The Royal Decree fulfills the requirement of Law 2/2023, which mandated the establishment of the AIPI within one year of its enactment. This Royal Decree recognizes the AIPI as a crucial component for ensuring the effective operation of the whistleblower protection system. The AIPI is set up as an autonomous public body with its own legal personality, with organic and functional independence, and will begin operating on the date to be established by ministerial order.

External complaints channel

The AIPI will function as an external reporting channel. This means that individuals will be able to turn to this Authority to report suspected criminal offences and administrative infringements, either directly or after having used the company’s internal channel, also known as the Internal Reporting Channel. The Royal Decree obliges companies to inform, in their Internal Reporting Channels, about the possibility of filing a complaint with the AIPI.

Thus, the AIPI is a new external channel available to whistleblowers, in addition to those regional bodies already existing in some Spanish autonomous regions. Similar channels currently exist in the Andalusian Office against Fraud and Corruption, the Anti-Fraud Office of Catalonia, the Valencian Anti-Fraud Agency, the Office of Good Practices and Anti-Corruption of Navarra, the Independent Authority on Corruption of Castilla y León, the Galician Authority for the Protection of Whistleblowers and the Office for the Prevention and Fight against Corruption in the Balearic Islands.

Protection and support measures

The AIPI may also take measures to protect and support the whistleblower. Support measures include free, full and independent information and advice on the procedures and remedies available, protection against retaliation and the rights of the whistleblower; assistance before relevant authorities to protect against retaliation; legal support in cross-border criminal and civil proceedings; or, financial and psychological support, on an exceptional basis, as determined by the AIPI after assessing the circumstances of the case (Article 37 of Law 2/2023).

Internal Reporting Channel Officers

Companies must notify the AIPI of the appointment and dismissal of the person responsible for their Internal Information Channel, whether this is a single person or a collegiate body. The deadline for this notification shall be two months from the date the AIPI begins to operate.

Circulars and recommendations

The AIPI may issue circulars and recommendations on good practices and appropriate criteria for its correct operation, as well as crime prevention models in the public sphere. These circulars may be useful, not only for the interpretation of Law 2/2023, but also as a reference to validating the existing risk prevention and compliance model in the company.

Sanctioning powers

The AIPI may initiate, investigate and rule on sanctioning proceedings against companies for potential breaches of Law 2/2023. The behaviors that constitute infringements are outlined in its Article 63, which classifies certain violations as very serious: the adoption of reprisals; violating the guarantee of confidentiality and anonymity of the whistleblower; violating the duty of secrecy; and failure to comply with the obligation to have an Internal Reporting Channel in accordance with the requirements of the law.

The AIPI will have jurisdiction over offences committed in the public and private sector, throughout the territory of Spain, except in cases where regional regulations grant this authority to the respective regional bodies within their territorial scope.

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Pharmaceutical sector’s collaboration is crucial for advancing and promoting clinical research, as well as other activities contributing to the benefit of the health sector and patients. This includes aspects like training, education, and the provision of healthcare services. Typically, healthcare (such as hospitals, foundations, universities and other academic bodies and scientific societies) and patient organisations serve these public interest purposes. In recent years, the legislator has sought to promote this collaboration by offering tax incentives. These incentives are not only for the entities benefiting from these collaborations, but also for all those who, on a not-for-profit basis, collaborate financially in achieving these purposes.

These incentives are established in what is commonly known as the “Patronage Law” (Law 49/2002). Since this Law was passed more than 20 years ago, numerous attempts have been made to improve the patronage regime, with the aim of encouraging these activities.

Following an arduous negotiation and a closely divided vote (172 votes in favour and 171 against), on 10 January, the Congress validated Royal Decree-Law 6/2023, known as the “omnibus decree”, which inter alia amends the Patronage Law.

Below we analyse the key modifications introduced by the amendment, focusing on the aspects we deem of interest to stakeholders in the pharmaceutical sector. We also take this opportunity to clear up any confusion surrounding the terms of “donation”, “sponsorship” and “collaboration”. In our experience, these concepts can sometimes be misunderstood.

Forms of patronage

The different forms of patronage include what Law 49/2002 refers to as “donations” (art. 16) and “business collaboration agreements for public interest activities” (art. 25).

A donation is an act of liberality whereby the donor disposes gratuitously of something in favour to another, who accepts it, without any consideration or compensation being received in exchange therefor. For the donor, the donation is a non-deductible expense. However, the donor is entitled to a corporate tax deduction when the beneficiary has availed itself of the special tax scheme of the Patronage Law. The donation must be justified by means of a certificate issued by the beneficiary. In turn, for the beneficiary entity, the donation is exempt income for corporate income tax purposes. VAT does not have to be paid because the donation is not subject to said tax.

A business collaboration agreement for public interest activities is one whereby the beneficiary entity, in exchange for financial support for the performance of its activities of public interest, commits to formally publicize the collaborating entity participation in writing. In terms of taxation, the contribution made by the collaborator is a deductible expense in its corporate tax. In practice, the agreement in writing, together with the document proving the transfer of the funds to the beneficiary entity, is sufficient to justify the deduction of the expense. For the beneficiary entity it is also exempt income. On the other hand, the Patronage Law specifies that advertising the collaborating entity’s participation does not in any case constitute a service provision and is therefore not subject to VAT.

Occasionally, these business collaboration agreements under Patronage Law are often confused with sponsorship contracts. Sponsorships are regulated in article 22 of Law 34/1988, on General Advertising. The latter defines sponsorships as “an agreement by which the sponsored party, in exchange for financial support for the performance of its activity (…) commits to collaborate in the sponsor’s advertising”. The key difference with collaboration agreements lies in the importance given to the promotion of the collaborating entity’s participation. In A sponsorship, the advertising objectives of the sponsor are more prominent, whereas in collaboration agreements the primary focus is on directing the financial support towards achieving the purposes of the beneficiary entity. Advertising expenses are deductible for the person incurring them and, as there is consideration, it is subject to VAT. The beneficiary entity must issue the corresponding invoice. The contribution received by the beneficiary entity is exempt income.

It could also happen that, in addition to promoting the collaboration, the beneficiary entity provides other types of services to the collaborating entity (e.g., scientific advice, the preparation of reports or similar activities). In these cases, regardless of the name given to the agreement by the parties, the provision of such services would be subject to VAT and the beneficiary entity would have to issue an invoice.

Finally, it should be recalled that Farmaindustria’s Code of Good Practice regulates the aforementioned forms of patronage under the same umbrella: “Donations and Grants” (Art. 15). According to the Code, they are only permitted if (i) they are conducted for the purpose of collaborating with healthcare, research, teaching/training or social or humanitarian care; (ii) they are formalized in writing; and (iii) they do not constitute an inducement to recommend, prescribe, purchase, supply, sale or administer medicines.

Key developments

In donations, the donor may make contributions in cash or in kind, either of goods or rights. The amendment clarifies that the assignment of use of movable or immovable property (also known as “bailment”), for a specific period of time, without consideration, entitles to relief.

As indicated above, in donations the donor does not receive any consideration. Another development is that, exceptionally, the donor may receive goods or services delivered or provided by the donee or beneficiary provided these are of symbolic nature. These are considered to be of a symbolic nature when the value of such goods/services does not represent more than 15% of the value of the donation and does not exceed the amount of 25,000 euros.

With regard to the tax incentives, for the donor, the relief percentage applicable to the corporate income tax liability is increased from 35 % to 40 %. In these cases of loyalty of donations, the relief increases from 40% to 50%. A “loyalty donation” refers to a charitable contribution made by a donor to the same entity consistently over the two immediately preceding tax periods, provided that the amount of the donation in the same year and in the previous year is equal to or greater, in each of them, than that of the immediately preceding year.

With regard to business collaboration agreements, it is now specified that financial aid may be in cash or in kind, or may also consist of the provision of services that are usually carried out by the collaborating entity. The amendment also incorporates new features in relation to the publicity of the collaboration. Until now, this publicity was carried out by the beneficiary only. Now, it can be carried out either by the beneficiary or by the collaborating entity.

Finally, in the case of both donations and business collaboration agreements, the Patronage Law requires that beneficiary entities must earmark at least 70 % of certain income and revenues for public interest purposes. It is now added that that the earmarking may be direct or indirect.

With the approval of Royal Decree-Law 6/2023, all these measures are in force as of 1 January 2024.

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The Spanish Criminal Code (article 31 bis) establishes that companies may be criminally liable for certain offences committed by their employees or managers. However, it also provides that such liability can be avoided or mitigated if the company has an adequate compliance programme in force.

To this end, compliance programmes must meet certain requirements: clearly identify the activities in which crimes can be committed (risk map); set out the necessary protocols and procedures to mitigate these risks, and inform and train its personnel; enforce the reporting of potential risks and breaches through so-called “whistle-blower channels”; fund the compliance programme as necessary; and set out a disciplinary system to sanction non-compliance with the programme. The company must also have an independent, autonomous supervising body (compliance officer). The compliance programme is a “living” element, which must be reviewed from time to time.

New situations that must be anticipated in compliance programmes

Organic Law no. 10/2022 classifies as an offence to inflict a degrading treatment on another person, seriously undermining their moral integrity, as well as to repeatedly conduct hostile or humiliating acts which, despite not constituting a degrading treatment, constitute serious harassment in the context of any employment relationship (whether with a public or private employer), while taking advantage of hierarchical superiority. The law also classifies as an offence to favours of a sexual nature in the context of an employment or service provision, or similar, if this causes an objectively and seriously intimidating, hostile or humiliating situation to the victim.

Up until now, when faced with this kind of situations, the company could be declared vicariously liable for possible moral damages and compensation. From now on, the company may also be criminally sanctioned with a fine and other additional penalties, such as loss of the right to subsidies, disqualification from contracting with the public sector, among others, or even dissolution.

Therefore, it is recommendable to revise and update compliance programmes and all related documents so as to include these new scenarios in which companies can be criminally liable. In particular, it is convenient to update risk maps, have prevention plans and actions protocols in force as regards these crimes, and conduct awareness training within the companies.

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According to the “Whistleblowing Directive” (Directive 2019/1937), private sector entities with over 50 employees as well as all public sector entities are obliged to have a whistleblowing channel. Although the deadline for implementing this Directive ended on 17 December and Spain has not yet done so, it is advisable that companies take the appropriate measures to comply with the provisions of this regulation, either by creating whistleblowing channels or, as the case may be, by adapting the existing ones to the new standards.

Whistleblowing channels and personal data

Rules, guidelines and directives have outlined how these channels should be organised. Organic Law 3/2018 on the Protection of Personal Data (article 24) regulates the processing of personal data through these channels. One key aspect is the period during which this data may be retained. According to the law, data must be deleted three months after it has been entered into the reporting system. However, in response to a query from the Spanish Compliance Association, on 22 November, the Spanish Data Protection Agency (AEPD) clarified that, if the complaint is considered well-founded and gives rise to a specific investigation, the data may be kept beyond this three-month period. However, in this case, the data must be retained in company’s systems other than whistleblowing channels (e.g. at the compliance committee or the human resources management body).

The AEPD recalls that its guide on data protection in labour relations, dated May 2021, also analyses these and other relevant aspects. By way of example, the AEPD clarifies that it is essential that workers are informed about the existence of whistleblowing channels and the processing of the data involved in making a complaint. This information can be included directly in the employment contract or, for example, by means of information letters sent to the staff.

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This case is about whether the beneficiary of a subsidy must return the subsidy to the Administration that granted it or not. The Administration considered that the subsidy must be returned because the beneficiary had not complied with its terms.

The matter was brought before the Spanish Audiencia Nacional which ruled that the beneficiary was not obliged to return the subsidy because the refund proceeding had already expired. According to the Audiencia Nacional, the proceeding expired because the Administration’s ruling on it was notified to the beneficiary (interested party) out of time.

The notification of the decision was conducted by electronic means and made available to the interested party on the date of expiry of the deadline. However, it was not accessed by the interested party until three days later.

Matter of cassational interest

The matter of controversy is the date on which the Administration’s obligation to notify a ruling is deemed to have been fulfilled: the date on which the notification is made available or the date on which the interested party accesses it.

What does the law state?

On the one hand, article 43(2) of Law 39/2015 on the Common Administrative Procedure  states that electronic notifications “shall be deemed to have been made at the time of access”.

On the other hand, article 43(3) of Law 39/2015 states that the obligation of the Administration to notify its rulings within a given time frame shall be deemed to have been fulfilled when the notification has been made available at the electronic site of the acting Public Administration or Agency or at the single authorised electronic address. Article 40(4) of Law 39/2015 provides that a “duly accredited attempt to notify” will suffice in order to consider that the obligation to notify the resolution of the procedure within the deadline has been fulfilled.

Conclusions of the Court

The Supreme Court concludes that, in the case of electronic notifications, the obligation of the Administration to conduct the notification within the maximum duration of the procedure is understood to have been fulfilled when the notification is made available at the electronic site of the acting Public Administration or Agency or at the single authorised electronic address, regardless of when the interested party accesses it. In view of this, if the Administration notifies its ruling on the last day of a given term, then such notification shall be deemed made on time. The interested party will not be allowed to allege that because it has accessed the ruling a few days after (and therefore after the expire of the Administration’s deadline) the notification has been made out of time.

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The resolution issued by the Spanish Competition Authority (CNMC) in the radiopharmaceuticals case is a long document (+140 pgs) that can be read from different angles and that brings up several interesting considerations. In this CAPSULAS we would like to comment briefly on some of them, while at the same time warning that the complexity of these issues may make it advisable to carry out a more detailed study adapted to each specific case.

Information exchange and transparency

CNMC points out that the sanctioned companies shared public contracts “through the exchange of sensitive commercial information between them, which had an impact on the prices set for customers”. The discretion that the CNMC requires from the companies regarding their sensitive information is understandable; those operating in the same market should not share data that are essential to compete.

For this very reason, it would be desirable, indeed very desirable, for the rules governing public contracts to be applied with caution when it comes to making award prices transparent on an individual basis. The law allows contracting bodies not to publish individual prices, something with which the CNMC should agree; but this requires a favourable report from the Transparency Council. It is therefore advisable to clarify this issue and provide contracting authorities with guidelines for action that reconcile transparency and competition.

Business logic

CNMC accuses the sanctioned companies of having excluded themselves from various bidding processes.

Without evaluating the conclusions of the resolution, it is worth highlighting how CNMC seeks to determine whether or not there is a reasonable competitive commercial attitude on the part of the companies operating in the same market. CNMC considers that this is not the case when a company does not participate in a bidding procedure without a logical justification; when it submits non-competitive or hedging bids; or when it presents bids with formal defects that are difficult to explain. These situations, according to CNMC, are indicative of the existence of non-aggression pacts.

The conclusion is clear: whoever decides not to participate in a bidding procedure must work carefully on the justification of its conduct. No one can be forced to compete where it does not want to compete; but when deciding not to compete, it is better to have a strong explanation, based on self interests and supported by a solid business logic reasoning. CNMC, in this case, did not accept the companies’ allegations, but in some cases in the past, after having heard  solid explanations, it has decided not to intervene.

Sanctions to directors

CNMC, also on this occasion, imposes fines on a personal basis on some managers of the sanctioned companies.  In doing so, the CNMC relies on the jurisprudence that supports these sanctions for the deterrent  effect they  have, as they are an instrument to achieve greater efficiency in the fight against anti-competitive behavior.

In any case, the resolution devotes very few of its 140 pages to solidly demonstrate the personal involvement of the sanctioned directors in the anti-competitive practice.

The message on this point is also clear: the jurisprudence is supporting fines for managers who have an active role in anti-competitive practices and also for those who passively participate; any evidence of a conversation, even isolated, can lead to personal liability.

Prohibition of contracting with Public Bodies and compliance programs

In Spain, the Law on Public Procurement is clear: companies that have been firmly sanctioned for a serious infringement regarding the distortion of competition are subject to a prohibition on contracting with public sector entities. The CNMC, in this case, refers the matter to the State Public Procurement Advisory Board in order for it to rule on the duration and scope of the prohibition.

The resolution does not mention that the Law on Public Procurement also states that the prohibition can be avoided via the payment or commitment to pay the fines or if the adoption of appropriate technical, organizational and personnel measures to avoid the commission of future administrative infringements is proven.

The relevance of compliance programs in this matter is unquestionable, and it is highly recommendable to rely on CNMC’s Guide of June 10, 2020 when designing and implementing them.

Some “tips” in this regard:

· It is advisable to have a Compliance Program in place before being involved in a case in front of the CNMC.

· The management bodies and/or the main directors of the company should be directly involved. A top down approach should be adopted, and ensuring compliance with these rules must be at the core of the company’s culture.

· Ad hoc training must be offered, adapted to the reality of the company and the activity of each of its members. A standard training strategy that merely outlines the basics of antitrust rules is not sufficient.

· It is necessary to have an internal, transparent and effective whistleblower channel.

In an environment where enforcement is a priority, a robust compliance program is not only advisable but essential.

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Decisive influence and indirect holdings

According to the doctrine of the CJEU, when it comes to deciding whether a parent company should be liable for infringements of competition law of a subsidiary, the essential thing is to determine whether the parent company effectively exercises a determining influence on its subsidiary or not.

If the parent company holds all or almost all the capital of the subsidiary, it is presumed that the parent company exercises said decisive influence. In the present case, the Court argues that it is not relevant that the ownership of the shares of the subsidiary is held through intermediate investment vehicles in which the parent company does not hold the majority. If the parent company, through whatever corporate structure, controls all voting rights associated with the subsidiary’s shares, the presumption of actual exercise of decisive influence can be applied. The existence of these links is sufficient to presume the decisive influence, without the need for the Commission to provide additional evidence.

At this point, the parent company can rebut the presumption. For this, and in order to be exempted from liability for the actions of the subsidiary, the parent company must prove that the subsidiary operates autonomously in the market; and that it is not limited to applying the instructions given by the parent company.

De facto decisive influence

In cases like this one, in which it may be difficult to prove that the parent company controls the voting rights of the subsidiary, the Commission could also prove the existence of determining influence through other means; for example, proving that the parent company is able to determine the subsidiary’s economic and commercial strategy. In this area, it will be especially important to jointly analyse the economic, organizational, and legal links that tie both entities. This is what, according to the CJEU, makes it possible to take account of the economic reality. In addition, according to the judgement, the existence of an economic unit constituted by the parent company and its subsidiary may arise not only from the formal relationships between them, but also informally, especially as a result of simple personal links existing between the members of the companies.

The judgment also recalls that in these cases an overall assessment of the situation is necessary, and that the effective exercise of decisive influence may be inferred from a body of consistent evidence, even if some of that evidence, taken in isolation, is insufficient to establish the existence of such influence.

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In 2001, a citizen was sentenced to pay civil compensation as a result of the commission of a crime. After 15 years without such compensation being paid, the Court declared the civil liability claim barred by limitation. The public prosecutor did not agree with such decision and filed an appeal. The Court upheld such appeal and ultimately declared that civil liability resulting from a crime is not subject to a limitation period. This decision was afterwards appealed before the Supreme Court which confirmed the ruling of the lower Court.

Judgment of the Supreme Court

The Supreme Court acknowledges that this is a controversial topic, and that lower Courts have issued contradictory judgments on this matter. Some judgments apply a limitation period of 15 years (as per the provisions of the Civil Code); others apply a 5-year period (as per the provisions of the Spanish Procedural Law); and others apply no statute of limitation at all.

The Supreme Court advocates for the last option and declares that claims for civil damages resulting from a final criminal conviction have no limitation period. According to the Court, civil claims related to a criminal conviction may be filed until the rights of the injured party (which, in turn, never prescribe) are fully satisfied. To support its decision, the Court argues that, when it comes to criminal proceedings, victims deserve special protection; and precisely because of such special protection, process rules must be interpreted in a way that favors the full effectiveness of the judgment. Any rule that limits the effectiveness of the judgment, the Court says, must be constructed restrictively.

The importance of compliance systems

Under the Criminal Code, companies may be subject to criminal liability with respect to certain specific crimes. In such cases, criminal liability may also result in civil liability as a result of which the company may have to pay damages to third parties. As per this judgment of the Supreme Court, this civil liability will never prescribe, which means that the company will always remain liable regardless of the period elapsed from the date of the final criminal conviction. This is, in our opinion, a reminder about the importance of having a comprehensive compliance program with adequate internal controls to prevent irregular conducts.

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This case refers to a citizen who filed an internal administrative appeal (ie a voluntary appeal submitted before the same institution that issued the act in question) against a tax assessment. The citizen did not specifically request the stay of the execution of the assessment. Tax authorities, after the legal deadline for ruling on the internal appeal had expired and prior to decide on the appeal, initiated the execution of the assessment. This way of acting was based on the self-executing nature of administrative acts and on the fact that the appellant, in the absence of a resolution within the legal deadline, could consider the appeal as dismissed. The citizen filed a court claim against the execution on the basis that such execution had been initiated while the internal administrative appeal was still pending.

Acts cannot be executed if an administrative appeal is pending

The Supreme Court first declares that determining whether the authorities may execute a tax assessment pending an internal administrative appeal is a matter of the utmost interest that justifies the intervention of the Supreme Court. Thereafter, the Court rules in favor of the citizen (the tax assessment cannot be executed pending the internal appeal) on the basis of the following grounds:

1. The ruling on an internal administrative appeal against a tax assessment may, at least in theory, revoke such tax assessment. That being so, it makes no sense to execute the assessment before ruling on the appeal.

2. What tax authorities must do is to first rule on any pending internal administrative appeal and only execute such act if the internal administrative appeal is dismissed.

3. Internal administrative appeals must be carefully managed by the authorities. This means that the authorities, when an act is subject to an appeal of this type, must actually review the situation in order to assess whether the act had been adopted in accordance with applicable law or not. It is not acceptable, as it unfortunately happens often, to consider internal appeals as useless claims with no other possible outcome than being dismissed.

4. Finally, from a factual perspective, the Court points out that rather than concentrating on executing an administrative act that is subject to an appeal, authorities should direct their efforts to rule on the pending appeal . From this point of view, the Court further considers that the standard practice which consists of not issuing express rulings on internal appeals and relying only on the institution of the administrative silence is unacceptable. 

Take-home message

Under the doctrine set forth by this judgement, administrative acts may not be executed pending an administrative appeal. This conclusion, although it is reached in the Judgment only in respect with tax assessments, may also be applied to other types of administrative acts.

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Use of privileged information

Until now the Criminal Code has only considered the use of privileged information as a crime if such use was made aiming to gain a benefit in the context of a regulated market. From now on the use of privileged information is also a crime if it is made outside a regulated market. There is an increase in the number of uses of privileged information that may be considered as a crime. The mere illicit communication of privileged information and recommending or inducing a person to use privileged information are now also considered to be criminal offenses.

Until the amendment of the Code only persons who had access to privileged information due to their professional or business activities (including members of management bodies of companies, shareholders and other persons who have access to privileged information during the performance of their duties) could be accused of having committed a crime for use of privileged information. After the amendment, the use of privileged information can result in criminal liability not only for persons who have access to such privileged information during the performance of their duties but also for persons that obtain such information for any other reason and use it knowing that it is privileged.

Bribery and embezzlement

With regards to bribery and embezzlement, the definition of who is a “public official” is broadened as it now also includes any person that carries out any public service, as well as foreign and European Union public officials.

Before the amendment, legal entities were not subject to criminal liability for embezzlement. After the amendment, legal entities that manage public funds may also be charged with criminal liability for embezzlement.

After the amendment, bribery among private parties not only exists when a company’s director, manager, employee or associate receives, asks for or accepts an unjustified benefit or advantage to illicitly favor another person, but also when what any of such persons receives, asks for or accepts is not the benefit or advantage itself but the mere promise of such benefit or advantage.

As a conclusion, it is advisable to review the criminal compliance systems of companies operating in Spain, in order to update their current policies and procedures and to include provisions regarding the new crimes for which companies can be charged with criminal liability.

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