DLA Piper secures annulment of €25 million sanction for Iberdrola

DLA Piper has secured the annulment of a €25 million fine imposed on Iberdrola by Spain’s National Commission on Markets and Competition (CNMC) over alleged price manipulation in the Spanish electricity market.

The fine was imposed on Iberdrola Generación in November 2015 after the CNMC concluded that the company had committed a very serious infringement in connection with an increase in the prices offered by its Duero, Sil and Tajo hydroelectric plants between 30 November and 23 December 2013.

The Fourth Section of the Contentious-Administrative Chamber of Spain’s National Court upheld the judicial review proceedings brought by the electricity company against the decision of the CNMC’s Regulatory Supervision Chamber, finding that the sanctioning decision was contrary to law and setting aside the €25 million fine.

The contentious-administrative proceedings had remained suspended since 2017 because of parallel criminal proceedings, which concluded on 4 January 2024 with an acquittal by Spain’s Central Criminal Court. The judgment found that no offence against the market and consumers under Article 281 of the Spanish Criminal Code had been committed and became final after no appeal was filed.

The decision of Spain’s National Court was based, among other considerations, on the binding effect of the final criminal judgment. The court applied Article 77.4 of Law 39/2015, which establishes that facts declared proven in final criminal judgments are binding on public authorities in administrative sanctioning proceedings.

The criminal judgment had found that Iberdrola offered all available hydroelectric energy to the market during the period under investigation, ruling out any withdrawal or withholding of production. It also questioned the reliability of the expert methodology used by the CNMC, describing it as an ad hoc system based on estimates and subjectively modified variables.

The criminal ruling also found that Iberdrola’s market operators acted autonomously, without instructions from their superiors, and ruled out the existence of intentional conduct in the setting of the offers.

Once the contentious-administrative proceedings resumed, Spain’s National Court concluded that there was substantial identity between the facts examined in the criminal proceedings and those considered in the administrative proceedings. The court also noted that both the offence under Article 281 of the Spanish Criminal Code and the infringement established in Article 60.a).15 of the Electricity Sector Law required intentional conduct aimed at altering market prices.

On this basis, Spain’s National Court upheld Iberdrola’s appeal and set aside the CNMC’s sanctioning decision.

The DLA Piper team advising Iberdrola was led by José Manuel Sala Arquer, of counsel in the Litigation and Regulatory department, together with José María Barrios Garrido, a partner in the same department.

The decision sets aside, at this judicial stage, the €25 million fine imposed by the CNMC in connection with the events investigated in the Spanish electricity market in late 2013, following more than a decade of litigation before the criminal and contentious-administrative courts.

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