The correct answer is C. They competed for special administration positions in the Americas, which caused friction between the groups and made them see themselves as having separate identities.
In the times of the Spanish America, the concept of Peninsulares was used to refer to Spaniards born in Spain, as opposed to Creoles who were born in the Spanish American territories to Spanish parents. The Spanish American society was stratified and there were clear political differences between Peninsulares and Creoles, which created friction between them. The process of independence in the Spanish America was an expression of this opposition.