Saturday, April 06, 2013

Stuffed Envelopes: Price-fixing in Spain

The opportunities for foreign residents to vote in elections in Mallorca may be restricted to municipal elections, but anyone who has bothered to vote, and even those who haven't, will know about the envelopes.

Letterboxes in Mallorca are generally not stuffed full of junk mail. Like junk phone calls, there is very little junk mail, the consequence of a strict application of data protection that is at considerable variance with how things apply in the UK. But in the lead-up to elections, letterboxes get filled with political party literature.

The chances are that many a foreign resident will simply file this literature without even opening it, but if the envelope is opened, he or she will discover other envelopes. It's all a bit like Russian dolls. There will also be voting forms and huge long lists of candidates from various parties who are arranged according to how the parties have prioritised them. The system of proportional representation means that the number one priority, if it is a municipal election, will be that party's mayoral candidate. The others, in descending order, are those who have first dibs on becoming councillors, assuming the PR goes in the party's favour.

All well and good and all well and baffling. It isn't necessary for one to fill out the voting form for one party or another in advance of heading off to the polling station - there are piles of forms there for those who, like myself, forget to do the filling-in or who have, as with mostly everyone else, chucked the envelopes in the paper recycling bin - but there will still be the requirement to put the form into the relevant envelope, depending on which election one is voting in (normally three at local election times: municipal, Council of Mallorca and regional government).

This rigmarole is the same in every municipality across Mallorca and Spain. There is a huge amount of paper and there are huge numbers of envelopes flying around. And someone has been making an enormous amount of profit from it all; this someone having been a cartel of stationery printing companies which have had a fine of 44 million euros slapped on them by the Spanish competition commission.

From 1977, i.e. from the time that democracy kicked in after Franco, until 2010, this cartel fixed the market for election stationery by fixing the price for printing and by keeping to itself the technology that is used to perform a complicated printing task. The cartel didn't only provide stationery for elections, it had also provided it for referenda and to large organisations, both public and private, that included the police, the tax agency and most government ministries.

Legislation against price-fixing has been on the Spanish statute book for years, but in 2007 a new act gave the competition commission more teeth. Last year, it issued a fine, ten thousand euros below the maximum of 60,000, on an individual company director for the first time. Joan Gaspart, the chief executive of the HUSA hotel chain and the chairman of the tourism division of the Spanish equivalent of the CBI, was fined 50,000 euros for having made a price recommendation in a speech at the tourism fair in Madrid in 2011. He had said that a rise of up to 7% in hotel prices seemed reasonable. The commission thought it unreasonable as it takes a dim view of price recommendations being made, as they can be construed as infringing competition law.

Other examples of tackling cartels have included an investigation into price-fixing by car-hire firms on the Costa del Sol, another into price-fixing for building insurance (a case that is to go back to the Spanish Supreme Court), a further one into fixing the price of petrol (BP and Repsol were fined 6.1 million euros). There are plenty of other cases.

Returning to the matter of envelopes, there was clearly a very good printing earner to be made from democracy, and a group of companies made sure they made it. It was a variant, I suppose, on the envelope stuffed with notes, but then Mallorca's electoral past has had something of the envelope-stuffing as well. In 2007, the gypsy vote was allegedly bought by the old Unió Mallorquina. In return for a payment of 25,000 euros, voting slips, already marked with a UM cross, were provided along with the relevant envelope and were to be placed in the ballot box. Maybe the UM could have saved themselves some manual cross-marking time and got the printers to have run them some slips off already marked.

Any comments to please.

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