Portugal: Maintaining Strong Enforcement

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In summary

This article outlines the enforcement and advocacy activity of the Portuguese Competition Authority (AdC) in 2020, as well as its priorities for 2021. The article covers the AdC’s record-breaking year on competition enforcement and focuses on the importance of its success rate in judicial review. The article addresses the AdC’s main advocacy initiatives to enhance competition in its jurisdiction and highlights the importance of the AdC's engagement with stakeholders, its activity in raising awareness to competition policy’s benefits and its sustained international activity.

Discussion points

  • The AdC imposed a total of €393.2 million in fines in six sanctioning decisions
  • The AdC faced increased litigation
  • Several of the AdC's advocacy initiatives took place in a virtual format in 2020
  • The AdC maintained vigorous international activity
  • The AdC's priorities for 2021 focus on the detection and sanction of abuse of dominance and other anticompetitive behaviour and on contributing to the economic recovery

Referenced in this article

  • ECN+ Directive
  • CompCast – Competition Talks
  • ‘Combating Bid Rigging in Public Procurement’ initiative

Record-breaking year in competition enforcement

Despite the unforeseeable covid-19 pandemic that marked 2020, the Portuguese Competition Authority (Autoridade da Concorrência (AdC)) continued its commitment to the mission of detecting abuse of dominance and other anticompetitive behaviour.

The AdC’s array of landmark decisions in 2020 confirm the agency’s strong effectiveness in its enforcement activity. The unprecedented nature of targeted anticompetitive behaviour and the particular attention given to key sectors of the domestic economy that have a direct impact on consumers, such as telecommunications and the retail distribution sector, marked the AdC’s enforcement activity in 2020.

In 2020, the AdC adopted five sanctioning decisions on anticompetitive behaviour, which led to the imposition of fines in the total amount of €393.2 million. Two of those sanctioning decisions resulted in fines of €304 million on six large food retail chains, two beverage suppliers, a board member and a director for indirectly concerting the sale prices of those products, to the detriment of consumers, through a hub-and-spoke arrangement. Those were the first two sanctioning decisions in Portugal for a hub-and-spoke arrangement.

Furthermore, the AdC opened proceedings for a no-poach agreement for the first time. In this respect, it imposed on the Portuguese Professional Football League (LFPF) an interim measure ordering the immediate suspension of the agreement not to recruit or hire other clubs’ football players of the First and Second Leagues who had unilaterally terminated their employment contract, invoking reasons caused by the covid-19 pandemic. Considering the potential negative effects of no-poach agreements, including the reduction of the wage level of employees and the barrier to employees’ labour mobility, the immediate application of the interim measure prevented a potential serious and irreparable impact of the practice on competition.

The AdC imposed a fine of €84 million on MEO – Serviços de Comunicações e Multimédia SA for entering into a market-sharing and price-fixing of mobile and fixed telecommunications services arrangement with Nowo Communications SA (NOWO). NOWO was exempted from paying a fine through the AdC’s leniency programme.

The AdC adopted a sanctioning decision that concluded an investigation of a cartel in railway maintenance in public tenders launched by Infraestruturas de Portugal SA in 2014 and 2015, resulting in a total fine of €3.4 million imposed on five companies and five board members and directors involved. The case originated from a complaint filed as part of the AdC’s ‘Combating Bid Rigging in Public Procurement’ campaign. The decision included, for the first time, an ancillary sanction that prohibits two firms from participating in public tenders in the concerned market for a period of two years.

Finally, the AdC imposed a fine of €3.6 million on the Portuguese Advertising Agencies Association (APAP) for preventing its associates from freely participating in procurement tenders for advertising services.

In merger review, beyond a regular flow of Phase I decisions, the AdC initiated two in-depth merger procedures. The in-depth reviews culminated in a prohibition decision (RBI/Grupo Fundão) and a clearance decision subject to commitments (Pigments/Ativos Ferro). Overall, the AdC issued 50 merger decisions: 48 final decisions in Phase I and two final decisions in Phase II.

Also in 2020, the AdC kept the detection of gun-jumping among its priorities. In this respect, it opened seven investigations into potential gun-jumping and failure to notify a merger to the AdC. Furthermore, it sanctioned an undertaking, Hospital Particular do Algarve SA, a total of €155,000 for gun-jumping.

Increased litigation and success in judicial review

Following increased enforcement activity in recent years, the AdC has dealt with the corresponding rise in litigation. This refers to the AdC’s decisions regarding access to files, confidentiality, the legality of search and seizure orders, the gathering of digital evidence, legal professional privilege, withdrawal of evidence, effects of an appeal and, more generally, rights of defence.

The courts issued 82 rulings in 2020 on the AdC’s decisions, of which 76 were favourable to the agency (ie, a success rate of over 92 per cent). Once more, the AdC experienced a remarkable year in its judicial activity. The technical consolidation of the AdC in the area of litigation and the constant improvement of its checks and balances system are two of the key factors for this outstanding success rate.

The Competition, Regulation and Supervision Court (first instance) confirmed an AdC decision that found that two major national companies engaged in anti­competitive practices through a non-compete pact, while reducing by 10 per cent the fines totalling €38.3 million imposed in 2017 by the AdC.

Promoting effective and fair competition

In 2020, the AdC issued 28 opinions, studies and recommendations on draft and existing legislation and regulation, covering a wide range of economic sectors, including energy, telecommunications, banking, tourism, higher education, transport, and water and waste management, in yet another remarkable year in its advocacy activity.

In this respect, in 2020, the AdC’s advocacy activity to enhance competition included a recommendation on loyalty clauses in the telecoms market. In its recommendation, the AdC found that current loyalty policies in the telecoms sector (minimum contract durations and early termination charges) reduce consumer mobility and restrict competition. As a result, a public consultation was launched, and a set of recommendations were issued to the legislator and the sector regulator aimed at mitigating competition concerns.

The AdC also issued comments to the draft regulation for the 5G spectrum auction, recommending measures to the sector regulator aimed at promoting entry and competition in the market, such as the inclusion of 5G lots in the initial bidding stage reserved for new entrants.

Other AdC initiatives include, among other things, a recommendation on the authorisation process for new higher education degrees, a recommendation on vehicle inspection centres in the Madeira autonomous region and comments on draft legislative proposals to limit fees associated with mortgages and consumer credit.

Finally, the AdC submitted to the Portuguese government the proposal of draft legislation for the transposition of the ECN+ Directive, which aims at empowering the national competition authorities of EU member states to be more effective enforcers of competition law in the European Union.

Engaging stakeholders, raising awareness for competition policy and maintaining an international contribution

The AdC maintained a series of open initiatives in 2020, the aim of which is to engage with wider circles of stakeholders, from practitioners to students, policymakers and sector regulators. Throughout the year, the AdC held nine public seminars on competition law and economics, including with Alexandre Barreto de Souza, Philip Marsden, Friso Bostoen, Alexandre de Streel, Ignacio Herrera-Anchustegui, Eric Posner, Mike Walker, Colleen Cunningham, Florian Ederer and Pierre Régibeau. Owing to the covid-19 pandemic, the seminar series was transformed into a webinar series, which now reaches a wider audience across all continents.

The AdC also continued its podcast series, CompCast – Competition Talks, now in its fourth year, which are short talks given by economics and legal competition experts.

The AdC held the third edition of the Competition Policy Award in 2020. The award seeks to encourage research in competition law and economics at an international level. The awarded paper on competition economics focused on killer acquisitions.

The AdC enhanced its ‘Combatting Big Rigging in Public Procurement’ initiative, which raises awareness of the signs of collusive behaviour in public procurement. The initiative has reached over 2,600 participants since its inception and, in 2020, it continued to reach out to large municipalities and the autonomous regions in Portugal. Other initiatives include a presentation of the AdC’s Guide for Business Associations in the autonomous region of Madeira.

Also in 2020, the AdC reinforced its cooperation with the various national sector regulators. In particular, it sent 24 requests for an opinion to several regulatory agencies, in the context of 22 merger control proceedings affecting markets subject to sectorial regulation. The regulators include the Regulatory Authority for the Media, the Regulatory Authority for Communications, the National Authority of Medicines and Health Products and the Energy Services Regulatory Authority.

In line with its commitment to transparency, the AdC also continued to improve its online search tool, PesquisAdC, which serves as a case and decision repository.

Finally, the AdC was the winner of the 2019–2020 Competition Advocacy Contest, organised by the World Bank and the ICN, in the category ‘Promoting pro-competition data regulation’, with its issues paper ‘Digital Ecosystems, Big Data and Algorithms’.

With regard to international activity, the AdC continued to be an active member in the various international fora. In 2020, the president of the AdC was elected as an effective member of the OECD Competition Committee Bureau, also continuing to act as a liaison between the International Competition Network (ICN) and the OECD Competition Committee Bureau, and as an ICN Steering Group member. The AdC also continued to co-chair the ICN Promotion and Implementation Working Group, as well as maintained its position within the ICN Framework for Competition Agency Procedures as a founding member.

In addition, at the level of the European Competition Network, the AdC participated in cooperation meetings, as well as in oral hearings and advisory committee meetings regarding anticompetitive behaviour, dominant positions and mergers. The AdC also continued to be one of the co-chairs of the Cooperation Issues and Due Process Working Group.

At the bilateral level, the AdC concluded a memorandum of understanding with the Angola Competition Authority and organised the Third Bilateral Meeting with the French Competition Authority.

Finally, throughout 2020, the AdC took part in preparatory works for the Portuguese Presidency of the Council of the European Union, as it is part of the chairing team of the Working Party on Competition during the first semester of 2021.

Priorities for 2021

The covid-19 pandemic has forced competition enforcers to adapt as they react to unprecedented challenges. In this context, in 2021, the AdC will continue its vigorous enforcement and advocacy activity with three well-defined priorities.

First, it will remain focused on supporting the Portuguese economy by prioritising the detection and sanctioning of abuse and other anticompetitive behaviour that exploit the current situation. In the current context of the pandemic, anticompetitive behaviour has the potential to become even more harmful for national economies, ultimately to the detriment of households and firms.

In this respect, the transposition of the ECN+ Directive will bring more effective and appropriate enforcement powers and tools to address harmful behaviour to consumer welfare, which will be relevant in the pursuit of the AdC’s mission and priorities. The transposition of the ECN+ Directive is expected to provide further resources, independence and powers to the AdC, thereby ensuring that the authority enforces competition rules more effectively.

Second, the AdC will ensure consistent investigation of signs of abuse and collusion in a digital environment, given the partial shift in the risk of anticompetitive behaviour to e-commerce, including risks such as price-fixing and market sharing. Factors such as social distancing and the digitisation of an array of markets have boosted electronic commerce, a trend which is likely to continue apace in 2021.

The AdC’s digital task force, created in 2020, will be ready to investigate anti­competitive behaviour in digital markets. In addition, as part of the chairing team of the Working Party on Competition for the Portuguese Presidency of the Council of the European Union, the AdC will address competition issues in the digital space.

Third, the AdC will contribute to the economic recovery by promoting the elimination of structural and legal barriers, such as those relating to professional mobility and corporate innovation, with the aim of enhancing efficiency, growth and innovation in the economy as a whole. Accordingly, it will continue to ensure active contribution in the public decision-making process by issuing opinions, studies, recommendations and guidelines.

The priorities set for 2021 by the AdC reveal its commitment to strengthening competition policy in Portugal and contributing to the economic recovery while seeking to materialise opportunities that arise through the digital economy.

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