Cartels 2020

Last Updated June 12, 2020

Portugal

Law and Practice

Authors



Abreu Avogados is a Portuguese full-service law firm with offices in Lisbon, Oporto and Funchal. Abreu Advogados is among the largest law firms in Portugal, with a team of over 200 lawyers in a company of over 300 professionals, which is recognised annually in international rankings of the legal sector. Abreu was the first law firm to adopt a professional management structure committed to creating a client-oriented culture that offers highly responsive teams, business-oriented advice and cost-effective structures. Abreu Advogados breaks down barriers to provide top legal support to clients in Portuguese-speaking countries. Its international presence is composed of lawyers who are highly experienced in international business and work closely with renowned local partners, such as Angola, Brazil, Cabo Verde, China, Mozambique and Timor-Leste.

Public enforcement actions regarding cartels are primarily ruled by the Portuguese Competition Act (Law 19/2012, of May 8th, the "Competition Act"), particularly by Article 9.

Vital provisions and further guidance are also set forth in regulations and guidelines adopted by the Portuguese Competition Authority (PCA) and in the PCA’s Statutes (Decree-Law 125/2014, of August 18th).

Articles 75 to 82 of the Competition Act also include the legal framework of the Portuguese Leniency Programme (applicable to infringements of Article 9 of the Competition Act and Article 101 of the Treaty on the Functioning of the European Union, the TFEU).

Regulation 1/2013 on "The Procedures relating to obtaining immunity from a fine, or the reduction of a fine, under the provisions of Law 19/2012" details the procedure relating to the application for immunity under the Leniency Programme. In addition, the PCA has issued an Explanatory Notice, the "Notice regarding immunity from a fine or the reduction of a fine in administrative procedures to establish infringement of competition rules", that sets out the way the PCA applies the Leniency Programme in such administrative proceedings.

The PCA also published guidelines on the handling of antitrust proceedings in March 2013, specifically regarding the enforcement of Articles 9, 11 and 12 of the Competition Act and Articles 101 and 102 of the TFEU, in addition to guidance on the related procedure.

Since cartel infringements qualify as administrative offences (contraordenações, or misdemeanours), enforcement is complemented on a subsidiary basis by the Code of Administrative Procedure (Decree-Law 442/91, of November 15th, as amended) and the Misdemeanours Regime (Decree-Law 433/82, of October 27th).

The judicial review of the PCA’s cartels enforcement decisions is governed by the Code of Administrative Courts Procedure (Law 15/2002, of February 22nd, as amended). More recently, Law 23/2018, of June 5th, which transposed EU Directive 2014/104, of November 26th, into the Portuguese legal framework and set a new liability regime for damages due to infringements in competition law, foreseen in Articles 9, 11 and 12 of the Competition Act, and Articles 101 and 102 of the TFEU.

Competition law is enforced by the PCA, created by Decree-Law 10/2003, of January 18th. The PCA is a public entity with the nature of an independent administrative body, having sanctioning, supervisory and regulatory powers that are established in Decree-Law 125/2014 and further developed in the Competition Act.

The investigation of cartels is committed to a dedicated unit, within the PCA, called the “Anti-cartel Unit”, which was created in order to address the need for reinforcement of the PCA’s effectiveness in terms of cartel detection and investigation.

Article 9 of the Competition Act prohibits and sanctions anti-competitive agreements, practices and decisions by associations of undertakings in similar terms to Article 101 (1) of the TFEU. As in other infringements of competition law, cartels are considered administrative offences and not criminal offences.

Consequently, the imposition of fines is the main form of sanction. Other penalties may include ancillary sanctions, such as periodic penalty payment and public announcement of condemnatory decisions (reputational damage).

In a recent case brought against several railway maintenance companies for collusion in the context of public tenders, the PCA imposed fines in the total amount of EUR3.4 million on five companies and five board members or directors involved and imposed ancillary sanctions prohibiting two of the companies involved from participating in tenders and procurement procedures related to maintenance services for track equipment on the national rail network for a period of two years.

The authors expect changes in the near future, as the Portuguese state is currently in the process of transposing the ECN+ Directive (Directive (EU) 2019/1 of the European Parliament and of the Council) to empower the competition authorities of the member states to be more effective enforcers and to ensure the proper functioning of the internal market.

As set forth in Law 23/2018, any stakeholder damaged by a competition restrictive practice can file a claim with the Portuguese courts for compensation, invoking the causal link between said conduct and the suffered damages.

These types of claims can be brought to courts individually or as class actions. In the case of individual claims, it is admissible under the Portuguese Civil Procedure Code to have third parties joining as co-parties, as mentioned above, on an “opt-in” basis. As for collective claims, an “opt-out” system applies under Portuguese law.

The Competition Act, in line with the TFEU, contains a general prohibition on agreements between undertakings (seen as economic units), concerted practices and decisions by associations of undertakings (anti-competitive co-ordination) that have the object or effect of significantly preventing, distorting or restricting competition in the domestic market or part thereof. For example, the Competition Act identifies as forbidden, agreements that are aimed at:

  • directly or indirectly fixing purchase or sales prices or any other trading conditions;
  • limiting or controlling production, markets, technological development or investment;
  • sharing markets or sources of supply;
  • applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or
  • making their execution contingent upon the acceptance by the other parties of additional obligations that, by their nature or according to commercial practice, have no connection with their subject matter.

Typically excluded from this prohibition are, inter alia, the following.

  • Agreements that may be considered justified, should they contribute to improving production or distribution of goods or services or to promoting technical or economic progress, given that they:
    1. allow the users of these goods or services an equitable part of the resulting benefit;
    2. do not impose on the undertakings concerned any restrictions that are not indispensable to the attainment of these objectives; and
    3. do not afford such undertakings the possibility of eliminating competition from a substantial part of the market for the goods or services at issue.
  • Collective agreements between employers and workers, in matters strictly related to labour matters, work conditions, etc.
  • Genuine agency agreements, where the economic risk lies with the principal.
  • Agreements that do not significantly (or appreciably) restrict competition (de minimis).

The limitation period for the procedure of cartel infringements is five years, starting from the end of the infringement (the limitation period for continued infringements starts only when the infringement ends).

The time limit for the enforcement of the sanction imposed on cartel infringements is also five years, from the date of the final decision.

Both limitation periods are subject to suspensions and interruptions, but the Competition Act establishes the maximum limitation period for the procedure (including interruptions) as seven and a half years, plus a maximum suspension period of three years, resulting in a total of ten and a half years.

The authors expect changes in the near future in this regard. In the context of the national process of transposition of the ECN+ Directive, the PCA has already made a public consultation of the draft legislation, which sets forth, for instance, the withdrawal of the time limits for suspension periods and the maximum limitation period currently in force.

The scope of the Competition Act covers all economic activities in the private, public and co-operative sector, whether permanent or occasional, so there is no specific exemption for any particular sector or industry.

Nonetheless, it must be noted that companies that are legally in charge of a service of general economic interest, or that benefit from a legal monopoly, are subject to the provisions of the Competition Act, but only to the extent that they are not impeded, in law or in fact, in the fulfilment of their specific mission.

The Competition Act applies to prohibited practices that have occurred in the Portuguese territory and that have had or may have an effect in the Portuguese territory (effects doctrine), without prejudice to the international obligations of the Portuguese state.

In this sense, if a cartel conduct in a foreign nation has an effect on competition in Portugal, it could be subject to the Portuguese Competition Act. Furthermore, it should be noted that, when trade between member states is at stake, both national competition authorities or national courts and the European Commission are competent to enforce Article 101 of the TFEU.

The (ongoing) implementation of the ECN+ Directive into Portuguese law is expected to incorporate new provisions for purposes of co-operation between national competition authorities, including endowing the PCA with powers to investigate and gather evidence, as well as powers for the enforcement of decisions to impose fines or periodic penalty payments, subject to Portuguese law and on the Portuguese territory, in the name and on behalf of other national competition authorities. Likewise, these proposed provisions will allow the PCA to request other competition authorities to execute such tasks in the name of the PCA in their corresponding jurisdictions.

As a member state Competition Authority, the PCA is entitled to ensure compliance with Article 101 of the TFEU when the geographic scope of the alleged cartel goes beyond the frontiers of Portuguese territory and affects trade between member states.

In this case, the Competition Act provides that, when the PCA learns that a Competition Authority in another member state has initiated proceedings relating to the same facts pursuant to the same articles of the TFEU, the period of limitation of the infringement is suspended until the PCA has been informed of the decision handed down in the other case. The party concerned must be notified by the PCA of the decision to suspend the case, as established in Article 13 of EU Regulation 1/2003 of 16 December 2002.

Investigations can be initiated ex officio or following a complaint. The sanctioning powers of the PCA are exercised under a principle of opportunity, which means that the PCA is granted the ability to choose which cases to pursue on the basis of criteria of public interest. Pursuant to Article 7(2) of the Competition Act, in assessing whether to initiate proceedings, the PCA shall take into account aspects such as its previously set priorities in competition policy, the elements of fact and of law brought to the file, the seriousness of the alleged infringement, the likelihood of proof of the infringement, and the extent of investigation measures required to adequately fulfil its mission.

The first stage ends with a decision of the PCA to:

  • terminate the investigation, if there is not sufficient evidence for a reasonable likelihood of a decision imposing a sanction;
  • settle the case by issuing a sanctioning decision within the context of a settlement procedure;
  • terminate the investigation by adopting a decision imposing conditions (to guarantee compliance with commitments submitted by the party concerned in order to eliminate the effects on competition stemming from the practice); or
  • continue with the case by initiating the second stage of the investigation (instrução), with a notification to the defendant of a “Statement of Objections” (SO).

Dawn raids are becoming increasingly frequent.

In this context, the keywords for any company are "prevention" and "compliance". Accordingly, since different sectors have different needs, companies are strongly encouraged to engage in risk identification and assessment actions, not only in order to implement tailored internal competition awareness training and compliance programmes and guidelines, but also to instil competition compliance into the company's culture and policy. Where possible, having special dawn raid procedures and specifically trained designated internal teams is an advantage. Other important preventative tools include the identification of employees that are more likely to have contact with competitors, internal investigations and due diligence, mock dawn raids, and the implementation of reporting and monitoring mechanisms and compliance incentives programmes.

During a raid, special dawn raid procedures should be followed, if they are in place. In any case, some basic procedures must always be kept in mind:

  • liaise with the legal counsel immediately;
  • confirm the identification documents of the officials, the documents that authorise an inspection, and the scope and purpose of the inspection;
  • do not leave the officials alone, and assemble a team of employees to assist each PCA or EU official/investigation team – ideally including someone from the IT department, someone to bring the requested documents and make copies, and another person (a "shadower") to take notes of the questions asked, the answers given and by whom, and the terms used, in order to control the documents and information given, etc;
  • agree a procedure with the officials, in order to maintain control of what is happening and when;
  • make copies of the documents copied or analysed by the officials;
  • inform the company’s employees that a raid is taking place, and give instructions regarding co-operation, non-obstruction, non-destruction of documents and non-disclosure to third parties;
  • be objective, succinct and concise;
  • do not speak more than necessary or volunteer information or documents that have not been requested; and
  • protect documents covered by legal privilege.

In the event of doubt, ask for the disputed documents to be kept separate (eg, in a sealed envelope), for the resolution of such issues after the raid. Any oral explanations given are to be written down in the minutes of the inspection, along with a description of the other actions carried out by the PCA; check its accuracy carefully.

During or after the inspection, the possibility of drafting a low-key press release should also be considered.

After the inspection, comprehensively debrief the legal counsel and all employees involved in the inspections, prepare all necessary internal communications (eg, giving instructions not to interfere with any seals) and give proper attention to public relations management of the situation.

Raids on lawyers’ offices and the seizure of any documentation or correspondence under client-attorney privilege can only be performed under very strict conditions.

The seizure of documents at banks and other credit institutions covered by banking secrecy (even if they do not belong to the undertaking concerned) can occur where there are well-substantiated reasons for believing that such documents relate to an infringement and are of major importance for finding out the truth or in terms of evidence. Such seizures must be made by the judge responsible for procedural safeguards and, whenever necessary, assisted by the police or by qualified staff of the PCA, who are bound by a duty of confidentiality regarding everything that is not of interest for the investigation.

Note that the PCA can undertake searches of private premises (including homes), vehicles and other places of partners, members of the board of directors, employees or anyone who works with the undertaking, as well as lawyers’ and medical doctors’ offices, only under specific circumstances.

The PCA also has powers to seal off any premises where there is, or may be, relevant accounting data or other documentation, including the devices on which they are stored or saved, such as computers and other data storage electronic equipment, during the period and to the extent that is strictly necessary for carrying out the inspections.

Searches of premises, property and means of transport of the undertakings concerned (access to read emails included), as well as the sealing of rooms or other premises, require the PCA officials to present credentials from the PCA and a warrant issued by the public prosecutor.

The PCA may conduct visits at a company's premises with or without prior notice. Where there is a well-substantiated indication that evidence of a serious infringement of Article 9 or 11 of the Competition Act or Article 101 or 102 of the TFEU may be found at the private premises of partners, members of the board of directors, employees or anyone who works with the undertaking or association of undertakings (not only homes but also "other locations", such as vehicles), a search of such premises may also be carried out by the PCA upon authorisation from the competent judge (ie, the judge responsible for the procedural safeguards).

The PCA may question officers and employees of the company and other persons involved in the case, either personally or through their legal representatives. Any oral explanations given are to be written down in the minutes of the inspection along with a description of the other actions carried out by the PCA and the party concerned in the case shall be duly notified.

When conducting its enquiries, the PCA must state the capacity in which the person is being questioned, whether as a witness or as a defendant. Defendants have privilege against self-incrimination and may refuse to answer. Witnesses do not have that privilege and must answer all questions truthfully. In both cases, they can ask to be summoned for a formal interrogation accompanied by a lawyer.

Legal representatives of the companies, acting in that capacity, have less protection against self-incrimination as they are required to answer questions concerning objective facts, even if they are not required to incriminate the company.

The proposition project of implementation of the ECN+ Directive into Portuguese law expressly sets forth the PCA’s powers to conduct enquiries within dawn raids.

Within the context of national investigations conducted by the PCA, the communications between an undertaking and its in-house counsel are granted the same protection as the communications between the undertaking and the external counsel; both are covered by legal privilege (which is broader than that in the EU regime).

Company officers or employees can be subjected to enquiries either personally or through their legal representatives.

The Competition Act states that, as a rule and unless such documents are the object of or an element in the infringement itself (in which case they may be seized), it is prohibited to seize documents covered by legal privilege. Upon authorisation from the competent judge (ie, the judge responsible for the procedural safeguards), the PCA can undertake searches of lawyers’ offices (as well as of medical doctors’ offices) if there is a well-substantiated indication that evidence of a serious infringement of Article 9 or 11 of the Competition Act or Article 101 or 102 of the TFEU can be found there. The judge must be present during a search of a lawyer's offices (if the judge is absent, the search is null and void) and must previously have notified the president of the Bar Association, so that the president of the Bar Association (or his representative) may attend.

The employees can choose their own in-house lawyers to defend, or external lawyers to represent or serve their best interests before the Competition Authority. The company cannot refuse the exercise of this right.

The law does not impose any obligation for the PCA’s investigators to wait for legal advisers to arrive, but companies under inspection have the right to have legal advisers present at the diligence.

One of the first steps recommended to be taken by legal counsel is to gather the information made available to the investigator and perform a risk assessment in terms of proof, under the investigation.

The PCA has the power to carry out searches, examinations, collection and seizure of accounting data or other documentation, irrespective of the devices on which they are stored or saved, at the premises, property and means of transport of the undertakings concerned. The seizure of documents is to be authorised, ordered or validated by a judicial authority; however, the PCA can seize documents during the search or where there is an urgent requirement, or where any delay may endanger the finding of evidence, but any such seizures carried out by the PCA without prior order or authorisation must be validated by a judicial authority within the following 72 hours.

Cartel infringements are administrative offences and, as such, there are legal restrictions concerning the type of elements of proof that may be used. Telecommunications and correspondence (if unopened) are specifically protected by the general regime of administrative offences (Decree-Law 433/82, of October 27th, as amended) and by the Portuguese Constitution.

The proof-gathering powers of the PCA have, in fact, significantly increased under the current Competition Act, which now provides, in addition to the interviews with employees and company’s representatives, powers to conduct searches not only of the company’s premises, but also of the vehicles and homes of the shareholders, of the members of the board and of employees.

The PCA also has the powers to seize documents that are deemed relevant to the investigation, no matter what their source (paper or digital), to carry out unannounced searches and to secure premises overnight (by sealing them). However, some of these powers require a judicial warrant or necessitate the presence of a judge during collection.

The draft project of implementation of the ECN+ Directive into Portuguese law includes relevant changes in this regard, stating that any documents, oral or written statements, electronic messages, regardless of whether they appear not to have been read or deleted, shall constitute admissible evidence, among others not expressly prohibited.

Article 2 of the Competition Act expressly states that, under the limitations set forth by the international commitments of the Portuguese state, the Competition Act applies to all infringements that have or are likely to have an effect in Portugal. If the company that is liable for the infringement is not located in Portugal, it will also have a duty to answer to the PCA in the same way as any company that is located in Portugal (provided such international commitments are complied with).

As mentioned above, the failure to assist the Competition Authority or the obstruction of the exercise of its powers qualifies as an administrative offence punishable by fine.

Moreover, the draft legislation for the transposition of the ECN+ Directive explicitly establishes that the PCA will be able to access any device, including smartphones, or cloud servers to seize evidence of competition infringements. Access to cloud servers may be granted regardless of the server’s physical location, as long as it is accessible to the investigated company.

In the context of investigations conducted by the PCA, the Competition Act states that, as a rule and unless such documents are the object of or an element in the infringement itself (in which case they may be seized), it is prohibited to seize documents that are covered by attorney-client privilege. Only upon authorisation from the competent judge (ie, the judge responsible for the procedural safeguards) can the PCA undertake searches of lawyers’ offices, if there is a well-substantiated indication that evidence of a serious infringement of Article 9 or 11 of the Competition Act or Article 101 or 102 of the TFEU can be found there. The judge must be present during a search of a lawyer's offices (if the judge is absent, the search is null and void) as well as a Bar Association representative.

Attorney-client privilege is recognised in Article 87 of the Portuguese Bar Association Rules, which covers all the facts, documents or information that directly or indirectly relate to professional matters disclosed by the client to its attorney. This privilege extends to any lawyers intervening in the matter and to their respective employees; it also extends to in-house counsels.

When conducting its enquiries, the PCA must state the capacity in which the person is being questioned, whether as a witness or as a defendant. Defendants have privilege against self-incrimination and may refuse to answer. Witnesses do not have that privilege and must answer all questions truthfully. In both cases, they can ask to be summoned for a formal interrogation accompanied by a lawyer.

Legal representatives of the companies, acting in that capacity, have less protection against self-incrimination as they are required to answer questions concerning objective facts, even if they are not required to incriminate the company.

Failure to co-operate with the PCA or obstruction of the exercise of its investigatory powers (either by wilful misconduct or by negligence) is sanctioned with a fine, the amount of which may not exceed 1% of the turnover of the year immediately preceding the final decision for each of the undertakings concerned or, in the case of associations of undertakings, the aggregate turnover of the associated undertakings.

Failure to supply information or the supply of false, inaccurate or incomplete information in response to a request by the PCA in the exercise of its powers of sanction or supervision (either by wilful misconduct or by negligence) is subject to a similar sanction.

The PCA shall have due care for the legitimate interests of the undertakings, or associations of undertakings, or of other entities, relating to non-disclosure of their business secrets. A time limit of not less than ten working days is given to select the information that is deemed to be confidential from the information that has been collected. In the end, the PCA may or may not agree with the classification of the information as a business secret. Notwithstanding the guarantee of the rights of defence, the PCA can demonstrate that there has been a law infringement using confidential information as evidence. The access to this documentation shall only be given to attorneys or external economic advisers strictly for purposes of defence.

The PCA can specify that a case will be subjected to secrecy of proceedings, should it consider that publicity would harm the investigation. Nevertheless, all final decisions adopted in restrictive practices proceedings shall be published on the PCA’s website, without prejudice to the safeguard of business secrets and other items of information considered confidential.

The draft legislation for the transposition of the ECN+ Directive sets forth that the PCA will be able to accept in advance and provisionally the qualification of the information as confidential, and revise said decision at a later stage of proceedings.

In general, the parties concerned have the right to access the proceedings file, the right of defence according to the adversarial principle, the right to a hearing, and the right to appeal against interlocutory and final decisions adopted by the PCA.

During the second stage of the investigation, the defendant is assured the exercise of its defence rights: it is given a “reasonable period” (not less than 20 working days) to reply to the Statement of Objections and it may request the PCA to undertake additional evidentiary measures (eg, witness depositions) and to have its written submissions complemented by an oral hearing.

The party concerned also has a right of appeal against any final or interlocutory decisions or against any interim measures by the PCA to the Portuguese Competition, Regulation and Supervision Court (CRSC), a first-instance specialised court.

The Leniency Programme is included in Articles 75 to 82 of the Competition Act, the provisions of which are binding upon the PCA and the courts. The criteria set out in the Competition Act to obtain immunity from or the reduction of a fine are quite clear and comprehensive. Furthermore, the PCA adopted Regulation 1/2013 with respect to the procedures to obtain immunity from or the reduction of a fine, as well as an accompanying Explanatory Notice on both substantive and procedural aspects.

Nonetheless, the PCA remains empowered with a degree of discretion to assess whether the legal conditions for the Leniency Programme to be applied have been fulfilled, especially those requiring subjective assessment (ie, see conditions (b) and (c) of the immunity regime or assessment of the significant added value of the information/evidence provided by the applicants for a reduction of a fine).

The Leniency Programme in Portugal can benefit the undertakings or the individuals, as both can be held liable for infringement of the Competition Act (eg, members of the board of directors or the supervisory board of legal persons and equivalent entities, as well as those responsible for the executive management or supervision of areas of activity where an administrative offence has occurred).

In order to obtain immunity from fines, the applicant must comply with four conditions:

  • the applicant must be the first to inform the PCA of their participation in a cartel and provide sufficient information enabling the PCA either to carry out searches and seizures or to detect a cartel for which the PCA did not previously have sufficient evidence;
  • they must co-operate fully and continuously with the PCA during the investigation;
  • they must terminate their participation in the cartel from the moment they provide the PCA with the information, except to the extent that is reasonably necessary to maintain the effectiveness of the investigation; and
  • they must not have coerced any of the other undertakings to participate in the cartel.

As established in Article 4 of Regulation 1/2013, the "first-in-the-door" applicant for the Leniency Programme can be granted a marker, either at their own request (properly grounded) or on the initiative of the PCA, provided that they have supplied a minimum of information (name and address, information relating to the participants of the cartel, products and/or services involved, the territory covered, an estimate of the duration and the nature of the cartel, any other application for leniency that the applicant has already submitted or may submit to other competition authorities relating to the cartel, and justification of the request for a marker).

With the marker, the applicant is given an additional period of not less than 15 days during which they may submit additional information and evidence to the application. Failure to submit additional information will lead to refusal of the leniency application.

Reduction of fines may be granted to undertakings or individuals who do not meet the criteria for full immunity but who provide the PCA with information and evidence on the cartel that has significant added value with respect to the information already in the possession of the PCA.

Similar to the full immunity regime, an applicant for a fine reduction must meet the conditions of full and continuous co-operation with the PCA and termination of their participation in the cartel.

The Competition Act determines the reduction of the fine as follows:

  • the first applicant providing information and evidence of significant added value is granted a 30–50% reduction;
  • the second applicant providing information and evidence of significant added value is granted a 20–30% reduction; and
  • subsequent applicants providing information and evidence of significant added value are granted a reduction of up to 20%.

If the application is submitted after the issuance of the statement of objections, the percentages quoted above are reduced by half.

The PCA will then have to take into account the order in which applications were submitted, assessing, for each application, the added value of the information and evidence provided. Although the notion of "significant added value" is not defined in the Competition Act, the Explanatory Notice provides some guidelines as to how it will be assessed by the PCA:

  • according to the information and evidence already in possession of the PCA;
  • its probative value, especially the extent to which the form, nature and level of detail of the information or evidence contributes to reinforce the capacity of the PCA to prove the existence of the alleged cartel; and
  • the degree of corroboration from other sources.

The draft project of implementation of the ECN+ Directive into Portuguese law includes relevant changes in this regard; inter alia, explicitly allowing associations of undertakings to apply for leniency, granting immunity to natural persons in administrative offences or criminal proceedings, adding further confidentiality protection measures and other incentives for applying to a Leniency Programme, and transposing the procedural aspects of the Leniency Programme into the Competition Act.

Interviews with company employees (and with any other person that the PCA deems relevant to its findings) are expressly provided for by Article 18 of the Competition Act. Employees can answer either in person or through a legal representative.

The PCA can send requests for documents and information to companies. Such requests must be made on appropriate grounds and contain at least the following:

  • the legal grounds for the request, the capacity in which the company is being asked for the documents/information and the purpose of such a request;
  • the deadline to provide such documents/information;
  • the reference to the requirement to identify confidential information and provide adequate justification, and in such a case the need to provide a non-confidential version in addition; and
  • the information that failure to comply with the request will trigger a breach of law.

Usually, the documents/information should be provided within ten business days, unless a different time limit is established by the PCA on a grounded basis.

Requests for information and documents may take place either within a sanctioning procedure or under the exercise of the supervision powers of the PCA. This has raised some opposition as, within its supervision powers, the current Competition Act introduced wide powers for the PCA. Any request for information and documents that fall outside the scope of a sanctioning procedure should be submitted in advance to the companies and will require their consent; however, companies are always bound by a duty of collaboration.

According to the Portuguese Code of Civil Procedure, the parties concerned may bring to the case all the evidence that they deem necessary, such as foreign decisions or evidence from other jurisdictions.

However, the national judge shall not be bound by such decisions or evidence, and is always allowed to weigh up the evidence presented by the parties as he deems fit.

The PCA has to co-operate with other public/regulatory agencies, including in sector-specific regulated markets, and may, whenever necessary, request legal opinions or studies regarding the respective sector.

If the PCA becomes aware, pursuant to Article 17, of facts occurring within the scope of sectoral regulation and likely to be classified as prohibited practices, it shall inform the sectoral regulatory agency in order for the latter to issue an opinion before reaching a decision.

Likewise, whenever a sectoral regulatory agency, within the scope of its responsibilities, is faced with a conduct that might constitute a competition law infringement, it shall inform the PCA of these facts and present a draft decision before implementing it.

As Portugal is an EU member state, the PCA co-operates with other EU national competition authorities in the framework of the European Competition Network (ECN).

The PCA is involved in several co-operation networks, including the European Competition Authorities Association, the International Competition Network, the Ibero-American Competition Network (Rede Ibero-Americana da Concorrência) and the Lusophone Competition Network (Rede Lusófona da Concorrência); it also co-operates with the Organisation for Economic Co-operation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD).

The PCA has similarly entered into co-operation agreements with the Mozambican General Direction of Commerce, the Brazilian System of Competition Policy and the Turkish Competition Authority.

As a member of the ECN, the PCA is involved in its Model Leniency Programme, launched with the aim of improving the handling of parallel leniency applications and in response to the call for a one-stop leniency shop.

The (ongoing) implementation of the ECN+ Directive into Portuguese law is expected to increase co-operation between national competition authorities, namely endowing the PCA with powers to investigate and gather evidence, as well as powers for the enforcement of decisions to impose fines or periodic penalty payments, subject to Portuguese law and on the Portuguese territory, in the name and on behalf of other national competition authorities. Likewise, these proposed provisions will allow the PCA to request other competition authorities to execute such tasks in the name of the PCA, in their corresponding jurisdiction.

These sanctions are based in administrative offences. There are no criminal proceedings in this respect.

Law 23/2018 created the procedure for issuing damage claims through private enforcement.

Anyone who has suffered harm caused by an infringement of EU and national competition law by an undertaking or association of undertakings can effectively exercise the right to claim full compensation, within a limitation period of five years.

A condemnatory decision issued by the Portuguese Competition Authority or by an appeal court that confirms that competition law has been infringed establishes an irrefutable presumption of the existence and nature of such infringement as well as of its material, subjective, temporal and territorial scopes, for the purpose of a claim for damages.

A condemnatory decision issued by an EU member state's national competition authority sets a refutable presumption of the existence and nature of such infringement as well as of its material, subjective, temporal and territorial scopes, for the purpose of a claim for damages.

The claimant may request urgent and effective interim measures aimed at preserving evidence of the alleged infringement.

Despite this, the courts may at the request of any party demand the counterparty, or third parties, to supply evidence in their possession, if deemed proportional and relevant to the decision of the case, with requests involving indiscriminate searches for information being refused. The court may demand evidence within a PCA file, exclusively in cases when no party or third party can reasonably provide it, under specific criteria. Some types of evidence can only be requested when the procedure with the PCA is terminated and evidence related to leniency requests.

Enforcement actions involving cartels tend to be brought against multiple parties in a single proceeding, under the Single Infringement principle intending to take action against a continuous cartel conduct, instead of multiple separate agreements.

According to Article 5 of Law 23/2018, a private enforcement action involving a cartel may also be brought against multiple parties in a single proceeding.

Under Portuguese law, the party that files a liability claim shall bear the burden of proof in respect of the facts alleged as grounds to that claim and that are relevant according to the applicable legal framework (Article 342 of the Portuguese Civil Code). Therefore, and as a general rule, the burden of proof lies with the claimant in private enforcement cases, unless the defendant invokes specific means of defence in respect of which the burden of proof lies with him. It should be noted that decisions issued by the PCA (or final judgments by Portuguese courts in respect of decisions of the same regulatory body) are considered to be binding to the court assessing the claim and are therefore excluded from any burden of proof by the claimant.

The PCA has the powers to determine the relevant facts, and to obtain the necessary evidence to support them. Facts found proven by a non-appealable decision by the PCA are excluded from the general rules regarding burden of proof in follow-on actions for damages related to the condemned practices.

Evidence obtained in one proceeding comes under the general evidence acquirement principle, meaning that said evidence can be used by the PCA in other parallel proceedings as long as the parties concerned are duly informed of that possibility prior to the information requests or investigatory actions being performed by the PCA.

According to Article 16 of Law 23/2018, there are restrictions on the access of evidence from previous PCA processes – including that the access may be accepted only after a conclusive decision is made, and evidence cannot be provided in the context of a process of exemption or reduction of the amount of the misdemeanour or under a proposal of transaction. Such evidence can only be used by the person who was awarded that right.

Although cartels (and any other antitrust infringements) are not classified as criminal offences under the Portuguese competition legal framework, but rather as administrative offences, and the standard of proof can in theory be lighter than in criminal cases, the PCA must satisfy a demanding, globally congruent and strong level of evidence and must adopt a final decision imposing a sanction only when the moral certainty standard of proof is verified. Furthermore, the PCA and the courts reviewing the PCA's decisions are bound by the in dubio pro reo principle.

In public and private enforcement cases, as in general civil litigation, all types of evidence are, in principle, admissible, including expert evidence, unless the evidence is obtained in breach of applicable law or unless the applicable law states that a specific type of evidence is required, in which case the remaining types of evidence are not admissible.

Under Portuguese law, the protection given by the rules on legal professional privilege (which is protected by the Constitution, the Criminal Code and the Statute of the Portuguese Bar Association) covers both independent lawyers and in-house lawyers who are members of the Portuguese Bar, since they are subject to the same professional and ethical duties.

In its March 2013 Guidelines on the handling of antitrust proceedings, the PCA expressly states that, in addition to lawyers registered in the Portuguese Bar, those registered in analogous entities in other countries will also benefit from a similar protection. Thus, the PCA indicates that, when carrying out its investigations, it will extend the scope for protection under legal privilege beyond what was acknowledged by the court (which only referred to lawyers registered with the Portuguese Bar Association).

As a general rule, multiple public proceedings are not admissible based on the same facts – ie, for the same restrictive practices – involving the same parties.

Multiple follow-on actions for damages can be brought upon courts, by different aggrieved parties, based on the same facts, as class actions are a possibility but not an obligation. As mentioned above, facts deemed to be proven in a non-appealable decision by the PCA or court regarding restrictive practices are free from any burden of proof in these private enforcement actions.

The PCA has powers to impose sanctions for cartel practices. The PCA is responsible for the investigation, for the issuance of the statement of objections and for the adoption of final decisions in cartel cases, since, under the Portuguese competition legal framework, cartels (as with other antitrust infringements) are administrative offences rather than criminal offences.

The Competition Act expressly establishes settlement procedures, which are applicable in general to all competition infringements. Settlements are identified in the Competition Policy Priorities for 2014 as a mechanism to be promoted.

Settlements may include pleading guilty or an agreement on commitments to bring the infringement to an end, allowing for a fine reduction and a swifter procedure.

Although aimed mainly at other types of infringements (in its guidelines on the handling of antitrust proceedings, dated March 2013, the PCA states that, in principle, it will not accept commitments in cartel cases), the settlement procedure is applicable to cartels and the reduction of fines is cumulative with the Leniency Programme, where applicable.

Facts brought to the PCA under a settlement procedure cannot be appealed in court.

Access to settlement documents by third parties or other undertakings concerned is limited and requires the consent of the author of the settlement.

The settlement procedure is very much in line with the EU type of settlement, although with some particularities, such as the fact that the reduction of the fine is not defined in the Act, but instead is decided by the PCA on a case-by-case basis.

The PCA has issued Guidelines on the method of setting fines (see above). The reductions will, in principle, be more relevant the sooner the settlement is reached.

The Portuguese Competition Act sets two phases to apply for settlements: in the course of the investigation or in the prosecution phase.

At any stage of the investigation, the party concerned can request settlement. Also, during the investigation, the Competition Authority can set a time limit of not less than ten working days for the party concerned to apply for and demonstrate its willingness to propose settlement. After that, the Competition Authority will inform the party about the facts it is accused of, the evidence giving rise to sanction and the fine amounts set by law for the offence in question. Once the discussion has been concluded, the PCA will set a time limit (of not less than ten working days) for the party concerned to submit a written settlement proposal. The PCA shall review this proposal, assessing its conformity with the conversations held between the parties, and will refuse it if it considers that the submission is unsubstantiated, and this decision is final, or accept it and draw a settlement notice that includes the identification of the party, legal stipulation of the rules infringed and the terms of such settlement, including the sanctions imposed and the percentage reduction of the fine. The party concerned should confirm the notice, since the settlement submission is deemed revoked once the ten working day time limit has elapsed.

After the conclusion of the investigation proceedings and when the Competition Authority notifies the party concerned of the decision to initiate prosecution proceedings, the party can propose settlement, admitting the facts and accepting responsibility for the infringement. Once the settlement proposal has been received, the PCA will review, and can either refuse it if it considers that the submission is unsubstantiated, and this decision is final, or accept it and issue a notice containing the terms of the settlement, including the sanctions imposed and the percentage reduction of the fine. The party concerned shall confirm the settlement notice or the submission shall be deemed revoked once the time limit of ten working days has elapsed.

As mentioned above, the reduction of the fine is not set out in the Act and will be decided by the PCA on a case-by-case basis.

According to Law 23/2018, a condemnatory decision issued by the Portuguese Competition Authority or by an appeal court that confirms that competition law has been infringed establishes an irrefutable presumption of the existence and nature of such infringement as well as of its material, subjective, temporal and territorial scopes, for the purpose of a claim for damages. The same applies, although in more limited terms, in respect to decisions issued by foreign competition authorities or foreign courts.

The PCA may impose as ancillary sanctions among others:

  • publication in the official gazette and in a national newspaper, at the offender’s expense, of the decision related to the infringement; or
  • a ban on participating in procurement proceedings for a maximum period of two years, if the infringement found has occurred during, or as a consequence of, such proceedings.

The sanctions are based in administrative offences. There are no criminal proceedings in this respect.

Fines for cartel practices can amount to 10% of the turnover of each participating undertaking, or, in the case of associations of undertakings, of the aggregate turnover of its members (which are jointly and severally liable for the fine under certain conditions).

There are currently no specific effective compliance programmes promoted or imposed by the PCA. Notwithstanding, companies are becoming more aware of the necessity of implementing internal competition compliance programmes in order to comply with the law and promote general awareness of competition law-related issues.

There is no mandatory consumer redress in Portuguese legislation, only possible voluntary follow-on claims for damages.

As a rule, the decisions handed down by the PCA are appealable to the Portuguese Competition, Regulation and Supervision Court. The Competition Act sets out that certain PCA decisions may not be appealed.

After being notified of a final decision, the party concerned must lodge the appeal before the PCA within 30 working days (appeals against interlocutory decisions or against any interim measure adopted have shorter deadlines). The PCA then has 30 working days to forward all relevant documentation to the public prosecution office. The Competition Act allows the PCA to present its own allegations at this stage, along with other information it deems relevant. The public prosecution office cannot withdraw the accusation without the PCA's agreement.

It is not mandatory to hold a court hearing in order for the CRSC to rule, but the party concerned – as well as the PCA and the public prosecution office – may be opposed to that and thus require a court hearing to take place.

Although the prosecution is conducted by the public prosecution office, the PCA is entitled to participate in the court hearing, to submit pleadings and to appeal independently against the CRSC decision.

The CRSC decision is appealable to the Lisbon Court of Appeals, whose ruling is final and binding. The CRSC will rule on the basis of evidence presented at the hearing, in addition to the evidence gathered by the PCA during the administrative phase of the proceedings. The Competition Act awards the CRSC full jurisdiction to review decisions whereby the PCA has imposed a fine or a periodic penalty payment, and can reduce or increase the fine or the periodic penalty payment imposed.

The implementation of the ECN+ Directive into Portuguese law is expected to bring about relevant changes in this regard, namely concerning the possibility of a suspensive effect of the appeal in terms of the limitation periods.

Law 23/2018 sets out the transposition of Directive 2014/104/EU, setting out the procedural rules ensuring that anyone who has suffered harm caused by an infringement of EU and national competition law by an undertaking or association of undertakings can effectively exercise the right to claim full compensation.

According to Article 19 of Law 23/2018, class actions are possible to be set out by associations and foundations for the defence of consumers, as well as by companies’ associations.

The Portuguese Constitution provides for the fundamental rights to petition and actio popularis, setting out that every citizen has the right to submit, individually or jointly with others, claims in defence of their rights, the Constitution, the laws or the general interest, including the right to apply for the appropriate compensation, as an aggrieved party or parties, either personally or via associations that purport to defend the interests in question.

Accordingly, Portuguese Act 83/95 dated August 31 (Lei da Acção Popular) sets out the legal framework applicable to class actions, including antitrust damages actions. The regime laid down in this Act allows not only natural persons but also associations and foundations (other legal persons not included) to act in the defence of collective and diffuse interests, particularly through a claim for damages.

As regards legitimacy, associations and foundations must have legal personality, must expressly include in their attributions or in their statutory objectives the defence of the interests at stake, and must not have a professional activity competing with that of the defendant.

Collective redress via actio popularis follows an opt-out system, through which the claimant automatically represents the remaining holders of the rights and interests at stake, unless they opt out of the representation, following the court’s citations and/or public notices for this purpose.

Cartel overcharges are presumed to be passed through to indirect purchasers, if the following can be demonstrated:

  • the party concerned has committed an infringement of competition law;
  • this infringement had an additional cost for the direct customer of the defendant; and
  • the indirect customer acquired the goods or the services affected by the infraction or the goods and services derived from the ones affected by the infraction.

With this legal presumption set forth in Law 23/2018, it is much more likely for indirect customers to obtain compensation, especially when compared with the previous regime where the burden of proof rested with the indirect customer.

Indirect purchasers can bring claims for damages, but are subject to the burden of proof when it comes to demonstrating the following general civil liability requirements laid down in the Portuguese Civil Code, which are also applicable to antitrust damages actions:

  • the existence of human conduct;
  • the unlawfulness of the conduct;
  • the imputation of the conduct to the wrongdoer;
  • the existence of damages; and
  • the existence of a causal link between the last two of these.

As far as the existence of damages and a causal link is concerned, indirect purchasers would be required to present evidence that the damage caused by the direct purchaser was transferred to them, and therefore caused to them. On antitrust damages actions, the burden of proof is reduced, determining that the indirect purchaser will be deemed to have proven that a passing-on to them occurred where they have shown that:

  • the defendant has committed an infringement of competition law;
  • the infringement resulted in an overcharge for the direct purchaser of the defendant; and
  • they purchased the goods or services that were the subject of the infringement, or purchased goods or services derived from or containing the goods or services that were the subject of the infringement.

Whether it is possible to raise a pass-on defence against claims brought by direct purchasers depends on the burden of proof and its consequences. The burden of proof rests with the defendant, who will have to present proof of the existence of a passing-on that eliminates or reduces the damages caused to the claimant as a direct purchaser. Such proof can be quite difficult to produce.

According to Law 23/2018, a condemnatory decision issued by the Portuguese Competition Authority or by an appeal court that confirms that competition law has been infringed establishes an irrefutable presumption of the existence and nature of such infringement as well as of its material, subjective, temporal and territorial scopes, for the purpose of a claim for damages. The same applies, although in more limited terms, with respect to decisions issued by foreign competition authorities or foreign courts.

There are still not enough practical examples of the application of these provisions from Law 23/2018.

There are no specific legal provisions regarding this issue, provided that the lawyers’ compensation is agreed within the limits set forth by the Statute of the Portuguese Bar Association that, among others, prohibits quota litis agreements.

The general provisions of the Regulation on procedural fees apply. Procedural fees include (broadly) court fees (taxa de justiça) and court expenses. Court fees are due and charged for the procedural initiative of the party, and depend on the amount of the claim or claims at stake in the proceedings, as well as on the complexity of the case. Court expenses relate to the costs of certain procedural acts or services.

In light of the particulars of a given case (the amount of the claims at stake), it is possible to estimate approximately the procedural fees to be charged in the proceedings.

The final court decision (or a decision that finally decides any procedural incidents or appeals) will rule on the liability for costs, with the general rule being that the losing party will be liable for payment of the procedural costs in proportion to its loss.

As a rule, the decisions handed down by the PCA are appealable to the Portuguese Competition, Regulation and Supervision Court.

After being notified of a final decision, the party concerned must lodge the appeal before the PCA within 30 working days (appeals against interlocutory decisions or against any interim measure adopted have shorter deadlines). The PCA then has 30 working days to forward all relevant documentation to the public prosecution office. The Competition Act allows the PCA to present its own allegations at this stage, along with other information it deems relevant. The public prosecution office cannot withdraw the accusation without the PCA's agreement.

It is not mandatory to hold a court hearing in order for the CRSC to rule, but the party concerned – as well as the PCA and the public prosecution office – may be opposed to that and thus require a court hearing to take place.

Although the prosecution is conducted by the public prosecution office, the PCA is entitled to participate in the court hearing, to submit pleadings and to appeal independently against the CRSC decision.

The CRSC decision is appealable to the Lisbon Court of Appeals, whose ruling is final and binding. The CRSC will rule on the basis of evidence presented at the hearing, in addition to the evidence gathered by the PCA during the administrative phase of the proceedings. The Competition Act awards the CRSC full jurisdiction to review decisions whereby the PCA has imposed a fine or a periodic penalty payment, and can reduce or increase the fine or the periodic penalty payment imposed.

In 2019, the PCA applied fines totalling EUR340.5 million in seven sanctioning decisions, including the cases of a concerted practice between banks, a cartel in the sector of railway maintenance and a cartel between insurance companies.

The PCA published a guide of good practices in the field of public procurement, which is one of the fields where cartels have been detected (it is available only in Portuguese at: http://www.concorrencia.pt/vPT/Praticas_Proibidas/Documents/Guia%20de%20Boas%20Praticas%20-%20Combate%20ao%20Conluio%20na%20Contratacao%20Publica.pdf).

Facing the current pandemic crisis, since 9 March 2020, all Portuguese courts have suspended procedures, also suspending all limitation periods, until the date of termination of the suspension is indicated via decree-law.

The suspension may be lifted either when all parties agree that they have the conditions to ensure all procedural acts through computer platforms, to be carried out electronically (or through other appropriate means of distance communication) or when procedures are qualified as urgent (defence of rights, freedoms and guarantees injured or threatened with injury by any unconstitutional or illegal measures; certain criminal matters; and proceedings necessary to avoid irreparable damage). This suspension also does not preclude a final decision from being issued where the status of the case so allows.

This suspension will naturally be applicable to any Judicial Review or Appeal of Decisions by the PCA on cartel cases.

This interruption is also extended to cartel infringement procedures with the PCA, as they are qualified as administrative offences, unlike, for example, merger control cases or other purely administrative procedures.

Notwithstanding, the PCA’s regulatory and investigatory powers or activities  are not suspended, but are now operating mostly on a remote basis, via phone, email or the online platforms provided by the PCA.

In fact, the PCA has communicated that it will be exceedingly alert and active in the detection of possible anti-competitive practices that exploit the current situation, through price fixing or market sharing, particularly, regarding suppliers, distributors, resellers from sectors of the economy, including goods and services for health protection, supplies to households and businesses or others, most needed by the community facing the pandemic.

Despite this, given the recommendations for the current pandemic crisis, dawn raids are not as likely to occur during these times.

Abreu Avogados

Av. Infante D. Henrique, 26
1149-096 Lisboa
Portugal

+351 21 723 18 00

+351 21 723 18 99

armando.m.ferreira@abreuadvogados.com www.abreuadvogados.com/en/
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Abreu Avogados is a Portuguese full-service law firm with offices in Lisbon, Oporto and Funchal. Abreu Advogados is among the largest law firms in Portugal, with a team of over 200 lawyers in a company of over 300 professionals, which is recognised annually in international rankings of the legal sector. Abreu was the first law firm to adopt a professional management structure committed to creating a client-oriented culture that offers highly responsive teams, business-oriented advice and cost-effective structures. Abreu Advogados breaks down barriers to provide top legal support to clients in Portuguese-speaking countries. Its international presence is composed of lawyers who are highly experienced in international business and work closely with renowned local partners, such as Angola, Brazil, Cabo Verde, China, Mozambique and Timor-Leste.

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