- CHAPTER IThe rules of competition
- CHAPTER IICompetition Authority
- CHAPTER IIIProcedure
- CHAPTER IVInfringement and penalties
- CHAPTER VAppeals
- CHAPTER VIFees
- CHAPTER VIIFinal and transitional provisions
Disclaimer: This translation is provided for general information purposes only. Solely the original Portuguese version may be deemed authentic.
Law No. 18/2003
of 11 June
APPROVING THE LEGAL FRAMEWORK FOR COMPETITION
Pursuant to Article 161 c) of the Constitution, the Assembly of the Republic makes the following decree, which shall stand as a general law of the Republic:
CHAPTER I
SECTION I
Article 1
1 – This act is applicable to all economic activities carried out on a permanent or occasional basis in the private, public or co-operative sectors.
2 – With the exception of the international obligations of the Portuguese state, this act is applicable to restrictive competition practices and concentrations between undertakings which take place or have or may have effects in the territory of Portugal.
Article 2
1 – For the purposes of this Act, an undertaking is considered to be any entity exercising an economic activity that consists of the supply of goods and services in a particular market, irrespective of its legal status or the way in which it functions.
2 – A group of undertakings is considered as a single undertaking if, though legally distinct, they make up an economic unit or maintain ties of interdependence or subordination among themselves arising from the rights or powers set out in Article 10 (1).
Article 3
1 – Public undertakings and those to which the state has granted special or exclusive rights are covered by the provisions of this Act, without prejudice to the provisions of the following paragraph.
2 – Undertakings legally charged with the management of services of general economic interest or which have the nature of legal monopolies are subject to the provisions of this Act, insofar as the application of these rules does not constitute an impediment in law or in fact to fulfilment of the particular mission entrusted to them.
SECTION II
Prohibited practices
Article 4
1 – Agreements between undertakings, decisions by associations of undertakings and concerted practices between undertakings, whatever form they take, of which the object or effect is appreciably to prevent, distort or restrict competition in the whole or a part of the national market, are prohibited, in particular those which:
a) Directly or indirectly fix purchase or selling prices or interfere with their establishment by free market forces, thus causing them artificially either to rise or fall: b) Directly or indirectly fix other transaction conditions effected at the same stage or different stages of
the economic process; c) Limit or control production, distribution, technical development or investments; d) Share out markets or sources of supply; e) Systematically or occasionally apply discriminatory pricing or other conditions to equivalent
transactions; f) Directly or indirectly refuse to purchase or sell goods or services; g) Subject the signing of contracts to the acceptance of additional obligations which, by their nature or
according to commercial usage, have no connection with the subject of such contracts. 2 – Except in such cases as are considered justified, under the terms of Article 5, practices prohibited under paragraph 1 are null and void.
Article 5
1 – Practices referred to in Article 4 may be considered justified when they contribute to improving the production or distribution of goods and services or promoting technical or economic development, provided that, cumulatively, they:
a) Offer the users of such goods or services a fair part of the benefit arising therefrom; b) Do not impose on the undertakings in question any restrictions that are not indispensable to attain such objectives; c) Do not grant such undertakings the opportunity to suppress the competition in a substantial part of the goods or services market in question.
2 – The practices provided for in Article 4 may be the subject of prior assessment by the Competition Authority, hereinafter referred to as the Authority, according to the procedure to be established by the regulations to be approved by the Authority in accordance with its Statutes.
3 – Practices prohibited by Article 4 are considered justified when, though not affecting trade between Member States, they satisfy the remaining application requirements of a Community regulation adopted under Article 81 (3) of the Treaty establishing the European Community.
4 – The Authority may withdraw the benefit referred to in paragraph 3 if, in a particular case, it ascertains that a practice covered by it has effects incompatible with the provisions of paragraph 1.
Article 6
1 – One or more undertakings shall not engage in the abusive exploitation of a dominant position in the national market or a substantial part of it, with the object or effect of preventing, distorting or restricting competition.
2 – The following are to be understood as having a dominant position in the market for a particular good or service: a) An undertaking that is active in a market in which it faces no significant competition or in which it predominates over its competitors; b) Two or more undertakings that act in concert in a market in which they face no significant competition or in which they predominate over third parties. 3 – The following in particular may be considered abusive:
a) Any of the forms of behaviour referred to in Article 4 (1);
b) The refusal, upon appropriate payment, to provide any other undertaking with access to an essential network or other infrastructure which the first party controls, when, without such access, for factual or legal reasons, the second party cannot operate as a competitor of the undertaking in a dominant position in the market upstream or downstream, always excepting that the dominant undertaking demonstrates that, for operational or other reasons, such access is not reasonably possible.
Article 7
1 – Insofar as it may affect the functioning of the market or the structure of the competition, one or more undertakings shall not engage in the abusive exploitation of the economic dependence on it or them of any supplier or client on account of the absence of an equivalent alternative.
2 – The following in particular may be considered abusive: consideration being given to prior commercial relations, the recognised usage in that area of economic activity and the contractual conditions established. 3 – For the purposes of paragraph 1, an undertaking is understood as having no equivalent alternative when: a) The supply of the good or service in question, in particular that of distribution, is provided by a restricted number of undertakings; and b) The undertaking cannot obtain identical conditions from other commercial partners in a reasonable space of time. SECTION III
Article 8
1 – For the purposes of this Act, a concentration between undertakings shall be understood to exist: one or more undertakings acquire control, directly or indirectly, of the whole or parts of one or several other undertakings.
2 – The establishment or acquisition of a joint undertaking shall constitute a concentration between undertakings, within the meaning of subparagraph b) of the paragraph above, inasmuch as the joint undertaking fulfils the functions of an independent economic entity on a lasting basis.
3 – For the purposes of the paragraphs above, control shall be constituted by any act, irrespective of the form which it takes, which, separately or jointly and having regard to the circumstances of fact or law involved, implies the ability to exercise a determining influence on an undertaking’s activity, in particular:
a) Acquisition of all or part of the share capital; composition or decision-making of an undertaking’s corporate bodies. 4 – The following are not held to constitute a concentration between undertakings: a) The acquisition of shareholdings or assets under the terms of a special process of corporate rescue
or bankruptcy; b) The acquisition of a shareholding merely as a guarantee; c) The acquisition by credit institutions of shareholdings in non-financial undertakings, when such
acquisition is not covered by the prohibition in Article 101 of the General Regulations for Credit Institutions and Financial Institutions approved by Decree-Law No. 298/92 of 31 December.
Article 9
1 – Concentrations between undertakings are subject to prior notification when one of the following conditions is fulfilled: a) Their implementation creates or reinforces a share exceeding 30% of the national market for a particular good or service or for a substantial part of it.
b) In the preceding financial year, the group of undertakings taking part in the concentration have recorded in Portugal a turnover exceeding EUR 150 million, net of directly related taxes, provided that the individual turnover in Portugal of at least two of these undertakings exceeds two million euros.
2 – The concentrations covered by this Act shall be notified to the Authority within seven working days of conclusion of the agreement or, where relevant, by the publication date of the announcement of a takeover bid, an exchange offer or a bid to acquire a controlling interest.
Article 10
1 – Calculation of the market share and turnover provided for in Article 9 shall take into account,
accumulatively, the turnover of: a) Undertakings taking part in the concentration; b) Undertakings in which such undertakings dispose, directly or indirectly, of: A majority holding in the share capital; More than half the votes; The ability to nominate more than half the members of the management or supervisory bodies; The power to manage the undertaking’s business; c) Undertakings which, in the participating undertakings, separately or jointly, have the rights or
powers specified in subparagraph b); d) Undertakings in which an undertaking referred to in subparagraph c) has the rights or powers specified in subparagraph b);
e) Undertakings in which various undertakings referred to in subparagraphs a) to d) jointly dispose, among themselves or with third-party undertakings, of the rights or powers specified in subparagraph b).
2 – If one or more undertakings involved in the concentration jointly dispose of the rights or powers specified in paragraph 1 b), the calculation of the turnover for the undertakings taking part in the concentration:
a) Shall not take account of the turnover resulting from the sale of products or the provision of services between the joint undertaking and each of the undertakings taking part in the concentration or any other undertaking connected to them within the meaning of paragraph 1 b) to e);
b) Shall take account of the turnover from the sale of products or provision of services between the joint undertaking and any other third-party undertaking and such turnover shall be attributed to each of the undertakings participating in the concentration in the part corresponding to its division into equal parts for all the undertakings controlling the joint undertaking.
3 – The turnover referred to in the preceding paragraph includes the value of products sold and services provided to undertakings and consumers within the territory of Portugal, net of taxes directly related to the turnover, but does not include transactions carried out between the undertakings referred to in the same paragraph.
4 – By way of derogation from the provisions of paragraph 1, if the concentration consists of the acquisition of parts, with or without their own legal personality, of one or more undertakings, the turnover to be taken into account with regard to the transferor or transferors shall solely be that relating to the parts involved in the transaction.
5 – The turnover shall be substituted:
a) In the case of credit and other financial institutions, by the sum of the following items of income, as they are defined by the applicable legislation: i) Interest and equivalent income; ii) Income from securities: Income from shares and other variable-yield securities;
Income from equity investment; b) In the case of insurance undertakings, by the value of gross premiums written, paid by residents of Portugal, which shall include all amounts received or receivable in respect of insurance contracts issued by or on behalf of such undertakings, including premiums paid to re-insurers, except for the taxes or levies charged on the basis of the amount of the premiums or their total volume.
Article 11
1 – A concentration subject to prior notification shall not be put into effect before it has been notified and has been the object of an explicit or tacit decision of non-opposition. 2 – The validity of any legal transaction carried out in contravention of the provisions of this section depends on the explicit or tacit authorisation of the concentration.
3 – The provisions of the preceding paragraphs do not impede the implementation of a public bid to purchase or an exchange offer that has been notified to the Authority in accordance with Article 9, provided that the acquirer does not exercise the voting rights attached to the securities in question or exercises them solely to protect the full value of its investments on the basis of a derogation granted under the terms of the following paragraph.
4 – At the request, duly substantiated, of the participating undertaking or undertakings, presented prior to or subsequently to the notification, the Authority may grant a derogation from the obligations provided for in paragraphs 1 or 3, after considering the consequences for the participating undertakings of suspending the concentration or the exercise of voting rights and the negative effects of the derogation for the competition. The derogation may, if necessary, be accompanied by conditions and obligations intended to guarantee effective competition.
Article 12
1 -Without prejudice to the provisions of paragraph 5 of this article, concentrations notified in accordance with Article 9 shall be appraised in order to determine their effects on the competition structure, having regard to the need to preserve and develop effective competition in the Portuguese market, in the interests of the intermediate and final consumer.
2 – The appraisal referred to in paragraph 1 shall take into account the following factors in particular: a) The structure of the relevant markets and the existence or absence of competition from undertakings established in such markets or in distinct markets; b) The position of undertakings participating in the relevant market or markets and their economic and
financial power, in comparison with their main competitors; c) The potential competition and the existence, in law or in fact, of entry barriers to the market; d) The opportunities for choosing suppliers and users; e) The access of the different undertakings to supplies and markets; f) The structure of existing distribution networks; g) Supply and demand trends for the products and services in question; h) Special or exclusive rights granted by law or attached to the nature of the products traded or
services provided; i) The control of essential infrastructure by the undertakings in question and the access opportunities to such infrastructure offered to competing undertakings; j) Technical and economic progress provided that it is to the consumer’s advantage and does not create an obstacle to competition; l) The contribution that the concentration makes to the international competitiveness of the Portuguese economy.
3 – Authorisation shall be granted to concentrations that neither create nor strengthen a dominant position that results in significant barriers to effective competition in the Portuguese market or in a substantial part of it.
4 – A prohibition shall be imposed on concentrations that create or strengthen a dominant position that results in significant barriers to effective competition in the Portuguese market or in a substantial part of it.
5 – A decision which authorises a concentration also covers the restrictions directly related to the implementation of the concentration and necessary therefor.
6 – In the cases provided for in Article 8 (2), if the object or effect of creating the joint undertaking is to co-ordinate the competitive behaviour of undertakings that remain independent, such co-ordination is assessed under the provisions of Articles 4 and 5 of this Act.
SECTION IV
Article 13
1 – The aid granted to undertakings by a state or any other public body must not significantly restrict or affect competition in the whole or in part of the market.
2 – At the request of any interested party, the Authority may scrutinize any aid or aid project and formulate such recommendations for the Government as it deems necessary to eliminate the negative effects on competition of such aid.
3 – For the purposes of this article, compensatory payments made by the state in return for the provision of a public service, whatever the form of such payments, shall not be considered aid.
CHAPTER II
Article 14
The Competition Authority shall ensure compliance with competition rules, within the limits of the attributions and competences that are assigned to it by law.
Article 15
The Competition Authority and the sectoral regulatory authorities shall work together to apply the competition legislation, in accordance with Chapter III of this Act.
Article 16
On an annual basis, the Competition Authority shall draw up a report on its activities and the exercise of its powers and competences, in particular in relation to its powers to sanction, supervise and regulate. It shall send this report to the Government, which shall forward it at that moment to the Assembly of the Republic, in readiness for publication.
CHAPTER III
Procedure
SECTION I
Article 17
1 – In exercising its powers to sanction and supervise, the Authority, represented by its institutional bodies and employees, enjoys the same rights and powers and is subject to the same duties as criminal police institutions and is able, in particular:
a) To question the legal representatives of the undertakings or associations of undertakings involved and to ask them for documents and other elements of information that the Authority deems useful or necessary for clarification of the facts;
b) To question the legal representatives of other undertakings or associations of undertakings and any other persons whose declarations it deems relevant and to request them to supply documents and other information;
c) To search for, examine, gather, copy or take extracts from written or other documentation, at the premises of the undertakings or associations of undertakings involved, whether or not such documentation is in a place that is reserved or not freely accessible to the public, whenever such inquiries prove necessary for the obtaining of evidence;
Assembly of the Republic
The rules of competition
General provisions
Scope
Concept of an undertaking
Services of general economic interest
Prohibited practices
Justification of prohibited practices
Abuse of a dominant position
Abuse of economic dependence
a) Any of the forms of behaviour laid out in Article 4 (1)
b) The unjustified cessation, total or partial, of an established commercial relationship, with due
Concentrations between undertakings
Concentrations between undertakings
a) In the case of a merger between two or more hitherto independent undertakings;
b) In the case that one or more individuals who already have control of at least one undertaking or of
b) Acquisition of rights of ownership, use or enjoyment of all or part of an undertaking’s assets;
c) Acquisition of rights or the signing of contracts which grant a decisive influence over the
Prior Notification
Market share and turnover
Income from parts of the capital in associated undertakings;
iii) Commission received;
iv) Net profit from financial operations;
v) Other operating income.
Suspension of concentrations
Appraisal of concentrations
State Aid
State Aid
Competition Authority
Competition Authority
Sectoral regulatory authorities
Report
General Provisions
Powers of investigation and inspection