Antitrust: restrictive agreements and dominance
As previously indicated, the Competition Act prohibits agreements, concerted practices and trade association decisions, including cartels, whose object or effect is to restrict competition (Article 9 of the Competition Act). It also prohibits undertakings, in a position of dominance, from abusing their position (Article 12 of the Competition Act). 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 such 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, such 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 the EU level; however, the Competition Act also includes provisions on the abuse of a situation of economic dependence. 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. In fact, PT was sanctioned for discriminatory pricing for allegedly offering more favourable prices, through special discounts, to operators from its group compared to 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. The most significant sanction imposed amounted to approximately €53 million, although the appellate court considered the infringement to be time-barred.
In 2009, the PCA dismissed, subject to certain conditions, a case against the food undertaking Sugalidal on the basis that it had allegedly abused its dominant position in the market for purchasing tomatoes for processing by requiring its suppliers to use a specific variety of seed produced by a company of its group. Sugalidal undertook to remove the illegal clause from its contractual arrangements and to publicise the removal.
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.
The PCA has also sanctioned a professional association for an abuse of a dominant position. In 2010, the Portuguese Chartered Accountants Association was fined for alleged restrictions imposed in the market for the training of certified accountants.
More recently, the PCA has sanctioned the National Association of Pharmacies and three other undertakings of the same group (Farminveste SGPS, Farminveste – Investimentos, Participações e Gestão, SA and HMR – Health Market Research, Lda) 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, Regulation and Supervision Court, however the amount of the fine has been reduced to €6.89 million.
In 2018, curiously enough, the PCA has closed an abuse of dominant position by the postal service incumbent CTT by means of the acceptance of certain commitments offered by this company. According to the public information, CTT has undertaken to, under certain conditions, offer access to its postal network to competitors.
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. 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.
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. This decision was upheld by the Competition, Regulation and Supervision Court (although the Court has reduced the fines to €4.1 million) and more recently by the Lisbon Court of Appeal, which confirmed the previous Court's decision in full.
In December 2018, after several years of investigation, the PCA closed its investigation on exclusive distribution agreements regarding certain TV sporting rights between pay-TV platforms and football clubs. These agreements had a duration of 10 years and the pay-TV platforms at stake were shareholders of the main paid TV content channel in Portugal, Sport TV.ii Trends, developments and strategies
The cases concerning PT's abuse of its dominant position faced many judicial obstacles. In fact, the decision imposing a fine of €38 million against PT for refusing to provide competitors access to what the PCA considered an essential facility – PT's underground conduit network – was overturned on appeal. The appellate court also considered the most significant sanction applied in this context – €53 million – to be time-barred.
The PCA is currently investigating other abuse of dominant position and well as vertical restrictions cases. In fact, the PCA has issued a statement of objections addressed to EDP, for an alleged abuse of a dominant position by means of the manipulation of the offer of the production infrastructures in order to obtain greater revenues.
The PCA has also sanctioned undertakings for having provided false or misleading information, in the context of a request by the PCA for information. In the first case, the PCA imposed a fine of €150,000 on Peugeot Portugal. Then, the PCA imposed a fine of €100,000 on CP Carga, and, lastly, a fine of €150,000 on Ford. CP Carga, Peugeot Portugal and Ford appealed against the decision to the Competition, Regulation and Supervision Court, which upheld all the appeals.
In 2015, the PCA addressed several vertical antitrust concerns in the automobile sector. For instance, 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 to public consultation and were then accepted and deemed mandatory by the PCA. Similar commitments were offered by Ford Lusitana and SIVA (importer and distributor of the automobile manufacturers Audi, Volkswagen and Skoda). The commitments proposed were also accepted and deemed mandatory by the PCA.
In 2016, the PCA opened proceedings against DIA Portugal (a supermarket chain) for alleged antitrust concerns arising from the company's franchise system. In order to address the PCA's concerns, DIA Portugal offered commitments designed to clarify that it did not impose minimum prices to its franchisees' network. The commitments were later accepted and deemed mandatory by the PCA.
Later in the year, the PCA also issued a statement of objections against the EDP Group and the SONAE Group, having fined the companies in 2017, with a global sanction amounting to €38.3 million for alleged anticompetitive market-allocation practices in 2012.
More recently the PCA has also issued a statement of objection addressed to the Portuguese brewery Super Bock for alleged resale price maintenance in the HORECA distribution channel. The closing of the case regarding the exclusive distribution of football rights – with the PCA stating that this issue was better solved by means of an amendment to the existing framework, in order to centralise and auction these rights, similarly to what takes place in the UK and in Spain -– may hint that the PCA will, in certain cases, be more focused on promoting legislative changes than on the alteration of particular contracts.iii Outlook
For 2018, the PCA has established as one of its priorities the detection and investigation of anticompetitive practices. Moreover, the PCA is expected to continue its efforts to promote access to its decisions and the decisions of courts of appeal, and to disseminate accurate and complete information on competition rules.
Additionally, the PCA will continue to promote the adoption of commitments, whenever important procedural gains can be anticipated, even in cases of abuse of a dominant position.