Portugal: Competition Authority

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The past year was an exciting one at the Portuguese Competition Authority (AdC), both in terms of its enforcement results and in the scope of its role as an advocate for competition in the Portuguese economy. Building on these results, 2019 will surely see a year of a dynamic, proactive and robust defence of competition in favour of citizens.

Reinforced investigative strategy in competition enforcement

In 2018, the AdC maintained its priority on strong enforcement and detection of anticompetitive practices. The AdC adopted two sanctioning decisions, one for a cartel in railway maintenance and another for a cartel in the insurance sector, with fines totaling €12.37 million. One of these sanctioning decisions followed from a complaint received by the AdC in the scope of our Fighting Bid-Rigging in Public Procurement Campaign, which empowers and encourages public procurement officials to identify and report potential collusive conduct. Both were settlement decisions, under which undertakings and managers involved admitted guilt and foregoed judicial appeal, benefitting the AdC’s efficiency and effectiveness. The AdC also accepted commitments in an abuse of dominant position investigation in the postal sector.

Statements of objections were issued in cases dealing with energy, retail distribution, insurance and railway maintenance. The cases were also diverse in types of infringement, including cartels and horizontal practices, retail price maintenance and abuse of dominance.

Also, dawn raids were carried out in four new investigations and four statements of objection were issued covering cartels, vertical restraints and abuse of dominance. Sectors include telecommunications, advertising and food retail. This range of sectors demonstrates our determination in seeking out anticompetitive practices. We also saw important developments in our strategy to become more proactive in detection methods, namely through recourse to data and intelligence.

These results are a clear demonstration of a sustained reinforcement of the AdC’s investi­gative capacity through enhanced detection, organisational efficiency and greater specialisation in digital tools.

In 2018, the AdC also gained full access to the national e-procurement database and signed a memorandum of understanding (MoU) with the medicines regulator to further promote proactive detection of anticompetitive practices. The MoU establishes a regular exchange of information on the supervision and monitoring of the sale and consumption of medical products for human use, medical devices and cosmetics. By allowing access to reliable information, the MoU will facilitate the detection of anticompetitive practices in the pharmaceutical sector. Elsewhere, the AdC continued to develop the implementation of the MoU with the Institute of Public Markets, Real Estate and Construction to access to the public procurement database.

In terms of merger review, the AdC analysed two in-depth mergers resulting in commitments and the withdrawal of a merger. I would highlight the Phase II investigation into a vertical media merger, with similarities to the AT&T/Time Warner case, but with a rather different outcome. The merger involved a vertical integration between one of the main players in the telecom sector, retail distribution of pay-TV services and multiple-play services (ie, bundled services for voice provided by fixed and mobile networks, TV and internet) on the one hand and the market leader for the wholesale distribution of audio-visual content and Portuguese-speaking TV channels, including the top-viewing channel (measured in terms of share-view), TVI, on the other. During the in-depth investigation phase, the notifying party MEO (Altice Group) withdrew the notification related to the proposed acquisition of sole control of the Media Capital Group, following the imminent adoption of a draft prohibition decision.

Consolidating practice and procedures through success in judicial review

Due to the reinforcement of enforcement activity in 2017, including carrying out dawn raids in 16 cases, 2018 saw an increase in litigation over the AdC’s interim decisions. Appeals namely regarded the legality of search and seizure orders, evidence, digital evidence gathering, access to file, confidentiality, withdrawal of documents, effects of an appeal and right of defence.

The Competition, Regulation and Supervision Court (TCRS) and the Lisbon Court of Appeals handed down 55 judgments on AdC interim decisions (mainly regarding dawn raids, access to file and decisions to take no further action), of which only seven were fully or partially overturned – a very high success rate. This figure reflects the consolidation of checks and balances for legal robustness from an early stage of the process and throughout the investigation life cycle.

An appeal of the AdC’s decision to take no further action in an antitrust case led to a request for preliminary ruling from the TCRS to the EU Court of Justice. This request for a preliminary ruling concerned the interpretation of point (c) of the second paragraph of article 102 of the Treaty on the Functioning of the European Union. The request was made in the course of proceedings between MEO and the AdC concerning the latter’s decision to take no further action on MEO’s complaint against GDA, concerning an alleged abuse of a dominant position; in particular, discrimination in the amount of the royalty that GDA charged MEO in its capacity as an entity that provides a paid television signal transmission service and television content. Based on the EU Court of Justice judgment, TCRS fully confirmed the AdC’s decision.

Promoting competition in the market

The AdC further maintained its work as an active advocate for competition. The AdC published recommendations in financial services, transport, liberal professions, ports and road fuels.

Regarding financial services, the AdC identified barriers to entry of new firms based on innovative technologies (fintech) and made recommendations to promote competition and innovation therein.

The AdC published recommendations as a result of its in-depth competition impact assessment project, carried out with the Organisation for Economic Co-operation and Development (OECD), on road and maritime transport and 13 liberal professions, with an estimated impact of €380 million for the Portuguese economy per year. Over 750 recommendations were published with concrete proposals for action that include, among others:

  • the abolition of access and price restrictions for the market of long-distance bus routes;
  • abolishing quotas and geographical restrictions for taxis;
  • broadening the private sector’s access to the activities of piloting, towing and cargo handling;
  • opening the market for the provision of port labour to temporary work agencies; and
  • bringing into force mandatory secondary legislation regarding certification of train drivers.

In the liberal professions, recommendations include the opening up of professions to individuals with university degrees in other fields, the elimination of restrictions on partnership, ownership and management of professional firms that should be available to individuals outside the profession as is the case of the legal professions and the abolition of restrictions on multidisciplinary societies, among others, which are equally significant.

The AdC also significantly issued Guidelines on Competition Impact Assessment (the Guidelines) for policymakers in order to assist them in preventing the impact on competition of public policy measures. The Guidelines focus, in particular, on the application of a competitive impact assessment procedure, in light of a prior evaluation of legislative or regulatory proposals that are being drawn up by the Portuguese parliament, the government or other bodies of the public administration. The Guidelines are also applicable to an assessment of existing legislation and regulations, ie, post-evaluation of legal provisions applied at a national, local or sectoral level.

In addition to these in-depth projects, the AdC published nearly 30 opinions in a wide range of sectors, including energy and telecommunications, seeking to promote a more competitive legal and regulatory framework in Portugal.

Engaging stakeholders in debating competition policy and practice

In 2018, the AdC hosted the fifth edition of the Lisbon Conference on Competition Law and Economics, with approximately 300 participants. During the two-day event, competition experts, including enforcers and academics, discussed the role of competition policy in today’s world, innovation in merger control, vertical media mergers, financial services: competition, innovation and stability in the banking sector and excessive prices.

The AdC also held eight seminars on competition policy and practice with experts from national and international academia, competition enforcers and the courts, at our Abel Mateus Competition Library, which boasts the largest collection of competition-related journals and periodicals in Portugal. The AdC also continued its podcast series ‘CompCast – Competition Talks’, a podcast with competition experts. The podcast series aims to further disseminate new ideas and trends in competition policy and practice within the competition community, both locally and abroad.

Also in 2018, the AdC presented the first edition of the AdC Competition Policy Award, which seeks to encourage research in competition law and economics, to a paper in competition economics on pay-for-delay agreements in the pharmaceutical sector. The 2019 edition will be awarded to a paper in competition law.

In the international scene, the AdC was nominated as liaison officer between the International Competition Network (ICN) and the Competition Committee of the OECD. As ICN–OECD liaison, our role is to encourage dialogue between the two organisations, promoting synergies and avoiding overlap between their work, to the benefit of global competition cooperation.

Also, the AdC hosted agencies with responsibilities in competition policy from Angola, Brazil and Cape Verde at a meeting of the Lusophone Competition Network, held on the margins of the 2018 Lisbon Conference. During the meeting, delegates and representatives from DG Comp, OECD and UNCTAD shared experience and discussed future trends in competition policy and practice, including next steps in technical cooperation among the Portuguese-speaking competition community.

Raising awareness of competition policy

In 2018, the AdC continued its active work in raising awareness of the benefits and rules of competition.

In the scope of its Fighting Bid-Rigging in Public Procurement Campaign, the AdC seeks to raise awareness among public procurement officials and other entities with responsibilities in public procurement of the potential indications of collusive behavior, encouraging interaction with the AdC. As part of this, the AdC has reached nearly 1,800 participants.

The AdC also continued to promote its Guide for Business Associations with the ‘do’s’ and ‘don’ts’ of competition policy. In 2018, we presented the guide to nearly 300 participants, in the financial services, services and accounting sectors.

Seeking to reinforce institutional cooperation and mutual understanding with sector regulators, with the aim of strengthening the detection and investigation of competition infringements and advocacy for competition issues, the AdC held seminars on competition issues at several sector regulators including the telecommunications, health, medicines and civil aviation regulators. The AdC also held a seminar at a consumer association.

In 2018, in the scope of its commitment to transparency, the AdC published its past opinions on a wide range of sectors on its website, seeking to promote a greater understanding of its work and of competition policy. We also continued the publication of all of the AdC’s competition decisions and judicial decisions.

In 2018, the AdC launched a podcast series ‘CompCast – 2 minutes of competition’ on the fundamentals of competition policy and competition rules for stakeholders.

Priorities for 2019

The activity of the AdC spans the entire Portuguese economy, without exception to any sector. In 2019, the AdC will have as its main priority the reinforcement of its activity in the detection and investigation of anticompetitive practices, namely cartels. We want to focus on the cases that will have the greatest impact on the consumer. Our current enforcement pipeline – with action in retail distribution, energy, insurance and banking, railway maintenance, among others – sends a clear message. We have a wide-reaching enforcement agenda, covering key sectors of the Portuguese economy and we will continue to maintain this. The challenge is not just doing more. It is also doing better – being more agile, effective and deterrent, and delivering more for consumers.

New methods of coordination between competitors and abuse of dominance will also be a focus of the AdC, in particular by deepening the AdC’s understanding of the use, by undertakings, of algorithms or artificial intelligence which may facilitate anticompetitive practices. The AdC will also aim to be ever speedier and more effective in merger control. In this respect, we are working to streamline procedures, reduce the burden on companies and continuously improve our internal procedures.

We have also have renewed attention to gun jumping and the detection of mergers that should have been notified for approval to the AdC. We have some cases underway and are sending a clear message to the market that this is a sanctionable offence.

In terms of its advocacy activity, the AdC will seek to contribute to reinforced competitiveness and productivity in Portugal and Europe. It will prioritise the implementation of the recommendations issued in 2018 regarding the liberal professions and the transportation sector. The AdC will also pay close attention to barriers created by legislation or by anticompetitive behaviour on the part of incumbents in sectors where innovation brings most benefit to consumers, in line with the work carried out in 2018 on innovation in the financial sector. The AdC will also continue its advocacy work across key sectors, including energy and telecommunications, as well as other regulated sectors.

Following several successful advocacy and outreach campaigns, we will also be continuing our active engagement with stakeholders. Our campaign to fight bid-rigging in public procurement is a particularly important campaign for us, as it bridges the gap between advocacy and enforcement, as well as our Good Practices Guide for Business Associations.

Supporting the main priority of reinforcing investigative capacity, the AdC will boost its capacity to detect anticompetitive practices, in particular taking into account the cooperation agreements signed with several institutions. Access to data in these fields will facilitate the ex officio detection of anticompetitive behaviour, even in the absence of a complaint or a leniency application, and can contribute to a speedier investigation.

Finally, and in our continuous pursuit of transparency and accountability, we will continue to publish our decisions, recommendations, studies and opinions on our website, with greater visibility through our monthly bilingual newsletter, presence on social media and multimedia materials.

Looking at our legal framework for competition policy, the ECN+ Directive will be an opportunity and challenge for 2019.

The ECN+ Directive is an important piece of legislation for European competition authorities. It brings reinforced standards on institutional issues like independence and the functioning of competition authorities, as well as investigative powers, sanctions and cooperation among EU agencies.

In our case, we are currently moving full speed ahead with transposing the directive into national law. Having been tasked by the Portuguese government with leading the process of preparing draft legislation, including consultation with relevant stakeholders, we have established a working group which includes governmental representatives, private practice, the judiciary and academia.

The group is a sounding board for us on the several issues inherent to deciding on how to transpose the directive into Portuguese Law.

I am proud of our achievements in 2018 and am confident that 2019 will be a year with important results with impact for the Portuguese economy and consumer from our action as a dynamic, engaged competition enforcer and advocate.

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