The Mergers & Acquisitions Review: Spain

Overview of M&A activity

The overview of M&A activity in Spain in 2020 and the first half of 2021 must clearly be divided into two, very distinct periods.

The start of the covid-19 pandemic and lockdown in March 2020 put M&A activity on hold. The rapid escalation of the public health crisis and the resulting lockdowns affected every industry and corner of the globe. During the first quarter of 2020, Spain's GDP fell by 5.2 per cent (compared to the last quarter of 2019) and M&A activity nearly stopped (around €12 billion in deals were postponed or put on hold).

M&A activity then bounced back in September 2020, especially across sectors such as financial services, healthcare, renewables, consumer, agribusiness, logistics, real estate, and technology, media and telecommunications. High liquidity in the debt and capital markets, increased investment capacity of private equity funds (especially international funds), the success of fundraising, low interest rates and the strategic push of big corporations compensated for the macroeconomic uncertainties.

The positive developments in Spain's economy (already achieved in pre-covid days) have been counterbalanced throughout, not only by the uncertainties brought by covid-19 but also by political instability (embodied by the difficulty of obtaining majority government and the challenges fostered by certain pro-independence regional parties in Catalonia), uncertainty on the future of the public pension system or concerns about the economic outlook (especially on emerging markets) and the situation in Latin America, the traditional region for Spanish direct foreign investments, uncertainties related to Brexit or the tense trade relations with the United States.

However, M&A activity targeting Iberia in 2020 grew considerably compared to 2019 in terms of value (an approximate increase of €25 billion). By contrast, the deal count in 2020 was considerably below that achieved in 2019 (down by 457 deals). Looking at the first half of 2021, M&A value consolidated the growth trend initiated in the second half of 2020.

The main drivers of M&A activity in 2020 and the half quarter of 2021 were the following:

  1. Spanish targets had become attractive as a result of the strengthening of their operations and balance sheets, the significant improvement of the macroeconomic environment, including the depreciation of the euro, and the availability of debt financing strengthened by low interest rates, which are not expected to increase;
  2. corporate and financial institutions are completing their deleveraging processes. Spanish banks and other financial institutions have continued selling non-core assets and branches, divested performing and non-performing loan portfolios, and also exited from industrial shareholdings; this activity is expected to continue throughout 2021 and 2022;
  3. energy (renewables), healthcare, IT, logistics and telecommunications have also attracted significant investments as a result of an increased consolidation in those industries and changes in the regulatory framework, alongside interest from national and international funds;
  4. foreign strategic and financial investors remain focused on Spain and interested in both strategic and opportunistic investments; Europe keeps being the main source of those investments, followed by North America and Latin America, mainly from the United States and Mexico; certain Asian regions (including Hong Kong and Singapore) have also been relevant players in terms of foreign investment; and
  5. outbound investments have also increased, focusing Spanish investments mainly on Europe, Latin America and the United States, and to a lesser extent Asia.

General introduction to the legal framework for M&A

i Corporate law

The basic Spanish legal framework for corporate acquisitions, mergers and other types of corporate restructuring includes elements of both contract and corporate law.

Spanish contract law is mainly contained in the Civil and Commercial Codes of the nineteenth century. Seeking to modernise and update this legal framework, the Ministry of Justice worked on a new Commercial Code with the aim of codifying the entire body of law on commercial contracts into a single piece of legislation. However, the draft bill has not been submitted to Parliament.

Spanish corporate law, on the other hand, is primarily based on the Companies Law (the governing framework for the most common corporate forms in Spain) and the Law on Corporate Reorganisations (the governing framework for mergers, spin-offs, conversions, en bloc transfers of assets and liabilities and international transfers of registered addresses).2

The rules that must be taken into account in connection with the main regulated markets include the Consolidated Stock Market Law3 (framework for the securities market), the Law on Discipline and Intervention of Credit Institutions4 (framework for the credit market) and the Private Insurance Supervisory Law5 (framework for the insurance market).

On 5 April 2020, the Law 5/2021 modified the Corporate Law to implement Directive (EU) 2017/828 of the European Parliament and the Council amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement for public limited liability companies.

ii Insolvency law

The general legal framework on insolvency is primarily contained in the Insolvency Law.

The Insolvency Law created a single insolvency procedure applicable to all insolvent debtors (i.e., debtors who are, or will imminently be, unable to regularly comply in a timely manner with their payment obligations). The single procedure has a joint phase with two potential outcomes: a creditors' agreement (in which the debtor and creditors reach an agreement on the payment of outstanding claims), or the liquidation of the debtor's assets to satisfy its debts. It has also clarified the risks associated with the clawback (rescission) of transactions carried out within the two years preceding a declaration of insolvency that are considered detrimental to the debtor's estate.

The Insolvency Law enacted in 2003 was amended on several occasions (2009, 2011, 2013, 2014 and 2015), leaving, as a result, a diverse, complex body of insolvency regulations as a result of an array of legal provisions being applied. Accordingly, the Insolvency Law was amended and restated on 5 May 2020 by virtue of Royal Legislative Decree 1/2020 with the aim of harmonising and clarifying insolvency regulations.

According to recent statistics, the number of insolvency proceedings has increased with respect to 2018, following a trend that commenced in 2017 interrupting the downward trend started in 2013. Despite the different measures approved by the Spanish government to mitigate the impact of the covid-19 health crisis, it is inevitable to expect an increase in insolvency proceedings throughout the remainder of 2021 and 2022.

iii Other regulations

Other matters relating to, inter alia, tax, employment and competition law also form part of the M&A legal framework (see below).

Developments in corporate and takeover law and their impact

Due to parliamentary inactivity in recent years as a result of the difficulty of obtaining majorities in Parliament, there has been reduced legislative activity in terms of corporate and takeover law.

A Business Secrets Law was enacted in February 2019. This new regime, which is complemented by other existing regulations (such as unfair competition law or the law regarding the regulation of criminal breaches of confidence) provides companies operating in Spain with a useful mechanism to protect trade secrets from third parties' illegal interference.

Hastened by the covid-19 health crisis, new screening mechanisms for specific investments made by non-European Union (EU) and non-European Free Trade Association residents were enacted in March 2020 (and further developed in November 2020) based on public order, public health and public security reasons. Pursuant to this screening mechanism, prior authorisation from the Spanish Council of Ministers – or lower-tier authorities if the investment value is less than €5 million – is required for any foreign direct investment worth over €1 million if:

  1. made in connection with critical sectors (i.e., critical infrastructure, critical technologies and dual-use items, supply of critical inputs (including energy or raw materials) and food security, sectors with access to sensitive information and media); or
  2. carried out by specific foreign investors regardless of the sector (i.e., who have already made an investment affecting national security, public order or public health in another EU Member State – including an investment in any of the above-mentioned sectors – are directly or indirectly controlled by a foreign government or are subject to ongoing judicial or administrative procedures for engaging in illegal or criminal activities).

Foreign direct investments made pursuant to these regulations are those that result in a foreign investor reaching a stake of at least 10 per cent of the share capital of a Spanish company and any corporate transaction, business action or legal transaction that enables effective participation in the management or control of a Spanish company. Gun-jumping the mechanism would result in the transaction being considered invalid and without any legal effect, as well as lead to the imposition of fines up to the value of the investment. Although passed during the covid-19 crisis, this legislation is not a transitional measure and is expected to remain in force for the long term.

It is also foreseen that, during 2021 a new regulation of the commercial registry will be approved (the current regulation dates back to 1996) that will modernise its mechanisms and organisation, and adapt this legislation to the current corporate legal regime.

Foreign involvement in M&A transactions

During 2020, and despite the shrinking in M&A activity caused by the covid-19 pandemic, the interest of international investors continued to focus on the Spanish real estate, energy, tourism, engineering and insurance sectors. Private equity investments continued to grow, and the outlook for 2021 both for inbound and outbound M&A remains strong. By way of example:

  1. Vinci SA has agreed to acquire the energy business of ACS, for €4.2 billion;
  2. the acquisition by Energias de Portugal (EDP) of Viesgo from Macquarie's European Infrastructure Fund IV, for €2.7 billion;
  3. the acquisition by EQT Partners of idealista, SA, a Spanish online property marketplace, from Apax Partners for €1.3 billion; and
  4. the acquisition by Helvetia Holding AG of Caser Seguros, SA, a Spain-based company engaged in providing personal insurance policies, for €800 million.

The following, among others, were announced in 2021 or are currently in the pipeline:

  1. the acquisition by IFM Investors of 22.7 per cent stake in Spanish utility firm Naturgy for €5.1 billion;
  2. the Spain-based construction group Ferrovial is negotiating the sale of the environmental services business with Schwarz Group; additionally, Ferrovial received an offer from the PE firm Buckthorn for its UK-based outsourcing subsidiary Amey in September; and
  3. Platinum Equity, LLC has agreed to acquire Urbaser SA, for a total consideration of €1.4 billion.

Significant transactions, key trends and hot industries

i Public M&A

Public M&A witnessed less activity, with national and international investors focused on public megadeals in banking and telecoms:

  1. the merger by Caixabank, SA of Bankia, SA, with a value of €14 billion;
  2. the take-private transaction launched by KKR, Cinven and Providence in connection with MasMóvil, Spain's fourth-largest telecommunications operator;
  3. the merger between Spain's Telefónica and US-based Liberty Global's of their UK mobile telecoms assets, O2 and Virgin Mobile, with a value of US$12.4 billion; and
  4. the acquisition by Cellnex Telecom, SA of CK Hutchison Networks Italia SpA, from CK Hutchison Holdings Limited, for €3.3 billion.

ii Real estate

As mentioned in previous editions, real estate has established itself as a prominent field for M&A activity after years of market corrections. Attractive prices combined with banks' need to clear their balance sheets of real estate assets have catalysed the resurgence of real estate transactions in the Spanish market. To foster this resurgence, the government has not amended the tax framework applicable to the Spanish SOCIMIs, which are similar to real estate investment trusts and are more attractive to investors. However, real estate deals have shrunk during 2020 and are slightly recovering during 2021. The most significant transactions in real estate activity include the following:

  1. the merger by Neinor Homes of Quabit Inmobiliaria – the merged entity would rank among Spain's top three real estate promoters, with around €2 billion in gross asset value;
  2. the agreement by Banco Santander, SA to acquire 85.04 per cent stake in Uro Property Holdings SOCIMI, SA from Ziloti Holding SA, for €1.4 billion;
  3. the acquisition by Bankinter, SA of Montepino Logistica, a Spain-based company engaged in logistic assets management and development, from CBRE Global Investors, for €1.2 billion; and
  4. the agreement by Inmobiliaria Colonial, SA to acquire a 5 per cent stake in Societe Fonciere Lyonnaise SA, for €216 million.

The covid-19 health crisis, and the consequences in the tourism industry, have certainly affected real estate deals within the hospitality sector. Nevertheless, for the remainder of 2021 and 2022, given the situation with covid-19, we can expect distress investments (including non-performing loan portfolios), as well as transactions related to logistic platforms and 'build-to-rent' assets.

iii Initial public offerings

Without a doubt, 2020 was another bad year for the Spanish stock exchange, both on the traditional continuous market (with only the initial public offering (IPO) of Soltec Power Holdings) and on the Mercado Alternativo Bursátil (which saw fewer IPOs than in previous years, such as Making Science or Cuatroochenta), a market (with a special set of regulations) for small companies seeking to expand.

In general, forecasts for 2021 are more optimistic, despite the political uncertainty and overcoming the covid-19 health crisis.

iv Private equity

Private equity activity experienced in 2020 an important decrease compared to 2019 both in aggregate value and number of transaction figures. This trend was reversed during the first half of 2021. According to Transactional Track Record data, during the first quarter of 2021 the aggregate value figures were 54 per cent higher than those of the first quarter of 2020. A continued growth until the end of the year would leave private equity activity close to 2019 levels, but still below them.

Similar conclusions may be reached regarding the number of transactions. However, the growth is smaller in this field.

The most active sectors for private equity investments during 2021 were (1) technology; (2) consultancy, audit and engineering; (3) food; and (4) healthcare, hygiene, medical aesthetics and cosmetics. Healthcare and technology gained an important position last year because of covid-19 and this has not changed during 2021.

International funds still hold a predominant position in the Spanish market. Thus, international funds carry out more operations, which tend to be of higher value. However, domestic private equity funds hold an important position and have been very active.

After the pandemic, the question will be whether private equity activity can be revived as some semblance of normality returns. Although still early, with fixed-income yields at record lows and equity markets appearing fully valued, investors need to diversify into alternative assets: Spain is one of the most attractive regions for private equity on a risk-return basis.

Technology sectors in Spain have made impressive progress in the past few years. They have showcased the greater number of deals per industry sector in 2020 and 2021, with steady growth in deal value. The important international component of technology-driven transactions evidence how Spanish companies have developed experience at home that they have exported overseas with great success.

After several years beating records by two digits, forecasts estimate that the Iberian earnings before interest, tax, depreciation and amortisation (EBITDA) buyout multiples might be revised during 2021.

2020 deals

Deals from last year (2020) include the following:

  1. the acquisition by Asterion Industrial Partners and F2i SGR SpA, of Sorgenia SpA, an Italy-based company that is engaged in the production and distribution of electricity, from Nuova Sorgenia Holding, for €1 billion;
  2. the sale by Horizon Equity Partners, Morgan Stanley Infrastructure Inc, and Altice Europe NV of OMTEL, Estruturas de Comunicacoes, SA, a Portugal-based owner and operator of telecommunications towers, to Spain-based Cellnex Telecom, for €880 million;
  3. the sale by Eurazeo Capital of Iberchem to UK-based speciality chemical company Croda, for €820 million;
  4. the acquisition by Hermes Infrastructure of a 74 per cent stake in six shadow toll concessions of Iridium Concesiones de Infraestructuras, SA, a Spain-based company that develops and operates various government concessions involving transport and public works infrastructure, for €703 million;
  5. the acquisition by Electricite de France SA, Swiss Life Asset Management AG and Asterion Industrial Partners SGEIC, SA, of Energy Assets Group Limited (EAG) from Alinda Capital Partners LLC and Hermes Investment Management, for €595 million; and
  6. the acquisition of Freepik, a Spain-based 'freemium' graphics and stock photo marketplace, by EQT Partners, for between €250 million and €300 million.

2021 deals

Deals from this year (2021) include the following:

  1. the acquisition by Telefónica of the mobile assets of Oi, SA (Brazilian telecom operator) jointly with Telecom Italia (TI) and America Movil (Claro) in the context of the judicial reorganisation of Oi in Brazil, for €2.7 billion;
  2. the acquisition by GIC and its SPV vehicle, Lisson Grove, of 9.23 per cent of the share capital of Cellnex from Goldman Sachs, for €2 billion;
  3. the acquisition by Nortland Power of a portfolio of 540MW operating onshore renewables assets from Helia Renovables, for €1.07 billion; and
  4. the acquisition by Plenium Partners of 100 per cent of FMGP Green Power Investments, SL, holding company of regulated and operative Spanish wind and solar photovoltaic assets with an aggregated installed capacity of circa 700MW, for €1 billion.

Financing of M&A: main sources and developments

The covid-19 pandemic has undoubtedly impacted the Spanish acquisition finance market over the past 20 months. The uncertainty provoked by the lockdowns, furloughs and other measures adopted to tackle the health crisis did not prevent the deals that were ongoing at the time from closing, but the new activity diminished significantly. An exception to this was the renewables energy and logistic sectors, which were unaffected, or even benefited from the new consumer trends. Bridge loans were more infrequent than in past years, and market flex provisions became more ample to allow for a successful syndication in such times. The non-performing asset activity also reduced, although it picked up towards the end of the year.

The last months of 2020, as well as the first half of 2021, came with significant opportunities in the private equity market, which led to an increase in acquisition finance activity.

Employment law

The main legal framework of labour law in Spain is the Statute of Workers, which regulates the rights and obligations of employees and employers within the framework of labour relationships.

Since the declaration of the state of emergency on 14 March 2020, various Royal Decree Laws and other Regulations have been passed, including extraordinary measures to combat the impact of covid-19 on employment relationships, such as: (1) a ban on dismissals grounded on covid-19-related issues; and (2) specific social security benefits granted to employers. Some of those social security benefits (e.g., those linked to furloughs (ERTE) as a result of force majeure) entail undertakings that could limit employers' capacity to: (1) implement dismissals within a six-month period after their activities resume; or (2) distribute dividends corresponding to a tax year in which furloughs were implemented.

Apart from these extraordinary regulations, the most recent ordinary legislation of relevance in terms of labour law was Law 10/2021 on telecommuting, which was enacted on 9 July 2021 and Royal Decree-Law 8/2019 on urgent measures on social protection and against labour precariousness with regard to working hours, which was enacted on 8 March 2019. Royal Decree-Law 8/2019 introduced a set of measures aimed at improving the precariousness of the Spanish labour market and Spanish social security payments.

Transfers of undertakings are governed by Article 44 of the Statute of Workers on terms similar to other jurisdictions within the European Union:

  1. the transferee company must assume all the transferor's employees assigned to the transferred business or production unit, maintaining all their previous labour and social security rights (including pension commitments); and
  2. transferor and transferee companies will be jointly and severally liable for three years after a transfer of undertakings takes place in relation to any labour and social security obligations not met before the transfer.

The purpose of the transfer-of-undertakings regulations is to guarantee the stability of employment relationships in the framework of the transfer of a business, and, therefore, a company transaction itself is not a valid ground for dismissal. However, it is possible and common that, after a transfer, there are grounds to carry out a collective redundancy (e.g., duplicate posts after a merger).

The legal regime for managing and executive directors is not provided for in the Statute of Workers, as these directors are not considered employees. Their service contract must be approved by the board of directors (without the involvement or vote of the relevant director). Such contract must include all the terms and conditions under which services are provided, especially all remuneration and compensation, and directors will not be allowed to receive any payment not expressly set out in their contracts. In 2018, the Spanish Supreme Court confirmed that the remuneration of managing and executive directors is subject to the same requirements and formalities as those applicable to any other director (their remuneration being included in the overall limit approved by the shareholders' meeting for all directors).

Tax law

In the past 12 months Spain has implemented new tax legislation that has a potential impact on M&A transactions. Regarding such tax measures, special consideration must be paid to the amendment of the participation exemption regime on corporate income tax (CIT), the amendments to the REIT and SICAV regimes (see Section VIII.iv) and the expansion of the scope of taxable forms of income from entities under the controlled foreign companies (CFC) rules.

Also of note is the deposit by Spain of the instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), the negotiation and renegotiation of Spanish tax treaties for the avoidance of double taxation with India, Azerbaijan, Cape Verde, Romania, Ukraine, Japan, Belarus and China, the entry into force of the DAC6 and the flood of fiscal amendments stemming from the new Spanish Law6 on measures preventing and fighting tax fraud. Moreover, in the coming months the Spanish government is expected to attempt to pass the State Budget Bill and a new Housing Bill, which could include important tax measures. However, predicting exactly the measures that will ultimately be passed is impossible.

Among future potential tax measures, special consideration must be paid to the introduction of a minimum tax for CIT purposes and to the approval of new amendments to the REIT regime.

i Limitation of the participation exemption regime on CIT

The Law 11/2020, 30 December, on the General State Budget for the year 2021 introduced an amendment to the Spanish participation exemption regime provided in Article 21 of the CIT Law constraining the exemption for dividends and capital gains.

The amount of the exemption to avoid double taxation has been limited (i.e., reduced from 100 per cent to 95 per cent). Thus, the remaining non-exempt 5 per cent will be included in the tax base for the period. However, an exceptional regime is foreseen for those entities whose net amount of turnover is less than €40 million.

Furthermore, the possibility of applying this exemption has been eliminated in those cases in which the minimum percentage of participation of 5 per cent was not reached but the acquisition price of the participation was higher than €20 million. Again, in this case, a transitional regime is foreseen for those shares acquired before 1 January 2021.

ii Extension of the scope of CFC rules

With effect for tax periods that start as of 1 January 2021, some changes have been introduced to adapt the regulations on international tax transparency to the provisions of the Council Directive (EU) 2016/1164.7

Thus, the potentially taxable forms of income under this regime will now include those derived from insurance, credit, financial leasing and other financial activities provided that they do not constitute economic activities, as well as the income obtained in operations carried out between related parties in which the non-resident entity contributes with barely added value to the transaction.

Nevertheless, the most significant amendment goes beyond what is required by this Directive. The new regulations have eliminated the clause that prevented the application of the CFC regime to foreign holding companies to the extent that such companies maintained a participation of more than 5 per cent in active companies. Thus, in these cases, CFC rules could apply to these companies with the consequent allocation of dividends and capital gains derived from transfers of shares.

This change, together with the above-mentioned limitation of the exemption for dividends and capital gains, requires the carrying out of a review of international investment structures through foreign holding companies and a case-by-case assessment of whether it is possible to apply the safe-haven clause provided for companies resident in another EU or European Economic Area Member State that carry out economic activities or for collective investment institutions regulated by the Directive 2009/65/EC of the European Parliament and of the Council, of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS).

iii Mandatory disclosure rules in relation to reportable cross-border tax-planning arrangements under DAC6

As explained in previous editions of this publication, the Council Directive 2018/822, of 8 May, amending Directive 2011/16/EU, as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC6) was passed in May 2018.

Following the recommendations of the Base Erosion Profit Shifting (BEPS) Action 12, the Directive introduces mandatory disclosure rules in connection with potentially aggressive tax planning schemes, referred as reportable cross-border arrangements. The Directive also provides for the additional exchange of such information between the tax authorities of the Member States. The purpose of the Directive is to enable tax authorities to react swiftly to regulatory tax practices: to fill existing gaps in the system by issuing appropriate rules and to carry out risk analyses and tax audits. The Directive also aims to stamp out aggressive tax practices.

For the effective implementation of DAC6 in EU Member States, DAC6 should be transposed by each Member State. A transposition deadline was set for the Member States but because of the covid-19 health crisis, this deadline was extended.

Finally, the transposition that was initiated in Spain on 31 December 2020, with the entry into force of the Law 10/2021, has continued with the approval of the Royal Decree 243/2021 (which regulates the statutory filing deadlines and introduces some clarifications to the concepts used by the Directive) and has been completed with the publication of the Order HAC/342/2021 (which approves the forms to be filed for declaring information requested by DAC-6) and the Resolution of 8 April 2021, issued by the Tax Management Department of the central Spanish Tax Authorities, which approves the communication models between the intervening parties and participants in cross-border mechanisms.

Consequently, DAC-6 is now fully operative in Spain. Thus, M&A transactions must be carefully analysed to check whether any of the hallmarks established in the DAC-6 regulations are complied with and hence the transaction should be reported to the tax authorities.

iv Amendments to the REIT and SICAV regimes

As with many other countries, Spain regulates special tax regimes for real estate investment trusts (REITs, or, in Spanish, SOCIMI) and investment companies with variable share capital (in Spanish, SICAV). Both regimes have been recently amended.

On the one hand, the REIT regime has been amended to establish a special tax rate of 15 per cent on the part of the undistributed benefits that comes from income that neither has been taxed at the general CIT rate nor is under the legal period of reinvestment. Moreover, the formal and documentary requirements related to the accreditation of the REIT condition have been increased.

On the other hand, the SICAV regime has been profoundly amended. In this regard, the requirements demanded for the conferment of this status have been hardened. From now on, at least 100 shareholders with a minimum value of €2,500 per investor is required, or €12,500 for the minimum number of investors (20) in its compartment modality. However, a transitional regime is established for the SICAVs which, affected by this amendment, agree to their dissolution with liquidation in 2022 and, within six months after said term, have completed all the acts and legal businesses necessary for the cancellation of the companies' registration.

Competition law

Under Law 15/2007 of 3 July on competition transactions leading to a concentration that fulfil any of the following alternative thresholds are subject to mandatory notification to Spain's National Markets and Competition Commission (NMCC):

  1. as a consequence of a transaction, the undertakings obtain a market share of at least 30 per cent in a national market or a substantial part of it regarding a certain product or service. However, even if the market share threshold is met, a transaction does not need to be notified provided that (1) the target's turnover in Spain was less than €10 million in the previous financial year; and (2) the parties do not have a market share of 50 per cent or more in the affected market; or
  2. the combined turnover of the undertakings in Spain in the previous financial year was at more than €240 million, provided that at least two of the undertakings concerned had a minimum turnover of more than €60 million in Spain during the same period.

Law 15/2007 includes a suspension obligation, requiring that the completion of a transaction meeting any of the thresholds be suspended until clearance is granted.

On April 2021, Spain amended Law 15/2007, to transpose Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (ECN+ Directive). The amendment clarifies that the maximum fines for gun jumping are now calculated based on the total worldwide turnover of the infringing entity (with a maximum of 5 per cent). Spain did not make substantial changes beyond what was required by the ECN+ Directive, mainly because of its transposition deadline, but the authorities have expressed an interest to implement new changes in Competition Law in the near future. At the time of submitting this chapter, the Spanish Congress is debating some additional changes, that include a change in the turnover notification threshold.

In 2020, the number of notifications filed was lower (70) than in the previous six years (which range from 82 to 102 transactions), probably as a result of the covid-19 situation. Most of the notifications were cleared in the first phase without commitments, and three of them were approved in the first phase with commitments. Only one transaction required an in-depth review, which was eventually authorised in the second phase with remedies. Additionally, two decisions moved notifications to the second phase.

In terms of antitrust enforcement policy, the NMCC issued its Action Plan 2021–2026 which stated that the authority will pay particular attention to digital markets and to sectors affected by the covid-19 crisis, such as pharma, insurance, funeral services and financial sectors. The NMCC continued to closely monitor companies' compliance with merger control rules and with its decisions in cases in which commitments were imposed. Within these proceedings, information requests are usually submitted to third parties enquiring about companies' compliance with the conditions imposed.


Despite the political uncertainties, deep economic crisis and the uncertainty surrounding covid-19, M&A prospects in Spain for the second half of 2021 and 2022 are optimistic.

The macroeconomic scenario, roiled by the notable size of the tourism sector and almost half of the labour market working for small and medium-sized enterprises, will hardly enable a quick recovery. Nevertheless, the massive liquidity in the hands of investors, low interest rates and increased access to credit and other financing for Spanish corporations and private equity strengthen the belief that the volume and number of M&A transactions will continue recovering in the short and medium term. On the other hand, we will witness distress-driven M&A, defensive M&A deals, in which the merger processes will enable a reduction in costs to maintain profitability (retail, financial services, etc.) and debt transactions.

Likewise, the growing appetite of foreign investors for the Spanish economy will continue to affect the high number of transactions involving foreign investors in Spain. European and US investors will continue to be the main players.

The new complexity of private M&A deals in Spain has led to multiple structures and formulas to determine the price of the transaction, such as rollovers, earn-outs and escrow mechanisms. W&I insurance has also become more prevalent, and not only in private equity sponsored transactions.

Finally, foreign private equity funds will continue investing in a wider range of industries including food and drink, retail, tourism, leisure, energy, infrastructure, real estate, and life sciences and pharma. Healthcare and pharmaceutical industries have potential, as public and private spending continues to increase in response not only to the pandemic, but also to an ageing population. Renewables and technology have attracted investor interest in recent years. These investments are now appearing in a wider range of forms and vehicles.


1 Christian Hoedl is a partner and Miguel Bolívar Tejedo is a senior associate in Uría Menéndez.

2 Translations (into English and French) of these laws are available on the Spanish Ministry of Justice website:

3 The securities market is supervised by the National Stock Exchange Commission.

4 The credit market is supervised by the Bank of Spain and credit institutions by the ECB or the Bank of Spain.

5 The insurance market is supervised by the General Insurances and Pension Funds Directorate.

6 Law 11/2021, of 9 July, on measures to prevent and fight tax fraud, transposing Directive (EU) 2016/1164, of the Council, of 12 July 2016, which establishes rules against tax avoidance practices that directly affect the functioning of the internal market, the modification of various tax regulations and the regulation of gambling.

7 This Directive is also known as the Anti-Tax Avoidance Directive (ATAD), and contains five legally binding anti-abuse measures, which all Member States should apply, against common forms of aggressive tax planning.

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