With the goal to strengthen the enforcement of the current regime that has been in effect for almost 20 years and dissuade the economic agents to conduct these practices, the Government is about to change the current legal regime of the trade individual restrictive practices.
Coincidence or not, this change was triggered by a notorious case a year ago extensively discussed in the media with a well-known Portuguese retailer. On the 1st of May of 2012, the retailer launched a sales campaign of 50% discount in almost every product sold to those who spent more than € 100. This promotion action revealed extremely successful, leading a huge number of consumers to shop, fighting with each other to grab as much products as they could and spending long hours in the queues to pay for them in order to benefit from the 50% discount.
Back then the Portuguese Competition Authority opened an administrative offence proceeding against the retailer for selling below cost and imposed a fine of € 29.927,88, for 15 sales at a loss. The retailer appealed to the Competition Court that reduced the fine to € 12.000 due to the fact that there had been only 1 sale at a loss instead of the 15 considered by the Portuguese Competition Authority. Again the retailer appealed and the decision is still pending.
Under the trade individual restrictive practices regime (Decree-Law n.º 370/1993 of October, 29) the following practices are forbidden:
- Selling below cost
Selling goods at a price lower than the buying price, plus taxes and transport charges, with some exceptions legally foreseen (ex.: sales and promotions).
- Not providing list prices and sales conditions
The sales conditions should include, without limitation, the payment terms and the several applicable discounts. Additionally, the terms and conditions under which a financial compensation or of other nature is granted as consideration of specific services (ex.: advertising and marketing services) must be put in writing.
- Applying discriminatory prices or sales conditions
Offering prices or sales conditions discriminatory concerning equivalent transactions, particularly when such practice would result in different orders execution times or different types of packaging, delivery, shipping and payment that are not justified by corresponding differences in the cost of the supply of products or the provision of services.
- Refusal to sell products or render services
This forbidden practice applies also even in case (i) of non-essential goods or services and (ii) such refusal does not cause injury to the regular market supply with some exceptions legally foreseen (ex.: existence of debts from previous supplies).
- Abusive business practices
These consist on granting prices, payment conditions, selling arrangements or other commercial conditions exorbitant in comparison to the general sales conditions which result in granting of benefit to the buyer that is not proportional to the volume of purchases or the value of the services rendered.
Currently, in case of non-compliance fines up to € 14.963,94 maximum can be applied. In the future and no later than October, 2013 the Portuguese Authorities will be empowered with:
- Higher fines
Impose in case of any trade individual restrictive practice forbidden the following fines:
- Up to € 20.000 (natural person)
- Up to € 50.000 (microenterprise)
- Up to € 150.000 (small enterprise)
- Up to € 450.000 (medium enterprise)
- Up to € 2.500.000 (large enterprise)
- Precautionary measures
Order an interim decision to suspend the trade practice whenever there is strong evidence that a trade individual restrictive practice is taking place that would imminently cause a serious and irreparable damage to the other economic operators.
- Periodic penalty penalties
Impose periodic penalties whenever interim measures are not complied up to € 50.000/day of delay subject to the following total limits: 30 days and € 1.500.000.