CNMC identifies competition problems in the fifth stowage sector's framework agreement

By Patricia Linan, Candela Sotes

06-2020

Since the European Court of Justice ("ECJ") judgment in 2014 in case Commission v. Spain (C-576/13), which declared the Spanish regime for stevedores incompatible with the freedom of establishment, there has been a progressive modification of the national regulation in order to liberalise the stevedoring sector and meet the requirements of the ECJ ruling. 

In November 2019, as a result of intense negotiations between the interested parties and new regulation approved, the draft of the fifth stevedoring framework agreement was signed.

The Spanish Competition Authority ("CNMC") has now drawn up a non-binding report on this draft, remarking the existence of some risks for competition in relation to the functions of the port employment centres - known as CPEs - and the State Sectoral Joint Committee - known as CPSE - which is a permanent body that represents both stevedoring companies and employees.

Under the premise that collective agreements are not per se out of the scope of competition rules, the CNMC offers the following recommendations to address its concerns:

  • The new framework agreement stipulates that the CPSE will be in charge of issuing a consultative report when a stevedoring company or a CPE intends to hire new employees and for the relocation of the surplus workforce when an annual occupation level of less than 85% is expected. The CNMC considers that these functions could facilitate the access of the CPSE to commercially sensitive information, which may restrict competition given that the CPSE is composed of representatives of the stevedoring companies. Therefore, the CNMC suggests revoking the CPSE’s intervention in the recruitment of new employees and calls for the reconsideration of its role in the organization of surplus workers.
  • According to the agreement, CPEs' employees take precedence over other dockers of the same port. For instance, CPEs are required to have a high percentage of their workforce on full-time indefinite contracts and stevedoring companies shall prioritize these workers regarding open positions, distribution of work or professional promotion. The CNMC does not recommend granting any privileges to CPE over other temporary work agencies and/or other potential providers of workforce services.
  • The framework agreement requires that the entry of new employees should preferably be determined by professional groups, restricting the freedom of self-organization of each operator, the mobility of stevedores and the hiring of more qualified workers. However, the CNMC advises to eliminate this preference for recruitment and facilitate labour mobility for all stevedores.
  • In case of partial or total dissolution of the CPE or company succession, the new agreement sets forth an obligation of conventional relocation of its employees. On this point, the CNMC recalls that in order to make this conventional relocation mechanism compatible with competition rules, it is necessary to prove efficiencies that meet the requirements laid down in Article 1 (3) of the Spanish Competition Act and Article 101 (3) of the TFEU and to ensure the voluntary nature of this mechanism.
  • Finally, the framework agreement makes reference to the necessity to establish training schemes for stevedores, which would be organised by a Sectorial Commission integrated into the CPSE. In the CNMC's opinion, this integration could lead to restrictions on competition (such as unequal treatment between companies, attribution of exclusive rights or encouragement of collusive conducts). Therefore, the CNMC recommends to take strong precautions to this end and to expressly include in the agreement that the exercise of these functions must respect competition law.

The risks for competition presented by the CNMC's report are not the only problem the stowage sector faces at the moment. In November 2017, the CNMC opened disciplinary proceedings against the national association of stevedoring companies and six trade unions for allegedly restricting the freedom to recruit stevedores.

However, this proceeding shall be suspended until the ECJ answers to the question referred for a preliminary ruling by the CNMC in June 2019, in light of the legal uncertainty surrounding this sector. For more information on the preliminary ruling, please refer to our July Edition of the Newsletter.

The CNMC's full report is available here (in Spanish).

For more information contact Patricia Liñán and Candela Sotés.