Cartels 2021

Last Updated June 14, 2021

Portugal

Law and Practice

Authors



Abreu Advogados 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 Misdemeanours Regime (Decree-Law 433/82, of October 27th).

The judicial review of the PCA’s cartels enforcement decisions is also governed by the decree-law referred to in the previous paragraph and on a subsidiary basis by the Code of Criminal Procedure (Decree-Law 78/87, of February 17th).

Finally, Law 23/2018, of June 5th, which transposed EU Directive 2014/104, of November 26th, into the Portuguese legal framework, provides for the liability regime for damages due to infringements in competition law, set forth 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 designated to a dedicated unit, within the PCA, called the “Anti-cartel Unit”, which was created 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).

Recently, the PCA has initiated several investigations concerning suspected cartel activity in a hub-and-spoke modality; ie, price co-ordination between competitors indirectly, through the common supplier. Some of these investigations have already resulted in the first convictions in Portugal for hub-and-spoke practices, the PCA having imposed fines in the total amount of EUR304 million on eight companies.

The authors expect changes in the near future, with the PCA focusing on the digital market and the ECN+ Directive (Directive (EU) 2019/1 of the European Parliament and of the Council) being transposed by the Portuguese state, 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 person, natural or legal, damaged by an infringement of competition law 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 (Decree-Law 41/2013, of June 26th) 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.

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.

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 submitted to the Portuguese government the draft legislation, which sets forth, for instance, the withdrawal of the time limits for suspension periods and of 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, 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, when trade between member states is at stake, both national competition authorities or national courts and the European Commission (EC) 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 respective 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.

In 2020, in line with the declaration of the European Competition Network (ECN) of 23 March 2020 and the Temporary Framework for assessing antitrust issues related to business-to-business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak, adopted by the EC on 8 April 2020, the PCA offered to provide individual informal business-to-business guidance on forms of co-operation to benefit consumers and the economy, provided that they are temporary, proportionate and objectively necessary to address shortages of supply.

For 2021, the PCA aims to:

  • stop and sanction anti-competitive practices that exploit the current pandemic situation caused by COVID-19;
  • investigate evidence of collusion in the digital environment, given the displacement of part of the risk of anti-competitive practices to e-commerce; and
  • contribute to the recovery of the Portuguese economy, by promoting the reduction of barriers to professional mobility and business innovation.

In this context, in April 2021, the PCA accused 31 sports companies of an anti-competitive agreement, which prevented clubs in the Portuguese first and second professional football divisions from hiring football players who unilaterally terminated their employment contract citing issues caused by the COVID-19 pandemic.

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 the 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 insufficient 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 who 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, but only under specific circumstances.

Once again, the authors expect changes in these matters once the ECN+ Directive transposition process is complete; for instance, with regard to the definition of lawyers’ office and the scope of client-attorney privilege.

The PCA also has the power to seal off any premises where there is, or may be, relevant accounting data or other documentation, including the devices on which it is stored or saved, such as computers and other electronic data storage equipment, during the period and to the extent that it 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 directly 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 subject 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.

As advanced above, the draft transposition of the ECN+ Directive provides for substantial changes in this context, bringing the Portuguese regime closer to that of the EU, namely by unprotecting in-house counsel communications that do not constitute a lawyer’s act.

Employees can choose their own in-house lawyers to defend them, 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 it is 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 (Misdemeanours Regime, Decree-Law 433/82, of October 27th) and by the Portuguese Constitution.

The proof-gathering powers of the PCA have significantly increased under the current Competition Act, which now provides, in addition to interviews with employees and company 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 the presence of a judge during collection.

The draft project of implementation of the ECN+ Directive into Portuguese law also includes relevant changes in this regard, stating that any documents, oral or written statements, and 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 counsel.

The ECN+ Directive transposition promises, as mentioned above, to amend the scope of the protection conferred by this privilege, bringing it closer to the EU regime.

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 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 sanctioning or supervisory powers (either by wilful misconduct or by negligence) is subject to a similar sanction.

The PCA shall have due care for the legitimate interests of 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 subject 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 applicants for a reduction of a fine).

The Leniency Programme in Portugal can benefit undertakings or 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).

Immunity from Fines

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

  • they must be the first to inform the PCA of their participation in a cartel and provide sufficient information enabling the PCA 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 it 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. Failure to submit additional information will lead to refusal of the leniency application.

Reduction of Fines

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 its 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.

Assessment of Leniency Applications

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 also 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 directly 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;
  • a reference to the requirement to identify confidential information and provide adequate justification, and in such a case, the need to additionally provide a non-confidential version; 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 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 falls 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 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 or she 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 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 Directorate-General of Commerce, the Brazilian Competition Policy System, the Turkish Competition Authority and, more recently, the Angolan Competition Regulatory 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, 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.

Sanctions are based on administrative offences. There are no criminal proceedings in this respect.

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

As advanced above, 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 final 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 final 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, 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. However, there is a “blacklist” of documents to which access cannot, under any circumstances, be granted by the court: leniency statements and settlement submissions.

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, a 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, Decree-Law 47344/66, of November 25th). 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 or her.

Final decisions issued by the PCA (or by Portuguese courts, in respect of decisions of the same regulatory body) are considered to be binding to the court assessing the claim. With the existence of an infringement of competition law being already established by a final decision as mentioned above, the injured party only has to prove the causal link, between that infringement and the damages suffered, and quantify the damages. Indeed, the presumption that cartels cause damages also follows from Law 23/2018. If it is practically impossible or excessively difficult for the party to calculate the damages suffered, the court shall carry out that calculation by means of an approximate estimate, having regard to the available evidence.

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 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 access may be accepted only after a conclusive decision is made, and evidence cannot be provided in the context of a leniency process or under a proposal of transaction. Evidence that has been obtained exclusively through access to a PCA file may be used as evidence in actions for damages for infringement of competition law only by the person who obtained it or a person who is successor in title to it, as well as the person who acquired the right to damages.

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 stated above, the ECN+ Directive transposition promises to amend the scope of the protection conferred by the legal professional privilege, bringing it closer to the EU regime.

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 described 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 the power 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 a fine is not defined in the Act, but 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.

Settlement Application Phases

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 (in which case the 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 of reduction of the fine. The party concerned should confirm the notice, since the settlement submission is deemed revoked once the time limit of ten working days 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 (in which case the 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 final condemnatory decision issued by the PCA 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 (rebuttable presumption), with 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 occurred during, or as a consequence of, such proceedings.

Sanctions are based on 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 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 claims for damages.

As advanced above, with regard to class actions, Portugal has an opt-out model (which is brought on behalf of indeterminate persons, while the opt-in model requires express consent) – an action for the protection of diffuse interests, called “ação popular”.

As a rule, the decisions handed down by the PCA are appealable to the CRSC. 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 oppose that and 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, the ruling of which 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 where 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, 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 can 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 31st (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.

As referred to above, collective redress via ação popular 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.

Indirect purchasers can bring claims for damages but, unless any of the above-mentioned presumptions apply, are also subject to the burden of proof with regard to demonstrating the following general civil liability requirements laid down in the Portuguese Civil Code, which are applicable to antitrust damages actions (with some specificities, namely the presumption that cartels cause damages):

  • 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 indirect purchasers’ burden of proof is reduced; they 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.

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

Whether it is possible for the alleged infringer to raise a passing-on defence 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. Such proof can be quite difficult to produce.

See 4.3 Collateral Effects of Establishing Liability/Responsibility.

Before Law 23/2018 there were few cases of this type of action in Portugal, and the success rates were even rarer (around seven compensations applied since 1988).

With the entry into force of Law 23/2018, damages actions have soared: there have been four cases based on infringements of competition law, one of them involving around 80 proceedings. However, they are still pending (and therefore it is not possible to draw conclusions about their success or duration).

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, which, 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.

See 4.8 Available Forms of Judicial Review or Appeal.

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 figures for 2020 are not yet known, but in just one case concerning the retail sector, a decision that was published in December 2020, the PCA imposed a fine of EUR304 million for cartel practice (indirect price fixing).

The PCA published a guide of good practices in respect 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).

It also published a guide of good practices for associations of undertakings, in order to prevent cartel behaviour (it is available, also only in Portuguese, at: http://www.concorrencia.pt/vPT/Praticas_Proibidas/Praticas_Restritivas_da_Concorrencia/Documents/Guia%20para%20Associa%C3%A7%C3%B5es%20de%20Empresas.pdf).

More recently, the PCA has sent guidelines to municipalities, inter-municipal communities and metropolitan areas on good practices for promoting competition and efficiency to be taken into account when concluding public service contracts for public passenger road transport, a process that is under way in Portugal (the statement is available, also only in Portuguese, at: http://concorrencia.pt/vPT/Noticias_Eventos/Comunicados/Paginas/Comunicado_AdC_202101.aspx).

Abreu Advogados

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Trends and Developments


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Cruz Vilaça Advogados is a highly specialised law firm that has its credibility and market position built upon its members’ experience, with a long record in academia and public service, in the EU courts, as well as in nearly 20 years of private practice. The firm's activity focuses on EU and competition law, state aid and fundamental rights law. In these fields, it currently assists many clients in the digital and energy sectors. The firm's practice is not limited to Portugal but is also Europe-wide. Besides a vigorous competition law activity, it has a strong EU law practice, both counselling and intervening in cases before the European courts. The team of eight lawyers and three consultants is one of the largest, most experienced and academically most qualified EU and competition law teams in Portugal (six out of eleven members hold a PhD). The members are actively involved in EU and competition law associations.

In the wake of the COVID-19 outbreak and the challenges that competition authorities, undertakings and competition lawyers had to face in 2020, 2021 is expected to bring new trends and opportunities. 

2021 will still be marked by the pandemic. However, it seems that this did not prevent the Portuguese Competition Authority (Autoridade da Concorrência, or AdC) from maintaining vigorous enforcement activity in both 2020 and 2021. Being an active member of the European Competition Network, and under the pandemic context, the AdC has provided informal guidance to undertakings so that they would not be discouraged from engaging in co-operation to the benefit of consumers and the economy. It is expected that the AdC will maintain this practice in 2021.

From legislative and policy perspectives, it is worthwhile highlighting the amendment of the Portuguese Competition Act resulting from the implementation of the ECN+ Directive (Directive (EU) 2019/1) and the AdC’s Issues Paper on Algorithms, which includes the AdC’s views on how algorithms may facilitate cartel activity. From an enforcement perspective, the main topics with regard to cartels in 2021 are expected to be the hub-and-spoke cases in the food distribution and retail sector and the no-poach agreement case that the AdC is pursuing for the first time since its creation in 2003.

Expected Legislative and Institutional Developments

In 2020 the AdC submitted to the Portuguese government the proposal for transposing the ECN+ Directive. Although the transposition period expired on 4 February 2021, the new legislation had not yet seen the light of day and is expected to be adopted this year. The proposal confers additional search powers on the AdC, expressly setting forth that the latter may search any technological device to seize evidence of anti-competitive behaviour.

The legislative amendment is also expected to clarify the notion of "undertaking", following the case law of the Court of Justice of the European Union and thus making it easier to hold parent companies accountable for the conduct of subsidiaries, which has been a particularly hot topic in Portuguese enforcement cases.

These new rules will be paramount in the AdC’s cartel enforcement activity.

Another trend that can be observed is the increasing use of interim measures by enforcers. In 2020 the AdC adopted such measures for the second time since its inception. Bearing in mind that the European Commission has only recently exercised its power to impose interim measures under Regulation 1/2003 for the first time, it is possible to predict that the use of this instrument will become more widespread in the near future amongst enforcers, including the AdC.

Enforcement Priorities

On the enforcement side, it is expected that the AdC will focus its attention on tackling restrictions in the digital sector (e-commerce in particular), as well as on combating practices that work against the economic recovery by raising barriers to entry, hampering innovation and making job mobility more difficult. In this respect, it is worth mentioning the recent issuance of a statement of objections relating to a no-poach clause.

The fight against cartels will also certainly retain the AdC's attention. In this respect, reference should be made to the pending hub-and-spoke cases in the food retail sector.

Hub-and-Spoke Cases

In the past four years, the AdC has launched a number of investigations into alleged hub-and-spoke practices in the food retail sector.

Hub-and-spoke arrangements are a set of practices involving both vertical and horizontal elements by which competitors co-ordinate their behaviour on the market, through the intermediation of a common supplier or a common customer. This type of arrangement may lead to horizontal price fixing. The hub-and-spoke concept was coined to allow imputing collusive behaviour between competitors in the absence of direct contact between them, rather inferring it from vertical contact with a third party (the hub).

The AdC’s hub-and-spoke cases involve the largest food retail chains in Portugal and several common suppliers. The main legal and factual issue at the core of these cases is whether it is possible to conclude from normal bilateral contacts between retailers and their suppliers that those different companies are involved in a conspiracy to fix retail prices in the market.

The investigation began in 2017 with dawn raids at the premises of a number of undertakings active in the food retail sector. Following those raids, the AdC opened separate probes (one for each supplier), thus initiating several cases that are currently moving at different paces. In May 2021, the AdC issued eight statements of objections, involving manufacturers in a wide variety of industries, from pre-packaged bread to personal care.

In December 2020, the AdC issued its first hub-and-spoke decisions against two beverage suppliers and six retailers, imposing fines totalling EUR304 million. In the two cases, the AdC found that the companies engaged in a single and continuous infringement, consisting of the horizontal alignment of retail prices in the market. According to the decisions, the alleged unlawful arrangements lasted about ten years in both cases. The addressees lodged appeals against those decisions with the Portuguese Competition Tribunal.

Given the scale of the investigations and considering the level of fines already imposed for just two infringements, Portugal may be considered as being the forerunner in the pursuit of such novel infringements in Europe, since the number of hub-and-spoke cases across the continent is hitherto conspicuously low.

Indeed, the European Commission has not yet issued any infringement decision relating to such arrangements and even in the United Kingdom – where the topic has been heavily debated among lawyers, economists and scholars – the most recent infringement decision dates back to 2011.

The low number of cases in Europe is, to a significant extent, an expression of the difficulty in proving this type of infringement to the requisite legal standard.

Given that, in hub-and-spoke cases, there is no direct contact between competitors, collusion is primarily inferred from discussions and information exchanges between business partners in the context of vertical relationships. Hence, the main challenge in this type of case arises from the need to ascertain whether such indirect evidence enables competition agencies to draw unequivocal conclusions as to the existence of an infringement. It should be stressed that, for a hub-and-spoke infringement to be established beyond any reasonable doubt, it is necessary to demonstrate that retailers and a common supplier took part in a structured plan pursuant to which retailers were informed by the supplier about the future pricing conduct of the other retailers. Moreover, all these retailers and their common supplier must be aware of their role in the collusive scheme, as providers and receivers of sensitive information.

However, there is a conundrum in the assessment of this vertical contact: discussions over commercially sensitive matters between suppliers and retailers that interact on a daily basis are a normal and seemingly legitimate feature of the market. Discussions on issues such as future prices, promotional activities or marketing plans may also involve references to competitors. As an example, references to retail prices set by competitors are normal negotiating tools intended to achieve better commercial conditions. These discussions may, in fact, prove to be pro-competitive and to enhance consumer welfare. In most situations it is not an easy task to distinguish a legitimate business dialogue from a behaviour aimed at reaching a collusive outcome.

Hub-and-spoke cases are therefore particularly demanding as regards the appraisal of evidence. In general, it does not suffice to adduce documentary evidence, such as emails, relating to business contact between trade partners. Those documents rarely provide indisputable evidence of a collusive scheme on their own, let alone evidence of a structured plan spanning several years. The preliminary indications stemming from that body of evidence should, in principle, be supplemented with further investigation, including a thorough assessment of the functioning of the market, to ascertain whether there are indications that competition is being hampered. It is also important to take witness statements to shed light on the meaning and scope of the interactions between retailers and their suppliers. In the two infringement decisions issued in December 2020, according to public sources, the AdC seems to have limited the evidence almost entirely to a certain number of emails.

The Portuguese Competition Authority seems thus to have decided to take the risks of testing a theory still largely undemonstrated. This may help to clarify the legal boundaries of hub-and-spoke infringements as well as the evidentiary requirements imposed on competition agencies. It will be for the courts to decide whether the reasoning and the body of evidence underpinning the AdC’s findings meet the requisite legal standard.

No-Poach Agreements

No-poach agreements are probably the next frontier of antitrust. These are agreements between independent undertakings whereby they co-ordinate their hiring policies by agreeing not to make job offers or hiring workers from each other (either reciprocally or not).

No-poach agreements are part of a broader category of agreements concerning labour markets, which also include wage-fixing agreements, through which undertakings agree to harmonise workers’ wages or other benefits. Such types of agreements are tantamount to horizontal co-operation and may trigger the application of Article 101 of the Treaty on the Functioning of the European Union (TFEU) or of its national equivalent (Article 9 of the Portuguese Competition Act). Those agreements can be accompanied by the exchange of competitively sensitive information.

Another type of labour market agreement that may trigger the application of competition law provisions is an agreement between an undertaking and a worker whereby the latter agrees not to work for competing undertakings for a period of time (no-compete agreements). Unlike in no-poach and wage-fixing agreements, no-compete clauses require the workers’ consent to be effective and lead to a different efficiency assessment.

The role of competition enforcement vis-à-vis labour markets may be questioned. In fact, competition authorities have traditionally focused their resources on products and services markets and on practices that have at least the potential effect of harming consumers through higher prices, lower quality or less innovation. However, no-poach and wage-fixing agreements may, in certain circumstances, have an impact on downstream markets by reducing output or innovation, especially in sectors where worker mobility is a relevant factor, as is the case in fast-growing and highly innovative sectors.

No-poach agreements may nevertheless be analysed as group purchasing agreements, which, under certain circumstances, can bring about efficiencies that may be passed on to consumers, thus being capable of benefiting from the application of Article 101(3) of the TFEU.

Likewise, no-poach agreements may form part of a transaction or a merger between undertakings as a condition of its implementation and therefore be justified in the wider context under conditions relating to the worker’s role or specific skills, or to the duration of the agreement.

No-poach agreements have been on the radar of international organisations, such as the OECD, as well as of the antitrust authorities in the USA, where they led to the adoption in 2016 of the Federal Trade Commission and the Department of Justice's joint “Antitrust Guidance for Human Resource Professionals”. They even gave rise to a criminal prosecution in 2021. In Europe, they also attracted the attention of some national competition authorities (Spain, France, the Netherlands); however, not as a standalone infringement, but as part of a broader context.

Labour markets are among the AdC’s priorities for 2021. No-poach/no-hiring agreements first came to the attention of the AdC in 2020. The Authority ordered interim measures on the Portuguese Professional Football League to suspend an allegedly no-poach/no-hiring agreement regarding football players that unilaterally terminated their contracts for pandemic-related reasons.

In April 2021, the AdC followed up on the case and adopted its first statement of objections for no-poach agreements against the Portuguese Professional Football League and 31 football clubs participating in the 2019-20 season of the first and second professional football leagues. In the statement of objections, the AdC highlighted what it considered to be the potential damage arising from this practice for consumers and workers as the agreement was able to reduce the quality of football matches and thereby harm consumers.

A few days later, the AdC submitted to public consultation an issues paper on “Agreements in the labour market and competition policy”. With this issues paper, the AdC intends to raise the awareness of companies, human resources professionals and recruitment agencies to the risks that may result from anti-competitive agreements in these labour markets. In the AdC’s view, these agreements can also affect the uncertainty associated with the competition, thus facilitating other collusive behaviour. The issues paper is accompanied by a Guide on Good Practices addressed at those stakeholders.

Further developments are expected in 2021 in this field, since it is possible that a final decision will be taken on the Professional Football League case.

The relationship between labour markets and competition law is definitively a trend for 2021 and the coming years. The attention of the competition authorities to this subject is driven not only by the ongoing discussion among scholars and academics (in both economics and law), but also by the need to boost economic recovery worldwide in the wake of the COVID-19 pandemic. Worker mobility and their efficient allocation may thus be key for the recovery.

Digital Ecosystems, Big Data and Algorithms

Digital markets have also naturally attracted the attention of the AdC. The latter’s priorities in 2021 include the investigation of “signs of abuse and collusion in a digital environment”. This follows the publication, in 2019, of the Issues Paper on Digital Ecosystems, Big Data, and Algorithms (the "Issues Paper"), and the creation of an internal interdepartmental digital task force to better incorporate the realities of the digital era in the application of competition rules.

The Issues Paper explored different characteristics of the digital economy, with a particular focus on the Portuguese digital market. The Issues Paper finds that the digitalisation of the economy led to the emergence of new business models, based on multi-sided platforms, which are characterised by the huge volume and diversity of data they collect about their users – big data – and strong network effects. In the AdC’s view, this reality must be taken into consideration when enforcing competition law. First, potential competition plays a key role in the competition analysis of digital markets, prone to high concentration levels. The incumbents’ incentives to protect their ecosystem may trigger strategies aimed at promoting the persistence of market power and limiting contestability and potential competition.

Second, big data has allowed the development of pricing, monitoring, ranking and recommendation algorithms. It is widely accepted by economic theory that this may have positive effects in the reduction of transnational and search cost, as well as market transparency. However, the use of algorithms may also facilitate collusion in the market. Pricing algorithms, in particular, may enable customised or tailor-made pricing strategies that, while potentially entailing an output expansion, may foster the ability of firms to appropriate consumer surplus.

The Issues Paper reports that there has been a growing use of algorithms by firms active in Portugal to monitor the online prices of competitors. These findings are in line with those of the e-commerce sector inquiry of the European Commission. The AdC further notes that pricing algorithms can be instrumental in collusive agreements between firms, and assist in the implementation of the terms of co-ordination. These algorithms may also facilitate tacit collusion, as they generate standardised decisions that can be deciphered by competitors, enhancing market transparency and the implicit commitment to a given strategy.

Regarding ranking and recommendation algorithms, data shows that their use is widespread by firms in Portugal. They are used by firms in ranking and recommending products online, in digital advertising and in search engines. The Issues Paper shows that for 75% of the respondents in Portugal, the order in which search results are displayed affects their consumption behaviour. This is the highest value for the EU. In the AdC’s opinion, the potential for firms to divert consumers from certain products/services to others is high, granting a competitive advantage to certain products/services at the expense of others. Where algorithms are used in ecosystems or by vertically integrated platforms, firms may increase their capacity to leverage market power between products and services.

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Law and Practice

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Abreu Advogados 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.

Trends and Development

Authors



Cruz Vilaça Advogados is a highly specialised law firm that has its credibility and market position built upon its members’ experience, with a long record in academia and public service, in the EU courts, as well as in nearly 20 years of private practice. The firm's activity focuses on EU and competition law, state aid and fundamental rights law. In these fields, it currently assists many clients in the digital and energy sectors. The firm's practice is not limited to Portugal but is also Europe-wide. Besides a vigorous competition law activity, it has a strong EU law practice, both counselling and intervening in cases before the European courts. The team of eight lawyers and three consultants is one of the largest, most experienced and academically most qualified EU and competition law teams in Portugal (six out of eleven members hold a PhD). The members are actively involved in EU and competition law associations.

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