Portugal: Portugal Adopts New Competition Law

On 8 May 2012, Portugal's new competition law was published in the national Official Journal, thoroughly overhauling the Portuguese competition regime and aligning it with EU competition law. The new law will enter into force on 7 July 2012.

The reform was agreed upon in 2011 when Portugal, the European Commission, the European Central Bank and the International Monetary Fund signed the Troika Memorandum of Understanding. This reform is deemed to be particularly necessary in the current economic climate, since, according to Manuel Sebastião, Head of the Portuguese Competition Authority (PCA), it will contribute to reinforcing the competitiveness of Portuguese companies.

Many of the new developments deal with restrictive practices. First, the PCA has been given the possibility to prioritise cases, and thus it will no longer be compelled to respond to every complaint. This will allow the PCA to focus on the most critical cases and to handle complaints more efficiently.

Further, the PCA will be empowered to raid not only corporate offices but also employees' private homes. Additional investigatory powers have also been vested in the PCA, such as the possibility of seizing documents without having first obtained judicial authority to do so.

The new law introduces the possibility to terminate proceedings through commitments and settlement agreements, as well as the possibility to impose structural remedies whenever behavioural remedies are not sufficient to put an end to the restrictive practice concerned.

The Portuguese leniency program is also undergoing major modifications. Once the new competition law enters into force, the leniency program will only apply to cartels, instead of all restrictive agreements as is currently the case. The new regime will align the levels of reductions in fine for leniency applicants with the European Leniency Notice. Moreover, a larger number of undertakings will be able to benefit from the leniency regime.

A controversial provision of the new competition law is the lack of suspensive effect of appeals against PCA's decisions, which means that, despite an appeal, the undertaking concerned will still have to pay immediately any fine imposed (or, at least, provide a bank guarantee in case the payment of the fine would cause considerable damage to the company). This provision has been criticised on constitutional grounds as being inconsistent with the presumption of innocence. Moreover, some have pointed out the difficulties that many companies will face in obtaining bank guarantees given the current economic and financial climate.

With regard to merger control, the new law has significantly modified notification thresholds. Merging undertakings will be subject to the obligation to notify a proposed concentration if (i) their combined market share exceeds 50%; (ii) their combined market share ranges between 30 and 50% and the turnover in Portugal of at least two of the undertakings concerned exceeds € 5 million; or (iii) the combined turnover of all the undertakings concerned exceeds € 100 million in Portugal, provided that the turnover in Portugal of at least two of the undertakings concerned exceeds € 5 million. Further, the previous deadline of seven working days to notify a merger has also been removed.

Insofar as market dominance is concerned, the new law will introduce the "significant impediment to effective competition" substantive test, in line with EU competition law.

In parallel to the new law, the Portuguese government has announced the creation of a new court specialised in competition and regulatory matters, which is expected to significantly speed up judicial proceedings. Although the new competition law does not directly regulate this point, it does include an innovative provision with respect to judicial review of PCA decisions: under the new regime, on appeal the courts will be entitled to increase the amount of fines imposed by the PCA, constituting an extension of their current powers. which are now limited to either confirming or lowering a fine.

Finally, the PCA will be required to publish its decisions on restrictive practices on its website. Moreover, it will also have to publish guidelines on the method of setting fines, which will provide companies with a greater degree of legal certainty.

The new law has been criticised for not introducing significant improvements with respect to control and transparency mechanisms while increasing the PCA's freedom of action, thus reducing the PCA's accountability. However, the reinforcement of the PCA's investigation powers is expected to heighten the PCA's readiness to act in antitrust matters, which has hindered its ability to enforce competition law in the past.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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