Portugal: The Portuguese Competition Authority
Having taken office as President of the Portuguese Competition Authority (AdC) at the end of 2016, it is an honour to lead an established, strong enforcer of competition rules and active advocate for competition in Portugal. Since 2003, the AdC has developed its enforcement agenda, with landmark competition decisions in both restrictive practices and merger control, and has multiplied its advocacy and outreach efforts to a wide range of stakeholders.
In 2016, we saw the consolidation of a robust enforcement agenda, as well as the reinforced positioning of the AdC on the institutional scene as an advocate of competition. The AdC's strategic priorities for 2017 kick off my six-year mandate with a clear focus on strengthening investigative capacity and enforcement action, as well as building on very successful advocacy initiatives in a comprehensive approach to promoting competition policy in Portugal.
Drawing on these strategic objectives, I will give a brief review of 2016 and the AdC's activities to date in 2017.
Proactively seeking out the detection and sanctioning of anti-competitive practices
The enforcement record in 2016 reflects the long-term strategy to strengthen investigative capacity, cartel detection, and efficiency, due process and transparency. This strategy has already brought important milestones for the AdC and further results will emerge in 2017. Efforts to reinforce investigative capacity have resulted in the specialisation of teams in forensic IT techniques, particularly within the Anti-Cartel Unit.
In 2016, the AdC focused its enforcement action on the fight against cartels and other agreements and practices harmful for competition, making ample use of procedural tools introduced by the 2012 Competition Act, namely settlements and commitments.
In this period, the AdC issued two sanctioning decisions and four commitment decisions, closing 10 cases in total. In the market for envelopes, the AdC used a combination of leniency and settlement procedures to sanction a cartel. It also imposed remedies to address both horizontal and vertical competition concerns in the food retail, mental health services and automobile sectors.
In the first semester of 2017, there has been a significant increase in investigative activity. The AdC conducted dawn raids in 12 cases, following searches in two cases in 2016.
Regarding cartel detection, we have seen important developments regarding ex officio detection and leniency. With regard to public procurement, the AdC has taken a proactive approach in working with other public institutions to analyse data on public procurement procedures in sectors of significant national public expenditure in order to identify signs of collusion.
Raising awareness of the AdC's leniency programme has also been at the top of the agenda. In 2016, the authority carried out a direct e-mail marketing campaign for business associations and the Portuguese Bar Association on the benefits of applying for leniency and the heavy sanctions that a business can risk if they do not apply.
The AdC is also reinforcing its efforts to engage with potential complainants, promoting awareness of the rules of competition and making it easier and more intuitive to inform the authority of practices that are restrictive of competition. To that end, the authority has launched its new Electronic Complaints Portal in June 2017, available on the AdC website.
Enhancing competition in public procurement: bid-rigging and efficiency
Regarding public procurement, a key strategic priority for the AdC, 2016 saw significant achievements in all three fundamental pillars of the AdC's Strategic Action Plan for Public Procurement. The three-pronged strategy includes engagement with contracting agencies through the ‘Fighting Bid-Rigging in Public Procurement' Campaign, enhanced institutional cooperation with procurement-related entities in an informal working group on Competition and Efficiency in Public Procurement, and contributing to a more ‘competition-friendly' legal framework, namely by providing input to the new Public Procurement Code.
As a crucial component of detection of collusion in public tenders, the ‘Fighting Bid-Rigging in Public Procurement' campaign, launched in 2016, seeks to raise awareness among public authorities of bid-rigging and efficient design of tenders. Since then, the AdC has organised large-scale public events and in-house training, which have already resulted in the detection of signs of collusion that are currently under investigation.
The interaction with public authorities involved in public procurement has had very positive feedback, having reached more than 1,200 participants so far in 2017, encouraging long-lasting relationships of mutual understanding and alignment of incentives in the defence of competition and efficient public spending. It has also gained international recognition, having been awarded an Honourable Mention in the 2016-2017 Competition Advocacy Contest organised by the International Competition Network and the World Bank Group.
In March 2016, the AdC and four other entities with responsibilities in public procurement (the Court of Auditors, the Centralised Purchasing Body, the Tax Audit Authority and the Institute for Public Markets and Real Estate) created an informal working group on competition and innovation in public procurement, which has met eight times to discuss best practices and innovative ideas on how to promote competition and efficiency in public procurement.
More efficient merger control
In the field of merger control in 2016, the AdC adopted a total of 63 decisions and one decision to open an in-depth investigation, following 64 merger notifications.
In 2016, the AdC cleared one merger subject to remedies in the sector for wind power-electricity generation (EDP Renewables/Sociedades Ventinveste) in February 2016. In the payments sector, the AdC opened an in-depth investigation of the SIBS/Ativos Unicre merger which is still ongoing. The analysis incorporates the theoretical developments on how to assess competition issues in multi-sided platforms. The in-depth analysis will focus on quantifying the efficiencies and the risk of market foreclosure. For 2017, the AdC aims to maintain this track record, with a renewed focus on more efficient and effective procedures in merger review.
Consolidating practice and procedures through success in judicial review
Looking at judicial review, the AdC has built a solid track record in proving its cases in court - an essential element for credibility as an enforcer and the deterrent effect of our decisions and a visible result of our continuous effort to improve the quality of the decisions, both in terms of due process and substantive analysis.
Since 2012, our success rate in court has risen from approximately 50% to an impressive 84% in 2016, with two landmark abuse of dominance cases upheld. This improvement results from a strategy to implement sound and transparent investigations as well as internal checks and balances both in terms of legal and economic reasoning.
The Competition, Regulation and Supervision Court (TCRS) ruled in favour of the AdC against the National Association of Pharmacies (ANF) and three undertakings of the same group, confirming the abuse of dominance (‘margin squeeze') in the markets of commercial data from pharmacies and of market studies based on these data. The TCRS applied a fine of €6.89 million (AdC had imposed a €10.34 million fine).
The Lisbon Court of Appeal upheld the AdC decision against three companies forming part of Galp Energia Group for anticompetitive practices in the Portuguese bottled LPG market. The Court maintained the fine of €4.1 million imposed by the TCRS, in a previous judgement. The AdC investigation in 2015 found that Galp Energia forbid its distributors from selling bottled LPG outside their allocated territory, thereby stifling intra-brand competition between these distributors.
In 2016, the decision of the AdC on abuse of dominance in the market of premium sports pay-TV from 2015 was upheld, following an appeal to the Constitutional Court, with a fine of €2.7 million.
In the scope of merger control, the TCRS confirmed the AdC clearance decision on the merger concerning the acquisition of sole control of Empresa Geral do Fomento by Serviços Urbanos e Meio Ambiente, following several appeals from third-parties. In 2015, the AdC had initiated an in-depth investigation on potential significant impediments to effective competition in some of the identified relevant markets. The AdC concluded that the initial concerns proved to be either unfounded or unlikely to create significant impediments to effective competition.
Promoting competition in the market
Strong enforcement and advocacy are mutually reinforcing. In the pursuit to enhance compliance and build a competition culture in Portugal, the AdC has engaged in advocacy initiatives to foster awareness among stakeholders and the wider public of the benefits of competition for economic growth, innovation and competitiveness.
In 2016, the AdC issued 26 opinions and five recommendations on draft legislation and regulations, including taxi services, waste management, EU funds in the environmental sector, legal services and the principle of competitive neutrality in the provision of acupuncture services.
The AdC also published a report on competition issues emerging from the legal and regulatory framework in public passenger transport services by car hire after a public consultation which gathered contributions from regulators, consumer associations and representatives of taxi drivers, among others. The final report recommended a regulatory review aiming to eliminate quantitative restrictions to entry, to progress towards price deregulation (while considering that some form of (lighter) regulation may be justified in hailing points and taxi stands) and to limit quality requirements to those which are deemed necessary to address market failures.
In 2016, the AdC initiated a competition impact assessment project, in partnership with the OECD. Under the joint project with the OECD, restrictions on competition in laws and regulations affecting liberal professions and transport are assessed, using the OECD Competition Assessment Toolkit. The project will also allow the AdC to consolidate expertise on tools, and methods on competition impact assessment.
Reaching out to stakeholders
Outreach to stakeholders has been a key element of the AdC's strategy to promote awareness of the rules of competition, as well as its benefits. In addition to the initiatives regarding the leniency programme and fighting collusion in public procurement, we have also set out to diversify and create more specific materials for our stakeholders.
In 2016, the AdC published its Guide on the Promotion of Competition for Business Associations. The guide sets out the dos and don'ts for business associations as regards competition rules, provides information and guidance for companies, promotes transparency and legal certainty, as well as encourages complaints and leniency applications. In 2017, the AdC will hold workshops and widespread mailing campaigns to increase awareness among the business community of the rules of competition and of the advantages and functioning of its leniency programme.
Also in 2016, the AdC inaugurated the Abel Mateus Competition Library, Portugal's only library solely devoted to competition issues, where competition-related works are available to researchers and public seminars are held to stimulate discussions on competition issues and contribute to the development of a competition culture in Portugal.
Fostering private enforcement in Portugal
In 2016, the AdC concluded its draft legislative proposal to transpose Directive 2014/104/EU on Antitrust Damages Actions into national law. The draft bill was submitted to the Portuguese government in June 2016 as one of the first among the EU member states. The AdC carried out the transposition process in an open and transparent manner, engaging directly with key stakeholders. A working group of external experts, comprised of representatives from the judiciary, academia and private practice, was set up and functioned as a sounding board on the ongoing legislative work. The AdC also organised a workshop and public consultation on the draft to ensure ample participation in the process. The transposition of the Damages Directive will be key in establishing an enabling legal environment and achieving the appropriate balance between public and private enforcement to ensure an effective competition policy and promote compliance.
The AdC is pursuing a strategy to reinforce its enforcement action and develop a wide range of competition advocacy initiatives. The main enforcement priority will remain the fight against cartels, by strengthening the leniency programme, and the ability to detect infringements ex officio. The AdC will also focus on public procurement, and competition impact assessment, among other priorities.
The robustness of our cases, which are systematically confirmed by courts, and the success of our outreach efforts have contributed to an increased relevance of competition policy in Portugal. As an overarching priority, the AdC will continue to reinforce transparency and interaction with stakeholders.