The PCA has exclusive jurisdiction to enforce the merger control rules established in the Competition Act. Only concentrations, as defined in Article 36 of the Competition Act, which meet one of the notification thresholds established in Article 37(1), are subject to merger control review. The basis of the concept of concentration lies in the notion of change of control on a lasting basis, and the definition of 'control' adopted in Article 36(3) of the Competition Act is similar to that used in the European Merger Control Regulation (i.e., the possibility of exercising decisive influence on an undertaking).
The Competition Act, unlike the EU Merger Regulation and the laws of most Member States (except for Spain), establishes alternative turnover and market share notification thresholds, even though a de minimis rule was introduced in 2012.
In brief, undertakings must notify a concentration if any of the following conditions is met:
- the combined aggregate turnover in Portugal of all the undertakings exceeds €100 million, provided that the individual turnover in Portugal of each of at least two of the undertakings concerned exceeds €5 million;
- the concentration results in the acquisition, creation or increase of a market share in Portugal equal to or greater than 50 per cent; or
- the concentration results in the acquisition, creation or increase of a market share in Portugal equal to or greater than 30 per cent and less than 50 per cent, provided that the individual turnover in Portugal of at least two of the undertakings concerned exceeds €5 million.
The time limit for the PCA to issue a decision is 30 business days for normal Phase I proceedings and 90 business days as from the initial notification for cases requiring in-depth investigations. These time limits can be suspended if additional information is requested from the parties and, in general, at the parties' request or if commitments are offered, or if the parties are invited to comment on the PCA's draft decision.
The PCA has also approved new filing forms, including, for the first time, a simplified form to be used in concentrations that, in view of certain parameters (e.g., no market overlap or limited joint market shares), will not raise competition concerns.
Since the enactment of the Competition Act currently in force, and similarly to the EU Merger Regulation provisions, the parties no longer have a specific deadline to notify (unlike previously, where parties had seven business days to do so). The parties nevertheless are obliged to suspend the implementation of the concentration until the PCA has issued a clearance decision. Breach of this obligation entails a fine of no more than 10 per cent of the turnover of the undertaking in breach. Pursuant to the Competition Act, any act or transaction implementing the concentration prior to clearance from the PCA is unenforceable.
The most important exception to the referred standstill obligation is the possibility to implement public takeover bids, provided that, in general, the acquirer does not exercise the voting rights in the target entity until clearance is obtained.
The Competition Act now adopts the significant impediment of effective competition (SIEC) test to assess concentrations instead of the dominance test that was previously used.
Merger control decisions are subject to judicial appeal and to a special administrative appeal if the merger is blocked (although such an appeal would only be upheld if the benefits to the national economy outweigh the disadvantages to competition resulting from the prohibited merger).i Significant cases
The PCA has extensive experience in merger cases, having reviewed and decided an average of around 50 cases a year; it has issued only six prohibition decisions in merger control cases since its incorporation in 2003, even though there were several notifications withdrawn by the notifying parties in view of the obstacles posed by the Authority.
In relation to these prohibitions, it is worth noting that the Minister of Economy, further to a special administrative appeal provided for in the PCA's articles of association, overturned the PCA's prohibition decision concerning a merger in the highway management sector. One of the PCA's prohibitions, in the media sector, was based on a binding negative opinion issued by the media sector regulator (since this decision was binding under the merger control framework).
With regard to merger remedies the PCA's Guidelines on Merger Remedies are in line with EU law and practice. The PCA has also imposed structural and behavioural remedies on several occasions. For instance, it imposed behavioural remedies in the concentration between two Portuguese commercial airlines (TAP and PGA). The remedies in the clearance decision included freeing up slots at Lisbon and Oporto Airports, limiting the number of flights operated by the merged airlines on certain routes, as well as limitations on the prices charged. In 2015, behavioural remedies were also imposed upon two concentrations (involving the same acquiring undertaking, part of the EDP Group, which was previously the incumbent supplier of electric energy in Portugal) in the market for the production of electric energy. In both cases, the acquirer undertook to maximise the production of energy in order to avoid any negative impact on the market, in particular, a potential increase in wholesale prices.
Regarding structural remedies, the decision practice of the PCA is also noteworthy. Remedies in two concentrations in the transportation sector included the divestment of one of the parties' operations in the inter-urban route where competition concerns were identified in the TRPN/Internorte case, and the approval of an up-front buyer solution in the Powervia/Laso*Auto-Laso*Probilog*Laso Ab case. More recently, in the Arena Atlântida/Pavilhão Atlântico*Atlântico case, a merger involving the acquisition of Pavilhão Atlântico (the main indoor arena in Lisbon), one of the shareholders of the acquiring undertaking committed to divest its shareholding in a ticketing services company, since the PCA had identified the referred shareholding as a vertical restraint to competition.
In 2018, divestment remedies were also offered in the Rubis/Repsol GLP case in order to overcome the horizontal concerns identified by the PCA. It should be mentioned that, for the first time, the divestment in question was made through a 'fix it first' solution (i.e., with a suitable buyer already found and accepted by the PCA prior to the clearance decision).
As regards the imposition of sanctions on undertakings that failed to file a concentration, early in 2013 the PCA imposed fines amounting to €149,278.79 for failure to notify a concentration in the pharmaceutical sector (this decision was appealed based on formal grounds and was reissued by the PCA in 2014). More recently, in 2017 the PCA imposed fines amounting to € 38,500 for failure to notify a concentration in the dental clinics sector, following a settlement procedure.ii Trends, developments and strategies
The simplified filing form and pre-notification contacts have been increasingly used, enabling a swifter assessment and earlier decisions regarding uncomplicated matters. The PCA is expected to continue to promote the use of the simplified filing form, as well as pre-notification contacts in order to deliver swifter decisions and enhance transparency in the market.
Also, as regards referral requests by the PCA, it is worth noting that the European Commission, in 2014, refused a request from PCA to refer the Altice/PT merger case for assessment under Portuguese competition law. This merger case involved the acquisition of the Portuguese telecommunications operator PT Portugal by the multinational cable and telecommunications company Altice. The European Commission concluded that, given its extensive experience in assessing cases in this sector and the need to ensure consistency in the application of merger control rules in the fixed telecommunications sector across the European Economic Area, it was better placed to deal with the case.
The PCA also seems to have strengthened its demands in terms of remedies, demanding structural remedies in the most complicated cases of 2018, Rubis and Altice (in this last case, as mentioned, the notifying party opted to withdraw the notification).iii Outlook
The PCA has also stated that one of its priorities for 2019 is still the implementation of more efficient and quicker merger control proceedings.
It seems that the PCA's merger control decisions are being increasingly subject to judicial review. In 2015, the Portuguese Competition, Regulation and Supervision Court rejected, on the one hand, the appeal by Media, Zon Optimus and Portugal Telecom related to the PCA's decision to initiate an in-depth investigation of this concentration and, on the other hand, these undertakings claim that the concentration had been tacitly approved. Also in 2015, this court confirmed the PCA's decision in the Arena Atlântida/Pavilhão Atlântico*Atlântico case. The PCA's clearance, after an in-depth investigation, of the SUMA/EGF concentration (a merger decision related to a reprivatisation in the waste sector) is currently being disputed in the courts. So far, the Portuguese Competition, Regulation and Supervision Court has already rejected, in two separate proceedings, the adoption of interim measures to temporarily suspend the effects of the decision.