PORTUGAL: An Introduction to Competition/European Law

Economic Overview and Legislative Developments 

The Portuguese economy is set to register solid growth of 6.8% in 2022, while inflation is projected to reach 8.1%.

The Portuguese Competition Authority (PCA) continues to pursue its highly active competition enforcement policy, with several highlights marking the last full year under the administration of Margarida Matos Rosa. A new president of the PCA has just been appointed, bringing anticipation of future enforcement trends and heightened levels of activity.

The last 12 months brought several legislative and institutional developments likely to have a significant impact in the years to come. The most noteworthy was the much-awaited transposition of the ECN+ Directive, through Law No 17/2022, of 17 August, introducing the third amendment to the Portuguese Competition Act and the first to the PCA’s bylaws.

With its enforcement powers strengthened, one could expect the PCA to have an increased capacity to detect, investigate and sanction anticompetitive conduct, including through leniency applications (a record number of which were registered in 2022) and/or complaints.

PCA Action 

The PCA has been carrying out a number of investigations in numerous sectors, having conducted in 2022, six unannounced inspections of 23 entities operating in the health and pharmaceutical sector, project management software sector and wood chips sector – sectors that should anticipate renewed attention in 2023.

Five Statements of Objection (SOs) were issued in 2022 covering, inter alia, alleged hub and spoke practices in the food and retail sector and bid rigging in the energy and in the health sectors. One of these SOs was against payment service provider SIBS, for alleged tying behaviour making this an abuse of dominant position case to watch.

Twelve sanctioning decisions were adopted, totalling more than EUR490 million in fines in several sectors such as security and surveillance, health, sports (involving the Portuguese Professional Football League and 31 football teams for implementing an allegedly anti-competitive no-poach agreement) and the food and retail sector. The latter includes hub and spoke practices that have been in the spotlight for the last couple of years and will continue to be as the cases move forward to judicial review.

Another high-profile investigation of the PCA into Google’s alleged abuse of dominant position for publisher ad servers and the market for supply-side platforms was initiated in May 2022 but was quickly taken over by the European Commission in July. This case reveals the special attention that the PCA and its digital team have been dedicating in recent years to the tech sector, which remains one of the PCA’s top priorities.

Merger Control 

The PCA received 65 merger control filings in 2022 and adopted 62 decisions, carrying over to 2023 a total of 11 cases. Overall, 2022 was a year of unproblematic mergers in Portugal.

The simple nature of these transactions does not, however, release companies of their duty to notify them under the merger control rules. Indeed, gun-jumping cases continue to be on the PCA’s radar. The PCA adopted six sanctioning decisions in the last six years, having applied the highest fine ever in 2022 (EUR2.5 million), and it published a Best Practices Guide on Gun Jumping following a public consultation, signalling intense scrutiny.

Judicial Action 

The specialised Competition Court is also very busy. Trials in several high-profile cases were either initiated or continued in 2022, including allegations of (i) information exchange involving 11 banks in Portugal, which are contesting a total fine of EUR225 million that was stayed due to a preliminary ruling request to the Court of Justice of the European Union on the concept of restriction by object; (ii) a cartel involving four insurance companies, their respective board members and directors, in a sui generis hybrid leniency/settlement case (two insurance companies are fighting their combined EUR42 million fine); and (iii) a cartel for market sharing and price fixing of mobile services involving telecom companies, where the Court confirmed in full the EUR84 million fine applied to MEO by the PCA. The Court also confirmed a fine of EUR48 million for abuse of dominant position imposed on EDP Produção. Both cases have been appealed to the Lisbon Court of Appeals.

The Lisbon Court of Appeal stayed the proceedings in the appeal lodged against the EUR24 million fine applied to beverage supplier Super Bock for fixing minimum resale prices and other resale conditions in the hospitality industry, due to a preliminary ruling request to the CJEU also on the concept of “by object” restriction of competition. This higher Court also confirmed the reduction of the fine initially applied by the PCA to Fergrupo and Somafel for alleged bid-rigging in the railway maintenance sector and annulment of the first ever applied ancillary ban on the right of companies to participate in certain public procurement tenders.

Private enforcement of competition law is steadily rising in Portugal. Of particular note is the first ruling of the Competition Court in the context of follow-on damage actions related to the Commission’s decision in the Trucks case (AT.39824) ordering DAF Trucks to pay almost EUR13,000 to a claimant in compensation for damages and more rulings are expected to come. For this reason, this ruling may provide insights on the approach of the Portuguese Competition Court to other cases.

State Aid 

As the COVID-19 pandemic slowed down, 2022 was marked by efforts to stabilise the economy under the Recovery and Resilience Facility (RRF), as well as by the war in Ukraine which led the European Commission to adopt a Temporary Crisis Framework (TCF) in March. This translated into a shift in the nature of most state aid cases related to Portugal with an impact on the activity of many companies.

Under the RRF, the EC approved a EUR250 million share capital increase of Banco Português de Fomento with a view to facilitating access to finance, particularly for SMEs affected by the crisis, and boosting competitiveness and job creation on a long-term basis.

Portugal also notified the creation of the Capitalisation and Resilience Fund under the COVID-19 Temporary Framework. Approved by the EC, this Fund aims to reduce the capitalisation deficit of companies established in Portugal and address the contraction of equity in relevant non-financial companies during the pandemic.

To mitigate the economic effects of the Russia-Ukraine war, the EC has also approved four state aid schemes notified by Portugal under the TCF in the energy and transport sectors.

The approval of Portugal’s Regional Aid Map for the 2022–2027 period should also be highlighted, being essential to the economic development of regions with abnormally low standards of living or serious levels of underemployment, which may present opportunities to business.