles for which there is evidence which would appear to contradict the existence of the debt or the requirement of payment are not subject to the exemption.

  • The data may not be manipulated or used for a different purpose to that which has been authorised.

  • Debtors which are listed in the datafiles should be free to access the files for information purposes as well as to exercise their rights of access, rectification, cancellation and opposition, as per Data Protection law.

  • There should be an obligation to cancel the information about defaulting debtors once the debts are cancelled, without prejudice to the obligation to block the data when legally required.

  • When providing information to users, creditors’ data should not be included.

The exemption cannot be applied to markets in which the market share of the three main operators is above 50%. Likewise, the authorised exemptions can be withdrawn should their effects prove to be incompatible with the general principles of the exemption of article 3 of the Competition Defense Act.

In any case, all the Bad Debtors´ datafiles should comply with the Spanish Data Protection Regulations (particularly those contained in article 29 of Spanish Data Protection Act and in Instruction 1/1995 of the Spanish Data Protection Agency).




[1] In some cases, the Government can authorise, through exemptions Regulations, categories of agreements, decisions, recommendations or practices, that the Competition Authorities would otherwise deem unlawful, if these authorisations improve rationality and competitiveness of undertakings, especially SMEs.