1 Legal and enforcement framework
1.1 Which legislative and regulatory provisions apply to cartels in your jurisdiction?
The primary statute governing cartels is Article 9 of the Competition Act (19/2012), which follows Article 101 of the Treaty on the Functioning of the European Union (TFEU).
Additional rules and guidance can be found in the bylaws of the Portuguese Competition Authority (PCA) (Decree-Law 125/2014), as well as in regulations and guidelines adopted by the PCA, including:
- the Explanatory Notice regarding Immunity from or the Reduction of a Fine;
- the Guidelines on the Methodology of Application of Fines; and
- the Guidelines on the Handling of Antitrust Proceedings.
Like other competition law infringements, cartels are considered administrative offences and not criminal offences, and are therefore punishable with fines and other ancillary sanctions. Enforcement is complemented on a subsidiary basis by the Code of Administrative Procedure (Decree-Law 442/91) and the Misdemeanours Regime (Decree-Law 433/82).
Judicial review of the PCA's cartel enforcement decisions is governed by the Code of Administrative Courts Procedure (Law 15/2002).
The Portuguese leniency programme for competition law infringements is set out under Articles 75 to 82 of the Competition Act, as well as under Regulation 1/2013 ("The Procedures relating to obtaining immunity from a fine, or the reduction of a fine, under the provisions of Law 19/2012").
Finally, the EU Private Damages Directive (2014/104) has been transposed into Portuguese law (Law 23/2018) and sets out the liability regime for damages due to competition law infringements.
1.2 Do any special regimes apply to cartels in specific sectors?
No. With regard to cartels, the PCA has jurisdiction over all economic activities in the private, public and cooperative sectors.
1.3 Which authorities are responsible for enforcing the cartel legislation?
The PCA – established in 2003 by Decree-Law 10/2003 – is a public entity and functions as the independent and autonomous authority responsible for enforcing cartel legislation. It has sanctioning, supervisory and regulatory powers in this regard. Within the PCA, the Anti-cartel Unit is dedicated to the investigation and detection of cartels.
The PCA benefits from statutory independence; administrative, financial and management autonomy; and organic, functional and technical independence.
National courts may also rule on the existence of cartels in the context of private enforcement.
For sector-specific activities that are subject to specific regulation, Articles 5(4), 34(4) and 35 of the Competition Act establish a general principle of cooperation between the PCA and sector regulators in the application of competition legislation, based on consultation mechanisms, whereby the PCA may obtain opinions from such regulators.
1.4 How active are the enforcement authorities in investigating and taking action against cartels in your jurisdiction? What are the statistics regarding past and ongoing cartel investigations? What key decisions have the enforcement authorities adopted most recently?
The PCA has become increasingly active in the fight against cartels.
In general terms, there has been a dramatic increase in the number of dawn raids conducted in recent years. Since 2017, 22 investigations involving 56 facilities have been conducted in the following sectors:
- tourist river transport;
- driving education;
- distribution and retail;
- food industry associations and advertising associations;
- provision of healthcare services;
- waste management; and
- private surveillance firms.
This increase in activity has already seen results: in 2019 the PCA adopted a final decision in relation to an insurance cartel, fining six companies a total of €54 million.
It also issued three statements of objections against several companies active in the retail and drinks industries. The theory of harm pursued by the PCA here is a so-called ‘hub-and-spoke' cartel. According to the PCA's public statements on the matter, the three separate proceedings are part of a larger sectoral investigation which is expected to culminate in the adoption of other statements of objections under the same theory of harm.
Finally, the PCA has been continuously active in its enforcement activity, with a strong focus on the fight against cartels, which was once again included in its priorities for 2019.
2 Definitions and scope of application
2.1 How is a ‘cartel' defined in the cartel legislation?
In line with Article 101 of the Treaty on the Functioning of the European Union (TFEU), Article 9 of the Competition Act sets forth a general prohibition against "agreements between undertakings, concerted practices and decisions by associations of undertakings which have as their object or effect the prevention, distortion or restriction of competition in the domestic market, in whole or in part, and to a considerable extent".
In addition, Article 75 on the rules applicable to immunity applications loosely defines ‘cartels' as practices between two or more competitors prohibited by Article 9 of the Competition Act and, if applicable, Article 101 TFEU.
2.2 What specific offences are defined in the cartel legislation?
Articles 9 and 75 of the Competition Act set out a non-exhaustive list of specific cartel offences, including the following:
- the fixing or coordination of purchase or sale prices or other trading conditions;
- the limiting or controlling of production, markets, technological development or investment;
- the imposition of production or sales quotas;
- the application of dissimilar conditions to equivalent transactions with other trading parties;
- market sharing, including concerted activities in auctions and public tenders; and
- restrictions on imports or exports.
In addition to this list, any other anti-competitive actions against competitors that restrict competition are also prohibited.
There are no sector-specific offences, as the Competition Act applies equally across all economic sectors.
2.3 Is liability under the cartel legislation civil, criminal or both?
Cartels are considered administrative offences – that is, misdemeanours – and are therefore quasi-criminal offences. They are punishable with fines and other ancillary sanctions; no criminal sanctions are available.
In addition, parties to a cartel will be liable under the applicable civil legislation – that is, Law 23/2018, which transposed the EU Private Enforcement Directive.
2.4 Can both individuals and companies be prosecuted under the cartel legislation?
2.5 Can foreign companies be prosecuted under the cartel legislation?
Yes. Pursuant to Article 2(2) of the Competition Act, any prohibited practices that take place within the Portuguese territory and/or that have or are liable to have an effect in the Portuguese territory are subject to the Competition Act, regardless of whether the companies involved are domestic or foreign, or whether they have a presence in Portugal.
2.6 Does the cartel legislation have extraterritorial reach?
Yes. As mentioned in question 2.5, according to the effects doctrine, the Portuguese Competition Authority (PCA) has jurisdiction to prosecute any competition law infringements that have an effect in the Portuguese territory, regardless of whether the infringement was actually carried out in Portugal (eg, an infringing business practice that is carried out in a third country, but has an effect in the Portuguese territory, will fall under the scope of the Competition Act).
In addition, the European Commission and the PCA or the national courts (under the principles of comity) are competent to enforce Article 101 TFEU in relation to issues of trade between member states.
2.7 What is the statute of limitations to prosecute cartel offences in your jurisdiction?
Pursuant to Article 74(1)(b) of the Competition Act, the statute of limitations to prosecute cartel offences is five years, starting from the end of the infringement (although the limitation period for continued infringements begins to run only once the infringement has ended).
If the PCA imposes a sanction following a cartel investigation, the limitation period for enforcement thereof is also five years, starting from the date of adoption of the decision.
These limitation periods are subject to suspensions (eg, for judicial review) for a maximum period of three years; and to interruptions (eg, where the PCA acts during the course of an investigation), which resets the clock. However, the PCA's procedure may be extended only to a maximum period of seven and a half years, and may be suspended only for a maximum period of three years, resulting in a total maximum delay of 10 and a half years.
3 Investigations – general
3.1 On what grounds may the enforcement authorities commence an investigation?
According to Article 17 of the Competition Act, the Portuguese Competition Authority (PCA) may initiate an investigation:
- following a complaint (which may also be made via the PCA's online complaints portal);
- on an ex offico basis; or
- following a leniency application (which is the most common trigger in cartel investigations).
Pursuant to Article 7(2) of the Competition Act, in assessing whether to initiate proceedings, the PCA shall take into account the following factors, among others:
- the priorities set out in the PCA's competition policy;
- the elements of fact and of law;
- the seriousness of the alleged infringement;
- the likelihood that the infringement can be proven; and
- the extent of the investigatory measures required to adequately fulfil its mission.
3.2 What investigatory powers do the enforcement authorities have in conducting their investigation?
The investigatory powers of the PCA are foreseen in the PCA's bylaws (Decree-Law 125/2014) and in the Competition Act.
First, under Article 6(2) of the PCA's bylaws, the sanctioning powers of the PCA include the following:
- the power to investigate and sanction any infringement of Portuguese or EU competition rules which has an effect in the Portuguese territory;
- the power to impose and collect fines; and
- the power to impose interim measures.
Furthermore, the PCA's powers of investigation are laid down in Articles 13 to 35 of the Competition Act. Within this framework, two articles stand out: Article 15 and Article 18.
Article 15 allows the PCA to request documents and other information from companies, business associations or any other persons or entities. This article lists the requirements that must be followed in order for the PCA to request information from companies and/or other persons, under penalty of invalidity.
Article 18 sets out the PCA's powers of inquiry, search and seizure. Within the scope of these investigatory powers, the PCA may:
- order the production of specific documents or information;
- conduct interviews with individuals;
- conduct unannounced searches of business premises (after obtaining a judicial order);
- conduct unannounced searches of residential premises (after obtaining a judicial order);
- copy image computer hard drives using forensic IT tools (after obtaining a judicial order);
- retain original documents (after obtaining a judicial order);
- require an explanation of documents or information supplied; and
- secure premises overnight (with authorisation from the court).
3.3 To what extent may the enforcement authorities cooperate with their counterparts in other jurisdictions during their investigation? How common is such cooperation in practice?
The PCA is a member of several broader cooperation networks, including:
- the European Competition Authorities Association;
- the European Competition Network (ECN);
- the Ibero-American Competition Network;
- the International Competition Network;
- the Lusophone Competition Network;
- the Organisation for Economic Co-operation and Development; and
- the United Nations Conference on Trade and Development.
The PCA has also entered into cooperation agreements with the Brazilian System of Competition Policy, the Mozambican General Direction of Commerce and the Turkish Competition Authority.
Naturally, the most common cooperation tool used by the PCA with its counterparts is the ECN, which – in light of the decentralised application of EU competition law – results in a regime of parallel competence between the national competition authorities of EU member states and the European Commission.
3.4 Is there an opportunity for third parties to participate in the investigation?
Yes. In general terms, the PCA's investigatory procedure is public (Article 32 of the Competition Act). However, the PCA may subject the procedure to judicial secrecy; in such cases third parties may access the non-confidential version of the file if they can show a legitimate interest. In cases where the PCA intends to close an investigation with conditions, for example, it will publish a summary of the case and third parties may submit their comments on the proposed conditions.
The PCA also coordinates closely with sectoral regulatory authorities. If it is investigating a practice in a market that is subject to sectoral regulation, its decision will be preceded by an opinion from the sectoral regulatory authority concerned (Article 35 of the Competition Act).
The target of an investigation may also request an oral hearing to complement its written defence. Any natural or legal persons can participate in the hearing if they can clarify specific aspects of the target's written statement (Article 26 of the Competition Act).
Finally, Article 18(1)(e) of the Competition Act states that the PCA may request any services from the public administration, including the police, that are necessary for the performance of its functions within the context of a dawn raid. In practice, the PCA is usually accompanied by the police.
3.5 What are the general rights and obligations of the enforcement authorities during the investigation?
As mentioned in question 3.2, Article 18 of the Competition Act sets out the PCA's general investigation rights, which include the right to:
- request information and documents;
- interrogate company employees and request documents and other information from them;
- interrogate any other persons whose statements are deemed pertinent and request documents and other information from them;
- search the premises, land or means of transport of undertakings or associations of undertakings for examination, collection and apprehension of documents and information; and
- seal the premises of undertakings and associations of undertakings.
According to Article 15, the PCA can request documents and information (which must usually be delivered within a timeframe of 10 business days), where appropriate. In making this request, the PCA must set out:
- the legal grounds for the request;
- the capacity in which the request is being made;
- the purpose of the request;
- the deadline for response;
- the possibility to classify certain information as confidential; and
- the fact that non-compliance will trigger a breach of law.
With regard to the PCA's obligations during investigations, its investigative powers are limited to the extension of the scope and subject matter of the investigation as expressed in the court order. All dawn raids must be carried out by duly appointed employees of the PCA, bearing credentials issued by the PCA stating the objective of the investigation and the judicial order from the competent judicial authority.
In addition, the PCA may not seize correspondence (including unread emails) and telecommunications that are explicitly protected.
Other obligations of the PCA during the investigations include the duty to:
- respect the rights of defence of the parties;
- protect the parties' confidential information; and
- provide access to the proceedings under the conditions established by law.
3.6 What are the general rights and obligations of the target company during the investigation?
The rights of companies and individuals targeted in an investigation include the following:
- the right to access the file;
- the right to exercise a defence in accordance with the adversarial principle;
- the right to a hearing;
- the right to appeal interlocutory and final decisions adopted by the PCA;
- the right to have confidential information properly protected; and
- the right to non-incrimination.
In general terms, and with regard to obligations during the investigation, the targeted company or individual must answer the PCA's request for information within the specified timeframe and cooperate with the PCA's inquiries and search and seizure actions. Specifically in the context of dawn raids, the targeted company or individual must:
- cooperate with the PCA and not, either by wilful misconduct or negligence, obstruct or preclude the exercise of the PCA's investigatory powers (non-compliance is subject to a fine of up to 1% of turnover in the year immediately preceding the final decision for each undertaking concerned or, in the case of associations of undertakings, the aggregate turnover of the associated undertakings); and
- supply information in response to a request by the PCA (a failure to supply information, or the supply of false, inaccurate or incomplete information, either by wilful misconduct or negligence, shall be subject to a similar sanction as that mentioned above).
3.7 What principles of attorney-client privilege apply during a cartel investigation?
Legal privilege is protected under the PCA's regulations (as well as before the Portuguese courts) by Article 87 of the Portuguese Bar Association's by-laws, the Portuguese Constitution and the Penal Code. It covers both external and in-house counsel (as long as they are validly registered with the Portuguese Bar Association).
This protection is also granted under the Competition Act, which foresees that the PCA shall not seize any correspondence or documents that are protected by attorney-client privilege, unless they are objectively (or partly) relevant to the competition law infringement that the PCA is investigating.
The PCA may also conduct searches of lawyers' offices only:
- if there is a well-substantiated indication that evidence of a serious infringement may be found there; and
- with authorisation from the judge responsible for the procedural safeguards, who must be present during the search.
3.8 Are details of the investigation publicly announced? If so, what principles of confidentiality apply?
The general rule is that PCA proceedings are public (Article 32(1) of the Competition Act), and that anyone with a legitimate interest can consult the proceedings (Article 33(3)), subject to redaction of confidential documents.
However, the PCA may decide that a case will be kept confidential if it considers that publicity would harm the investigation, or if it considers (on its own initiative or in response to a request from the target company) that the rights of the party concerned in the case so determine.
As its general practice, the PCA keeps investigations confidential and subject to judicial secrecy until the final decision has been adopted. Nevertheless, when the PCA carries out dawn raids, it sometimes (eg, if there has been a leak to the press) issues a press release stating that it has conducted a dawn raid in a specific sector, without identifying the target companies. In addition, although investigations are usually subject to judicial secrecy, in some situations the PCA will issue a press release to report on certain aspects of the investigation, e.g. when it adopts a statement of objections.
Also, notwithstanding judicial secrecy, the target company has the right to access the file once the statement of objections has been issued, in order to exercise its right of defence (Article 33(2) of the Competition Act).
Through the proceedings, the PCA will apply similar principles to those applied by the European Commission with regard to confidential issues. In this context, the PCA shall have due care for the legitimate interests of companies, associations or other entities relating to non-disclosure of their business secrets.
During the course of an investigation, target companies will have at least 10 days in which to classify information as confidential, which the PCA may choose to accept or reject. Access to this documentation is then granted solely to attorneys or external advisers for the purpose of preparing the defence.
All final decisions adopted by the PCA are published on its website. However, the publicly available versions of final decisions will be subject to a ‘confidentiality assessment', whereby the PCA will safeguard business secrets and other information considered confidential to the parties.
4 Investigations – step by step
4.1 What initial steps do the enforcement authorities take to commence a cartel investigation?
The Portuguese Competition Authority (PCA) will commence an investigation either ex officio, following a complaint or following a leniency application (which is the most common trigger in cartel investigations).
Once the PCA learns of a potential competition infringement, it will launch an official procedure. At this first stage of the proceedings, the PCA will adopt all necessary investigatory measures to determine whether the practice at stake may amount to a competition law infringement and which parties were involved in the alleged infringement. In cartel investigations, the first investigatory measure will typically consist of dawn raids.
The PCA will conclude the first stage of the proceedings with the adoption of a decision to:
- terminate the investigation, if there is insufficient evidence for a reasonable likelihood of a decision imposing a sanction;
- settle the case by issuing a sanctioning decision within the context of a settlement procedure;
- terminate the investigation by adopting a decision imposing conditions (to guarantee compliance with commitments submitted by the party concerned in order to address the competition concerns stemming from the practice); or
- continue with the proceedings by initiating the second stage of the investigation, by issuing the defendant(s) in the proceedings by means of a statement of objections.
4.2 Are dawn raids commonly conducted in your jurisdiction? If so, what are the pre-conditions for conducting a dawn raid? When, where and by whom are they conducted? Do the enforcement authorities have the power to search private as well as company premises?
There has been a dramatic rise in the number of dawn raids conducted in Portugal. Since 2017, the PCA has conducted 21 dawn raids – a significant increase on the previous average of fewer than three dawn raids per year.
The PCA may conduct dawn raids at a company's premises with or without prior notice. The PCA may also conduct dawn raids at the private premises (ie, homes, property and vehicles) of individuals (eg, shareholders, board members, employees and other individuals working with a company or association of companies, including lawyers and doctors) where there is a well-substantiated indication that evidence of serious infringement may be found there. The requirements when conducting dawn raids at private premises are much stricter than those applicable to dawn raids at business premises and a warrant is needed from the competent judicial authority.
Dawn raids are conducted by PCA officials who must, for this purpose, present credentials issued by the PCA stating the purpose of the investigation and the warrant from the competent judicial authority.
Finally, the Competition Act states that where necessary, the PCA can seek support from the police when carrying out dawn raids (which often happens at the beginning of a dawn raid).
4.3 What powers do officers have during the dawn raid? Are there any limitations on these powers?
When conducting a dawn raid, PCA officials generally enjoy the powers granted to the PCA regarding its investigatory process under Article 18 of the Competition Act. These include the power to:
- question and interview persons at the company;
- search, examine, collect and seize accounting data or other documentation, including the devices on which they are stored or saved (eg, computers, tablets or electronic devices);
- request documents from the company; and
- seal off any premises where such information or data may be stored or saved.
Key limitations to the PCA's powers include legal privilege and restrictions on telephone tapping, which is available only in criminal proceedings. In addition, the PCA must respect the parties' rights of defence and, when exercising its powers of inquiry, the right against self-incrimination.
4.4 What are the rights and obligations of the target company and any individuals targeted during a dawn raid?
Both the target company and any individuals investigated during a dawn raid have the right to have legal advisers present. However, the law does not require PCA investigators to await the arrival of legal advisers before commencing a dawn raid,
Article 18 of the Competition Act states that the PCA may interview individuals. When doing so, the PCA is obliged to notify the person being questioned whether he or she is being questioned as a witness or as a defendant. Defendants have a right against self-incrimination and may refuse to answer, whereas witnesses and legal representatives of the company are obliged to answer all questions of fact truthfully. Individuals always have the right to request that a lawyer be present during the questioning.
In the context of investigations conducted by the PCA, the Competition Act states that, as a rule and unless such documents are the object of or an element in the infringement itself (in which case they may be seized), the PCA is prohibited from seizing documents that are covered by attorney-client privilege.
Attorney-client privilege is recognised in Article 87 of the Portuguese Bar Association Rules, which covers all facts, documents and information that relate directly or indirectly to professional matters disclosed by a client to its attorney. This privilege extends to any lawyers intervening in the matter and their respective employees; it also extends to in-house counsel.
The obligations of the targets of dawn raids include:
- the duty to cooperate with the PCA (non-compliance or obstruction of the exercise of the PCA's investigatory powers will be sanctioned with a fine of up to 1% of the company's turnover); and
- the duty to supply all information requested by the PCA (non-compliance is subject to a similar sanction).
4.5 What evidence can be seized during a dawn raid? Do the enforcement authorities have the power to interview witnesses and take statements during a dawn raid?
According to Article 18 of the Competition Act, during a dawn raid the PCA may seize accounting data or other documentation – irrespective of the devices on which it is stored or saved – in the premises, property or means of transport of the undertakings concerned, whenever this is deemed necessary to obtain evidence.
Documentation or correspondence protected by client-attorney privilege can be seized only under very strict conditions (see question 3.7). Furthermore, documents at banks and other credit institutions and covered by banking secrecy can be seized only where there are well-substantiated reasons to believe that such documents relate to an infringement and are important in proving that infringement. These seizures are carried out by the judge responsible for procedural safeguards, who may be assisted by the police or a member of the PCA, all of whom are bound by a duty of confidentiality.
Telecommunications and correspondence (if unopened) are specifically protected by the general regime of administrative offences (Decree-Law 433/82, as amended) and by the Portuguese Constitution.
Finally, both during dawn raids and at any other point in the proceedings, the PCA may interview any persons – either personally or through their legal representatives – whenever it considers that these statements may be pertinent to the investigation (see question 4.4).
4.6 How can a company best prepare itself for dawn raids? What best practices should it follow in the event of a dawn raid?
By their nature, dawn raids carried out by the PCA are usually unannounced and unexpected. Therefore, the best way to prepare for a dawn raid is to train all employees (including support staff, such as reception and IT staff) in how to behave, inform them of the consequences and have a set of guidelines in place.
Companies are usually recommended to assemble a designated taskforce for handling dawn raids, which should include a member of the senior management team and an in-house counsel.
Companies are also strongly recommended to seek assistance from external lawyers, to ensure that they can benefit fully from the protection of legal professional privilege against the disclosure of documentation.
During a raid, special dawn raid procedures should be followed. Companies should also take the following first steps:
- Liaise immediately with legal counsel;
- Check the identification documents of the officials that authorise an inspection and confirm its scope and purpose;
- Ensure that the officials are not left alone, and assemble a team of employees to assist each PCA or EU official/investigation team;
- Agree on a procedure with the officials in order to maintain control of what is happening and when;
- Make copies of the documents copied or analysed by the officials;
- Inform employees that a raid is taking place and issue instructions regarding cooperation, non-obstruction, non-destruction of documents and non-disclosure to third parties; and
- Not speak more than necessary or volunteer information or documents that have not been requested.
Companies should also consider working on their external communication strategy – in particular, by preparing a written statement to be released if approached by the press (this is a sensitive issue, as dawn raids are usually protected by judicial secrecy).
4.7 What are the next steps in the cartel investigation following a dawn raid? What timeframe do these typically follow?
Dawn raids typically occur in the first stage of the proceedings, during which the PCA undertakes all necessary investigatory measures to determine whether the practice at stake may amount to a competition law infringement and which parties were involved in the alleged infringement.
Following the dawn raid, the PCA may address further requests for information to the defendant, to clarify certain issues or to obtain additional information. It has also been the practice of the PCA to hold meetings with the parties to discuss the facts of the case and discuss its possible outcomes (eg, a first approach to a settlement).
Furthermore, after assessing all available evidence in the proceedings in detail, the PCA will notify the parties of which pieces of evidence will remain in the official files of the proceedings. If the PCA concludes that certain elements may not be relevant to the proceedings, these elements will be returned to the defendant.
In order to prepare for access to the file, the PCA will also request the defendant to indicate and substantiate whether any of the evidence seized in the dawn raid amounts to a business secret and should therefore be classified as confidential.
The PCA has an indicative deadline of 18 months to conclude the first stage of the proceedings (which is often extended). The possible outcomes of this stage of the proceedings are outlined in question 4.1.
Where the proceedings move to the second stage (ie, where the PCA issues a statement of objections), the defendant will have the opportunity to exercise its defence rights by replying to the statement of objections within a "reasonable period" (not less than 20 working days), to request the PCA to undertake additional investigatory measures and to have its written submissions complemented by an oral hearing.
4.8 What factors will the enforcement authorities consider in assessing whether cartel activity has taken place?
In general terms, when assessing a competition law infringement, the PCA will consider all elements of fact and law relevant to substantiating its case.
4.9 In case of a finding of cartel activity, can the company seek to negotiate a settlement, plea bargain or similar resolution? If so, what is the process for doing so?
Under Portuguese law, two resolution mechanisms are available for competition law infringements. The parties may:
- agree with the PCA on the adoption of binding commitments in exchange for the proceedings to be dropped; or
- enter into a settlement procedure that allows for a swift decision and a reduction in fine (cumulative with the leniency programme).
In cartel proceedings, given the seriousness of the offences, only the latter is typically available.
The settlement procedure is available on terms similar to those applied by the European Commission. However, fine reductions in Portugal are not subject to a 10% ceiling and the PCA will decide on the reduction on a case-by-case basis (neither the Competition Act nor the PCA guidelines on the method of setting the fine clarify the reduction that may be expected). Generally, the sooner a settlement is reached, the greater the reduction.
The Competition Act identifies two stages during which the settlement procedure may be applied:
- the investigation phase (where the party must submit a written settlement proposal, which the PCA will either refuse or accept); and
- the prosecution phase (where the party can admit the facts and accept responsibility for the infringement; the PCA will then either refuse or accept the settlement).
The facts admitted to the PCA in a settlement procedure cannot be judicially appealed. Moreover, only interested third parties may access related documents for the purposes of preparing their defence; they cannot make copies of such documents without authorisation from the parties involved.
5.1 Is a leniency programme in place in your jurisdiction? If so, how does this function?
The leniency programme is set out in:
- Articles 75 to 82 of the Competition Act (which set out the criteria for leniency);
- Regulation 1/2013 (which sets out the procedures for leniency); and
- the Portuguese Competition Authority's (PCA) Explanatory Notice on the Substantive and Procedural Rules for Immunity.
Leniency may be granted to both applicant companies and individuals (see question 5.5).
There are two types of leniency categories: (full) immunity and fine reduction.
In order to be granted immunity, the applicant must:
- be the first to inform the PCA of its participation in a cartel; and
- provide information and evidence enabling the PCA either to carry out searches and seizures or to detect an infringement where it did not previously have sufficient evidence (see questions 5.2 and 5.3).
Applicants that do not meet the immunity criteria, but nevertheless provide information and evidence on an infringement that has significant added value, may be granted a fine reduction. While the Competition Act does not define ‘significant added value', it does set out the criteria for assessment (as per the explanatory guidelines), as follows:
- the order in which applications are submitted;
- the information and evidence already in the possession of the PCA;
- the value of the information; and
- the fact that further corroboration might not be necessary.
5.2 What are the benefits of applying for leniency, both for the first mover and for subsequent applicants?
As under most leniency regimes, full immunity is available only to the first company that provides information and evidence which enables the Competition Authority to:
- effectively ground a request for a warrant to carry out dawn raids; or
- detect a cartel infringement.
In addition, the ‘first mover' must:
- fully and continuously cooperate with the PCA in the investigation;
- cease to be a party to the cartel; and
- not have coerced any other undertakings to participate in the infringement.
The EU Private Damages Directive – and the Portuguese law transposing it – grant further protection to leniency applicants by establishing that third parties may not use leniency applications and settlement proposals as evidence, except for revoked settlements.
For subsequent applicants, a fine reduction is available in accordance with the following levels:
- between 30% and 50% for the first company providing information and evidence of significant added value;
- between 20% and 30% for the second company providing information and evidence of significant added value; and
- up to 20% for any subsequent companies providing information and evidence of significant added value.
If the application is submitted after the issuance of the statement of objections, these percentages are reduced by half.
5.3 What steps does a leniency application involve? What timeframe do these typically follow?
Once the applicant has submitted a leniency application (informing the PCA of the infringement), it is given a period of not less than 15 days in which to submit additional information and evidence (a different deadline may be set by the PCA if so justified for reasons of cooperation with other competition authorities within the European Union, pursuant to EU Regulation 1/2003).
Article 4 of Regulation 1/2013 states that the first applicant may be granted a marker, either at its own request (properly grounded) or on the initiative of the PCA, provided that it has supplied minimum information (in line with the European Competition Network Model) including:
- its name and address;
- information relating to the participants in the cartel;
- information on any past or possible future leniency applications to any other competition authorities in relation to the alleged cartel;
- information on the products and/or services involved, the territory covered and an estimate of the duration and nature of the cartel; and
- any other application for leniency that the applicant has already submitted or may submit to other competition authorities relating to the cartel.
Failure to complete the initial request will lead to refusal of the leniency application. Any documents that were delivered will be returned to the applicant or, upon express request by the latter, retained by the PCA and assessed under the cooperation criteria, to be taken into account when setting the amount of the fine.
5.4 What are the rights and obligations of the applicant during the leniency application and over the course of its cooperation with the enforcement authorities?
To be granted leniency, the company or individual applicant must:
- cooperate fully and continuously with the PCA during the investigation;
- terminate participation in the cartel, except to the extent that is reasonably necessary to maintain the effectiveness of the investigation; and
- not have coerced any other undertakings to participate in the cartel.
The Competition Act sets out detailed rules on confidentiality and access documents:
- The PCA is obliged classify the leniency application as well as all documents and information submitted as confidential.
- The defendant is granted access to the leniency application and related documents for the purposes of preparing its response to the statement of objections (although copies are permitted only where authorised by the applicant).
- Third parties are granted access to the leniency application only upon authorisation by the leniency applicant.
- In oral leniency applications, the applicant is not given access to copies of its statements and third parties shall be prevented from accessing such information and documentation.
Supporting documents and information may be accessed by third parties by court order, despite potentially benefiting from a special disclosure regime if they were specifically prepared for the purposes of the enforcement procedure once the procedure has been concluded by the PCA.
5.5 Is the leniency programme open to individuals? Can employees or former employees benefit from a leniency application filed by their employer? Do the authorities operate a programme for individual whistleblowers separate to the leniency programme?
According to Article 79 of the Competition Act, the leniency programme is open to individuals who are liable for competition law infringements in similar terms to those available for companies, and follows a similar procedure, as long as those individuals cooperate fully and continuously with the PCA. Such individuals include:
- members of the board of directors or supervisory board of legal persons and equivalent entities; and
- individuals who are responsible for the direction or supervision of areas of activity within a company or equivalent legal entity where an infringement has occurred.
Individuals may apply for leniency on behalf of the company or individually (for the latter, the immunity or fine reduction will only benefit the individual). Individuals need not formally submit or adhere to a company's leniency application, as they may benefit from the company's application provided that they fully cooperate with the PCA.
In addition to the leniency programme, the PCA recently launched a complaint portal, through which individuals (eg, employees, consumers, competitors or third parties) may lodge a complaint with the PCA implicating other individuals or companies in a suspected cartel. These complaints may also be made anonymously.
5.6 Can leniency be denied or revoked? If so, on what grounds?
A failure by the leniency applicant to complete the initial request made by the PCA, or to fulfil the legal conditions for leniency to be granted, will lead to refusal of the leniency application.
In addition, and once leniency has been granted, if the PCA considers that the applicant is no longer cooperating with the investigation, the leniency status may be withdrawn.
6 Penalties and sanctions
6.1 What penalties may be imposed in criminal proceedings on companies? What penalties may be imposed on individuals?
As competition law infringements are considered administrative offences (misdemeanours), there are no criminal proceedings in this respect. This general rule applies to both companies and individuals.
6.2 What penalties may be imposed in civil proceedings on companies? What penalties may be imposed on individuals?
No penalties are available in civil proceedings for a competition law infringement. Penalties can be imposed by the Portuguese Competition Authority (PCA) or the courts only in the context of administrative proceedings for misdemeanours.
Any prohibited agreements are null and void pursuant to Article 9(2) of the Competition Act, and may incur civil law sanctions.
Civil proceedings involving competition law are usually damages actions, although they may also involve other competition law infringements (eg, where a company seeks a declaration of nullity of a certain agreement; a judicial declaration or injunction; or a verdict of unjust enrichment) – that is, actions where there are no pecuniary amounts at stake.
In the case of damages actions, a court may award compensatory damages only; punitive damages are not commonly available (although both doctrine and jurisprudence have accepted punitive damages that were contractually provided for). Compensation covers the harm actually suffered by the injured party (actual loss) plus interest, and lost profits or advantages that the injured party missed as a result of the infringement.
6.3 How are penalties in cartel cases determined? In deciding on the applicable penalties, will the enforcement authorities consider penalties imposed in other jurisdictions?
The legal framework on the setting of fines for competition infringements is set out in the Competition Act and the PCA's Guidelines on the Method for Setting Fines (following the guidelines and practice of the European Commission).
The main factors taken into account when determining the fine are as follows:
- the seriousness of the infringement;
- the duration of the infringement;
- the nature and size of the affected market;
- the level of involvement in the infringement;
- the gains that resulted from the infringement;
- whether the infringement has been terminated and damages have been compensated;
- the financial and economic situation of the company;
- whether the company is a repeat offender; and
- the level of cooperation with the PCA.
Penalties imposed in other jurisdictions are not taken into account.
The PCA then calculates the fine according to a three-step methodology:
- The basic amount is established according to the value of sales of goods or services to which the infringement relates (depending on the seriousness of the infringement, up to 30% of the value multiplied by the number of years of participation);
- The amount is adjusted taking into account any aggravating or mitigating circumstances; and
- The amount may be increased or reduced for reasons of deterrence or proportionality.
Fines can reach up to 10% of the turnover of each participating undertaking, or of the aggregate turnover of the members of an association of undertakings (which are jointly and severally liable for the fine under certain conditions), in the year preceding the issue of the PCA's final decision. For individuals, fines may reach up to 10% of the individual's total annual income in the last complete year of the breach. Liability arises when individuals knew or should have known of the infringement, but failed to take appropriate measures to bring it to an end.
In addition, if the seriousness of the infringement so justifies, the PCA may impose ancillary sanctions as follows:
- publication in the Official Gazette and in a national newspaper, at the offender's expense, of the decision relating to the infringement; or
- a ban on participation in procurement proceedings for a maximum period of two years.
The PCA is also entitled to impose a periodic penalty in case of non-compliance, imposing a fine or ordering the application of certain measures of up to 5% of the average daily turnover of the infringing undertaking in the year preceding the decision for each day of delay.
The PCA guidelines are purposefully vague, making it difficult for companies to calculate the risk of the infringement in terms of a potential fine.
6.4 Can a defendant company pay the legal costs incurred by and/or penalties imposed on its employees?
No specific provision prevents a company from paying the penalties and/or legal costs imposed on its (former or current) employees.
7.1 Can the defendant company appeal the enforcement authorities' decision? If so, which decisions of the authority can be appealed (eg, all decisions or just the final decision) and to which reviewing authority? What is the standard of review applied by the reviewing authority (eg, limited to errors of law or a full review of all facts and evidence)?
Defendant companies may appeal decisions of the Portuguese Competition Authority (PCA) to the Portuguese Competition, Regulation and Supervision Court (CRSC). However, some decisions cannot be appealed (as expressly stated under the Competition Act). The CRSC has full jurisdiction to review the facts and law of the PCA's decision, and may decide to reduce or increase the fine or periodic penalty payment imposed either with a hearing (including the possibility for testimonial evidence and witness examination) or without a hearing (if the PCA, the public prosecutor and the defendant do not object).
Certain decisions may be appealed by third parties. For example, where the PCA decides to close an investigation because there are insufficient grounds to act on a complaint, the complainant will be informed of that decision and will have the opportunity to appeal before the CRSC.
The PCA has an autonomous right to appeal.
Decisions of the CRSC may be appealed to the Lisbon Court of Appeals, whose ruling is final and binding.
The procedure for appeal is as follows:
- A party to a final decision by the PCA has 30 working days within which to lodge an appeal with the PCA (appeals against interlocutory decisions or against any interim measure adopted have shorter deadlines).
- The PCA then has 30 working days within which to forward all relevant documentation to the Public Prosecutor's Office, including the presentation of its own allegations.
7.2 Can third parties appeal the enforcement authorities' decision, and if so, in what circumstances?
Pursuant to Article 87 of the Competition Act, only the addressee of a PCA decision may appeal that decision, after being notified thereof.
Certain decisions may be appealed by third parties. For example, where the PCA decides to close an investigation because there are insufficient grounds to act on a complaint, the complainant will be informed of that decision and will have the opportunity to appeal before the CRSC.
The PCA has an autonomous right to appeal.
8 Private enforcement
8.1 Are private enforcement actions against cartels available in your jurisdiction? If so, where can they be brought?
Yes. The rules governing this regime are set out in Law 23/2018, which transposes the EU Private Damages Directive. Its procedural rules allow stakeholders that have suffered harm from an infringement of EU or Portuguese competition law by a company or association of companies to claim full compensation.
According to Article 342 of the Civil Code, in private enforcement cases the burden of proof rests with the claimant, unless the defendant invokes specific means of defence with regard to which the burden of proof lies with it.
The Competition, Regulation and Supervision Court (CRSC) has jurisdiction over all private enforcement proceedings based solely on competition law infringements. If the claim also includes aspects that fall within other fields of law, the competent court will depend on the civil jurisdictional rules.
8.2 Can private enforcement actions be brought against both companies and individuals?
Yes. Under Portuguese and EU competition law, individuals may be considered as undertakings to which competition law applies and private enforcement actions may thus be brought against individuals.
8.3 Are class actions or other forms of collective action available in your jurisdiction?
Class actions are available under Article 52 of the Portuguese Constitution and the general Law on Popular Actions (83/95), as amended by Decree Law 214-G/2015, and are expressly referred to in Article 19 of the Private Enforcement Law (23/2018).
Portugal is one of the few EU countries in which there is an opt-out system – that is, the parties covered by the class action that have not intervened in the action are notified through a press announcement and can then decide whether to accept representation in that action.
8.4 What process do private enforcement actions follow?
Although several specific rules are set forth in Law 23/2018, private enforcement actions are civil law actions and, as such, follow the general civil and civil procedure rules – that is, those applicable to the tort liability regime.
8.5 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?
Portuguese courts may award compensatory damages only, as punitive damages are not usually available in Portugal. However, doctrine and jurisprudence have accepted punitive damages that have been contractually provided for.
The amount of compensation to be awarded shall correspond to the difference between the current patrimonial situation of the injured party and the patrimonial situation of that party had the damage not occurred. Monetary compensation should cover damage caused by the illicit conduct plus interest.
Compensation covers the harm actually suffered by the injured party (actual loss, damnum emergens) and the profits or advantages lost as a result of the illicit act (loss of profits, lucrum cessans).
8.6 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?
Under Law 23/2018, the CRSC has sole competence to hear claims based solely on competition infringements to the CRSC. With regard to claims based on both competition law and other areas of law, the general jurisdiction rules will apply.
The decisions of first instance courts (including the CRSC) may be appealed to the Court of Appeal under the general terms applicable to civil litigation – that is, if:
- there is an issue of jurisdictional competence;
- there is a conflict between a decision of the first instance court and a prior decision rendered by a higher court; and
- the value of the proceedings exceeds €5,000.
If the value of the proceedings exceeds €30,000, the Court of Appeal's decision may also be appealed before the Supreme Court of Justice.
9 Trends and predictions
9.1 How would you describe the current cartel enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
Since 2017 the Portuguese Competition Authority (PCA) has increasingly ramped up its enforcement activity. Although the number of dawn raids conducted in 2018 and 2019 fell – mostly because the PCA is still processing the extensive number of new proceedings initiated in 2017 – the coming years are expected to be the busiest ever, particularly in terms of the number of decisions and the size of the fines imposed.
The PCA has already broken several records in 2019. Notably, it imposed fines totalling €54 million on six insurance companies for cartel activity and €225 million on 11 banks for the exchange of information.
The PCA's yearly priorities for 2019 establish cartels as a main target, with a particular focus on the leniency programme, and on algorithms and artificial intelligence.
The PCA has been tasked with proposing amendments to transpose the European Competition Network-plus Directive (2019/1), which empowers the competition authorities of EU member states to be more effective enforcers and to ensure the proper functioning of the internal market. This will increase its investigatory powers. The PCA's draft legislation has been posted for public consultation.
10 Tips and traps
10.1 What would be your recommendations to companies faced with a cartel investigation and what potential pitfalls would you highlight?
A company faced with a cartel investigation should swiftly seek specialised legal assistance. All communications concerning the investigation should be made in the context of attorney-client privilege, so that they can benefit from legal privilege.
The company should also immediately conduct a general internal audit to understand its liability exposure, both with regard to the issues/business areas under investigation by the PCA, and to any other business area, because once the company is under the Authority's "radar", it will have to be particularly cautious and should cease any potential illegal business practices. Furthermore, the company should immediately schedule a meeting with all key employees which may be related to the investigation to ensure a consistent approach within the company. Given the high profile nature of cartel cases in the media, the company should also be promptly prepared (e.g. with a prepared press release) to react to any news.
These actions should be taken in the shortest timeframe possible, as the company will have to assess whether it may be advisable to apply for leniency. This issue is surely one of the most relevant pitfalls in cartel cases, as once companies become aware of the Authority's investigation, there usually is a "leniency race".
In addition, leniency applications should be carefully considered in terms of the company's long-term strategy, because the company will be giving up future appeals of the PCA's decision and will open the door for private enforcement (even though leniency statements are protected under the Portuguese private enforcement regime).
Both the company and its lawyers should be made aware of the scope and purpose of the Portuguese Competition Authority's (PCA) investigation and understand the limits of its authority. The company should cooperate wherever possible, unless exceptional circumstances apply.
It is also recommended that companies request an informal meeting with the PCA, to better understand certain issues under investigation and open a dialogue with the PCA. These informal meetings may prove particularly important in cases where the company only becomes aware of the proceedings at a later stage (e.g. there were no dawn raids) and where the proceedings are subject to judicial proceedings.
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.