Chambers Practice Area Overview 2020 – Competition/European Law (Portugal)
In 2019, the Portuguese economy continued to grow at a healthy pace, fuelled by solid domestic demand, continually increasing tourism revenues, and strong export performance.
In contrast with 2017 and 2018, when the number of merger filings witnessed a slight decrease, in 2019, the merger decisions adopted have increased to 60 (58 final decisions in Phase I and two final decisions in Phase II). The Portuguese Competition Authority (PCA) opened 6 ex-officio investigations into potential gun-jumping and non-notified mergers, issuing one Statement of Objections in this regard. In addition, 24 pre-notification procedures were started by the Authority this year.
The most significant development with respect to merger control in 2019 was the PCA’s decision not to oppose the merger consisting of the acquisition of sole control over Grupo Media Capital SGPS, S.A. by Cofina SGPS S.A. In the Authority’s view, the merger was unlikely to harm competition in any of the relevant markets, such as the supply of basic pay-TV channels, the press, and digital contents and advertising markets.
In her third year as President of the PCA, Margarida Matos Rosa has maintained the agency’s strong enforcement activity against illegal practices. The effective and swift detection and sanctioning of cartels continues to be one of the agency’s top priorities under her presidency.
In the context of these enforcement efforts, in 2019, the PCA carried out dawn raids at eight locations of nine entities in the healthcare sector in Lisbon, Porto and Algarve, two premises of seven undertakings in the waste management sector in Lisbon, and five premises of five undertakings in the private surveillance sector, also in Lisbon. Although somewhat higher than in 2018, the number of dawn raids carried out in 2019 was still significantly lower than in 2017 when 36 companies were raided.
In the course of 2019, the PCA issued Statements of Objections in several antitrust proceedings. Statements were made against six large food retail groups in Portugal (Modelo Continente, Pingo Doce, Auchan, Intermarché, Lidl and E.Leclerc) and three beverage suppliers (Central de Cervejas, Super Bock and PrimeDrinks) for alleged price fixing, against two associations of undertakings in the advertising sector (APAN and APAP) for allegedly restraining tendering of advertisement services, and against two telecom operators (MEO and NOWO) for allegedly taking part in a market sharing and price fixing cartel.
In 2019, the PCA applied record fines totalling EUR 340.5 million in seven sanctioning decisions, concerning an exchange of sensitive commercial information between banks, anti-competitive agreements in railway maintenance and insurance, abuse of dominance in the energy sector and retail price maintenance in food retail distribution.
Several of the decisions in the railway maintenance and in the insurance case were issued under the settlement procedure in which the firms admitted their participation in the practices concerned.
The only case in which commitments were offered in 2019 concerned the PCA investigation that revealed the existence of a series of legal concerns relating to statements made by the president of the Northern Association of Manufacturers of Bread, Pastries and Similar Products (AIPAN), to the extent that they could interfere with the free functioning of competition and with the price-setting freedom of bread-making members of the association, to the detriment of consumers. AIPAN undertook to make it clear to its members that each is entirely free to set its own prices, thus minimising the potential restrictive effects resulting from statements made by the Association’s president regarding the price of bread.
With respect to studies and market monitoring, in the course of 2019, the PCA analysed the telecom sector and identified vulnerabilities in terms of competition, such as higher prices than the EU average, low consumer mobility, and a high level of consumer complaints. The analysis focused on loyalty policies and switching costs which, together with other aspects, contribute to Portuguese consumers perceiving this sector as the least competitive. Given this, the PCA decided to issue a set of eight recommendations to the legislature and the sector regulator aimed at mitigating the competition concerns.
Furthermore, the PCA published an Issues Paper on digital ecosystems, big data and algorithms where it warns that firms are responsible for the algorithms they use and that employing these tools with the aim of coordinating prices, or otherwise weakening competition in the market, is incompatible with the Portuguese Competition Act.
In view of its mission to contribute to the consolidation of a competition culture in Portugal, the PCA carried out a number of events to promote good practices to detect collusion and to encourage efficiency in public procurement. These initiatives are part of the campaign on fighting bid-rigging in public procurement that was launched in 2016 and on which the agency has followed up in the current year. There has been an increase in complaints about public procurement, including one that has led to a sanctioning decision.
On the legislative front, the draft legislation to implement the ECN+ Directive into Portuguese law has been widely debated in the course of this year. This legislation empowers competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market. The draft legislation provides for the PCA to be able access any technological device, including smartphones, tablets or cloud servers, to seize evidence of competition infringements. The ECN+ Directive was published in the Official Journal of the European Union on 14 January 2019 and must be implemented into national law by 4 February 2021.
Finally, with respect to private enforcement, in July 2019, the truck case litigation arrived in Portugal, with over 60 legal actions having been filed against the various manufacturers so far. Later, in September 2019, a Portuguese court gave consumers 30 days to opt out of the first ever competition class action for damages against Sport TV, a premium TV cable network that operates in Portugal. Sport TV had been sanctioned in 2013 by the PCA with a fine of EUR 3.7 million for abuse of dominance through imposing discriminatory conditions upon the cable TV operators.
By Ricardo Oliveira and Joana Schmid Moura