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- Rating Enforcement
Portugal: Competition Authority
President of the Competition Authority
At the beginning of its second decade, the Portuguese Competition Authority (PCA) has initiated a new phase. A new Board took office in September 2013 and has set the goal of further building an independent, impartial and accountable agency that acts in a dynamic, firm yet flexible way, with enhanced transparency and efficiency.
This new phase of the PCA will also be characterised by full implementation of the recent reform of the Portuguese competition legal and institutional framework. The reform process started in 2012 with the approval of a new Competition Act and the creation of a new specialised Competition, Regulation and Supervision Court. In May 2014, new by-laws of the PCA were approved that are expected to enhance the guarantees of independence and financial autonomy of the PCA. The PCA actively participated in this reform process and is now eager to fully put into practice the legislative and institutional reforms, together with the Courts and the business and legal communities.
The PCA is committed to contribute, through the promotion of effective competition in the market, to a sustained economic recovery process in the context of the current economic and financial crisis. It is the PCA’s firm conviction that competition is crucial to increase productivity and competitiveness and promote innovation, and will proactively play its role.
First, the PCA is prioritising the establishment of an effective and transparent antitrust enforcement, placing particular emphasis on the fight against cartels. A visible step towards this goal is the creation of the new Anti-Cartel Unit by the Board immediately after taking office. This unit is currently handling the high-profile cartel case in the banking sector. Over the course of the investigation, the PCA has carried out dawn-raids in a large number of locations with the use of IT forensic tools, made possible due to a clearer competition legal framework set out after the review in 2012. The complexity of this case has no parallel in previous cases of the PCA. Other cartel investigations are being conducted, including bid-rigging.
The Anti-Cartel Unit is also consolidating expertise in dealing with leniency applications, thus expediting procedures, enhancing legal certainty for potential applicants and promoting the attractiveness of the program, as well as focusing on ex officio investigations.
The current set of ongoing cases shows that the PCA is active in many different sectors and looking into diverse types of potential competition infringements, targeting other anti-competitive practices besides cartels. In May 2014, the PCA issued a statement of objections regarding possible vertical restraints in the distribution of bottled liquefied petroleum gas, one of several investigations being conducted by the PCA.
The effectiveness of the antitrust enforcement of the PCA is also being enhanced by the use of new powers and procedural tools resulting from the amendment of the Competition Act in 2012. The ability to set priorities in the use of its enforcement powers allows for a better allocation of resources, focusing on the most serious restrictions to competition and those that may have a greater impact on consumer welfare and the economy. The Competition Act of 2012 has also reinforced the PCA’s investigative tools, namely its powers to conduct dawn raids and the possibility of concluding investigations with a settlement decision. The PCA issued its first settlement decision in a cartel case in 2013, and will continue to use this procedure whenever it deems appropriate.
The increased focus on ensuring due process and robust competition analysis seems to be producing the intended results. Since the creation of the new specialised Court on Competition, all PCA’s antitrust decisions have been upheld.
In June 2014, the Court confirmed an important PCA decision on a case of abuse of dominant position in the premium sports pay-TV market, albeit with a reduction in the imposed fine (from €3.7 million to €2.7 million). The PCA concluded that the dominant undertaking had engaged in price discrimination regarding the downstream markets for over six years, particularly in the pay-TV market. The case was heavily supported with economic evidence and the Court took a novel approach during the hearings by using economic experts as advisers. This is the first ever judicial confirmation of a PCA decision concerning an abuse of dominance position, thus representing a major step in competition enforcement in Portugal.
The priority of strengthening enforcement will be coupled with enhancing transparency, namely by improving the information available on the PCA’s website and ensuring the regular publication of its antitrust decisions and corresponding court rulings following judicial appeals.
Another important dimension of the PCA’s competition law enforcement is merger review. The PCA continues to review and take effective actions in addressing competition concerns when needed. In order to promote legal certainty and transparency, the PCA is finalising its guidelines on the assessment of horizontal mergers, with particular emphasis on economic analysis, and promoting the use of the pre-notification procedure, which also contributes to improved efficiency and celerity in merger control.
In the current economic and financial context, advocacy plays an enhanced role. As part of an internal restructuring to better reflect the PCA’s new priorities, the Board created a Special Unit for Competition Assessment of Public Policies. Building on international best practices, the PCA will work closely with government, sector regulators and other public bodies to promote a more pro-competitive regulatory environment, improving conditions for investment and innovation.
Moreover, the PCA has developed studies and issued recommendations aiming at eliminating distortions of competition. The PCA issued a recommendation to government in 2013 to revise stranded costs compensations in the electricity sector, which were providing the wrong incentives for power plants benefiting from these compensations in terms of participation in secondary reserve auctions. Besides the energy sector, the PCA will continue to closely monitor the telecommunications and the ports sectors.
Also on the advocacy front, the PCA is developing a roadshow to raise awareness among the business community of the benefits of competition and the risk of not complying with competition rules. Under the motto ‘fair play’ the roadshow will reach several regions of the country.
As with several other agencies, the PCA is facing the challenges of boosting internal efficiency under resource constraints. In this regard, the PCA has taken steps to streamline case management and consolidate internal knowledge by increasingly relying on IT tools. Internal efficiency is being promoted through the setup of additional checks and balances, as well as rotation of staff, to enhance communication, experience sharing and the dissemination of best practices. A programme of internal seminars has also been launched to raise staff’s overall awareness on the activities being developed in different areas of the PCA.
The PCA is determined to vigorously fulfil its role as an enforcer and advocate for competition in order to promote market efficiency and consumer welfare. The challenges ahead have been identified and the appropriate tools to tackle them are being implemented to deliver long-lasting results in the promotion of an effective competition policy in Portugal.
President of the Competition Authority
Next Chapter: Portugal: Overview