The National Authority for Markets and Competition in Spain (“CNMC”) has recently analysed the possible existence of a hub & spoke cartel among the three leading ride-hailing platforms operating in Spain (i.e. Uber, Cabify and Bolt) which, as in many other EU countries, offer transportation services that connect passengers with private drivers (“VTC”) through their mobile apps.

The investigation was formally opened by the CNMC following a series of complaints filed by two national taxi industry associations, and the joint representation of 137 individual holders of taxi licenses. In their submissions to the CNMC, the complainants argued that the mobility services platforms had violated the Spanish Competition Act (“LDC”), by allegedly conducting the following practices:

1. Tacitly coordinating prices across platforms using price-setting algorithms, contrary to the provisions of Article 1 LDC;
2. Abusing their dominant position under Article 2 LDC by imposing non-equitable prices; and 
3. Distorting free competition through unfair practices in breach of Article 3 LDC. 

In its evaluation of a potential infringement of Articles 2 and 3 of the LDC, the CNMC concluded, without a very detailed analysis, that there was no sufficient indication or evidence to suggest that the conduct in question could be considered unfair or abusive. However, the CNMC’s decision addresses in more detail the potential infringement on Article 1 LDC in order to conclude that there is not a collusive agreement between the platforms.

1. CNMC’s analysis of the alleged collusion between the digital platforms 

The alleged breach of Article 1 of the LDC stemmed from claims that the mobility platforms operated within an oligopolistic market, coordinating among themselves to avoid price competition. Specifically, the claimants argued that they established an external pricing mechanism that was applied uniformly across different VTC companies and drivers. The complaints also affirmed that the platforms were setting prices below the cost of the service, which they compensated for by raising them in circumstances of consumer need, which would lead to indirect price fixing and the application of unequal conditions for equivalent services, thereby placing other competitors at a disadvantage.

In this regard, the CNMC analysed both the possibility that i) the mobility platforms were acting in concert with each other; and ii) that each of them was acting as a common supplier with the respective VTC drivers who use their applications, generating a hub & spoke cartel structure, so that drivers would have a price set by the application, preventing effective competition between them.

1.1. On the potential coordination between platforms

The CNMC considered that the existence of similar conduct among market operators is not in itself indicative of an infringement, provided that there is a reasonable explanation for such behaviour. Likewise, the existence of similar pricing policies was not considered to constitute a breach of competition law. 

On this basis, the CNMC ruled out an infringement of Article 1 of the LDC, finding that while the platforms’ pricing models may appear similar, this alone is insufficient to prove collusion, particularly in the absence of any evidence to the contrary. Instead, the CNMC acknowledged that such similarities can be reasonably explained by the logical adaptation to competitors’ previous actions or prevailing market conditions (based, for instance, on economic and regulatory factors), rather than constituting an illicit agreement under competition norms.

1.2. On the potential existence of a hub & spoke cartel

The CNMC also concluded that the use of pricing algorithms by these platforms constitutes an ancillary restriction inherent to their business model which, therefore, does not amount to a competition law infringement. The authority finally ruled out any breach on the basis that such algorithmic pricing systems enable drivers and users to make decisions with the immediacy and convenience integral to the functioning of digital mobility platforms, features that would be compromised in the absence of such systems. 

Moreover, the CNMC has emphasised that the pricing model relies exclusively on variables essential to the operation of the service (i.e., ride duration, distance, vehicle type, safety measures, real-time supply and demand conditions, etc.), without including elements unrelated to it. As such, the system is deemed proportionate to the nature of the service provided.

2. Final remarks

As a result of the foregoing, the decision led to the absence of sanctions and non-initiation of sanctioning proceedings against any of the companies involved in the complaints. But this does not undermine the importance of the case. In fact, although the CNMC has not carried out a more exhaustive analysis due to insufficient evidence, this decision has been able to shed some light on certain elements that should be considered relevant for the identification and assessment of potential algorithmic collusion and price coordination between competitors. 

These developments might be key in shaping future cases on the matter, reaffirming the CNMC's role as a leading authority in the enforcement of competition norms within digital markets.

If you need more information or further guidance in this area, please contact Candela Sotés.

VISIT OUR COMPETITION LAW HOMEPAGE