Spotlight: restrictive agreements and dominance in Portugal

1 Spotlight: restrictive agreements and dominance in Portugal

All questions

Antitrust: restrictive agreements and dominance

As previously indicated, the Act prohibits agreements, concerted practices and trade association decisions, including cartels, whose object or effect is to restrict competition.48 It also prohibits undertakings in a position of dominance from abusing their position.49

Abusive conduct includes imposing, directly or indirectly, unfair purchase or sale prices or other unfair trading conditions, limiting production, markets or technical development to the detriment of consumers, applying dissimilar conditions to equivalent transactions with trading parties, thereby placing them at a competitive disadvantage, making the execution of contracts subject to the acceptance by the other parties of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of the contracts, and refusing another undertaking access to a network or other essential facilities that it controls, when appropriate payment for access is offered, in a situation where the other undertaking cannot, therefore, in fact or in law, act as a competitor of the undertaking in a dominant position in the market, upstream or downstream, unless the dominant undertaking can demonstrate that, for operational or other reasons, this access cannot reasonably be provided.

The Portuguese legal framework on restrictive practices and the abuse of dominant positions is very similar to that applied at EU level; however, the Act also includes provisions on the abuse of a situation of economic dependence. An undertaking is considered to be in a situation of economic dependence with regard to another undertaking if it does not have an equivalent alternative to contracting with that undertaking (i.e., when the goods or services at issue are provided by a limited number of undertakings and the undertaking would be unable to obtain identical conditions from other commercial partners within a reasonable period). An abuse of a situation of economic dependence may include any of the types of conduct previously mentioned and identified as potentially abusive under the abuse of dominance rules, as well as the full or partial rupture of an established commercial relationship, in view of past commercial relations, trade practices in the relevant market and contractual conditions.

i Significant cases

The major cases regarding the abuse of a dominant position involved Portugal Telecom (PT), the former telecommunications incumbent. PT was sanctioned for discriminatory pricing for allegedly offering more favourable prices, through special discounts, to operators from its group compared with those for competing retailers. It was also sanctioned for alleged margin-squeezing practices and for an alleged refusal to grant access to its underground conduit network, which the PCA considered to be an essential facility.50 The most significant sanction imposed amounted to approximately €53 million, although the appeal court considered the infringement to be time-barred.51

The PCA also sanctioned Sport TV, an undertaking active in the supply of premium sports content for television platforms, with a fine of €3.7 million for an alleged abuse of a dominant position consisting of applying discriminatory commercial conditions to several pay-per-view operators.52

The National Association of Pharmacies and three other undertakings of the same group (Farminveste SGPS, Farminveste – Investimentos and Health Market Research) were also sanctioned with a fine amounting to €10.34 million for abuse of a dominant position in the markets for both pharmaceutical commercial data and market studies based on pharmaceutical commercial data. In 2016, this decision was upheld by the Competition Court; however, the amount of the fine has been reduced to €6.89 million.53

Later in the year, the PCA issued a statement of objections against EDP and SONAE, having fined the companies in 2017 with overall fines of €38.3 million for alleged anticompetitive market-allocation practices.54 This case was appealed first to the Competition Court, which upheld the decision with a 10 per cent reduction of the fine, and subsequently to the Lisbon Court of Appeal, which submitted a request for a preliminary ruling to the ECJ in 2021, where the case is currently under discussion.55

In connection with vertical restrictions, the PCA closed a procedure against Bayer regarding a clause in its standard contract with wholesalers, according to which wholesalers were allegedly obliged to carry Bayer products exclusively, for five years.56 Bayer removed the clause from the contracts and proposed an amended contract to the PCA as a remedy. The PCA has also fined the dairy company Lactogal €341,098 for resale price maintenance practices (minimum price-fixing) in the on-trade distribution market for dairy products, considering it a vertical agreement.57

The PCA sanctioned Petrogal, Galp Açores and Galp Madeira (all of which are part of the Galp Energia group and active in the liquefied petroleum gas sector) with fines amounting to €9.29 million for exclusive distribution agreements that allegedly restricted passive sales.58 This decision was upheld by the Competition Court (although the Court has reduced the fines to €4.1 million) and subsequently by the Lisbon Court of Appeal.

In December 2018, after several years of investigation, the PCA closed its investigation into exclusive distribution agreements between pay TV platforms and football clubs regarding certain TV sporting rights. These agreements had a duration of 10 years and the pay TV platforms concerned were shareholders of the main paid TV content channel in Portugal, Sport TV.59

During the course of 2019, the PCA imposed a fine of €48 million on EDP for abuse of a dominant position through manipulation of its production infrastructure to obtain greater revenues.60 The investigation started in 2016 and the PCA found the existence of anticompetitive practices in EDP’s control of the provision of teleregulation and secondary reserve services under the Contractual Balance Maintenance Costs (CMEC) regime. According to the PCA, in diverting the provision of services from its CMEC regime infrastructure to other channels, EDP had a significant negative impact on the National Electricity System and harmed consumers.

Also, in 2019, following two complaints from former Super Bock distributors, the PCA sanctioned Super Bock, together with a board member and one of the company’s directors, with fines totalling €24 million, for fixing minimum resale prices and other commercial conditions for its products (i.e., beer and other beverages) in hotels, restaurants and cafes. According to the PCA, this practice was implemented through the imposition of commercial conditions, including sanctions in cases of non-compliance, which ultimately resulted in the fixing of distributors’ resale prices.

ii Trends, developments and strategies

In recent years, the PCA has favoured closing cases subject to the adoption of commitments whenever important procedural gains can be anticipated.

For example, in 2015, the PCA addressed several vertical antitrust concerns in the automobile sector. In the case against Peugeot Automobiles, this undertaking offered commitments designed to address the PCA’s concerns about the alleged existence of a warranty extension agreement that prevented consumers from getting their cars repaired in independent garages. The published proposals were submitted for public consultation and were then accepted and deemed mandatory by the PCA.61 Similar commitments were offered by Ford Lusitana62 and SIVA (importer and distributor for the
automobile manufacturers Audi, Volkswagen and Skoda).63 The commitments proposed were also accepted and deemed mandatory by the PCA.64

In 2016, the PCA opened proceedings against DIA Portugal (a supermarket chain) for alleged antitrust concerns arising from the company’s franchise system. To address the PCA’s concerns, DIA Portugal offered commitments designed to clarify that it did not impose minimum prices to its franchisees’ network.65 The commitments were later accepted and deemed mandatory by the PCA.66

In 2018, the PCA closed an abuse of dominant position case subject to conditions by the postal service incumbent CTT, which has undertaken to offer access to its postal network to competitors.67

iii Outlook

For 2022, the PCA has established as one of its priorities the detection and investigation of abuses of a dominant position, especially in digital ecosystems. To this end, the PCA has already issued a call for information with the purpose of collecting comments from stakeholders to help identify possible barriers to entry and expansion of companies, exclusion strategies and the use of algorithms to monitor and set prices.68 Moreover, the PCA is expected to continue its transparency efforts to promote access to its decisions and the decisions of courts of appeal, and to disseminate accurate and complete information on competition rules. As mentioned, the PCA has updated its website and decision directory, greatly facilitating research into previous decision practice, as well as current proceedings.

According to public information, it appears that the PCA is currently investigating cases of abuse of dominant position, which may result in the issuance of statements of objections during the course of 2022.

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