Competition Authority approves Guidelines on the Conduct of Proceedings regarding anticompetitive infringements

At the end of March 2013, following a public consultation, the Portuguese Competition Authority (“PCA”)approved a set of Guidelines on the Conduct of Proceedings (“Guidelines”) concerning the enforcement of Articles 9, 11 and 12 of Law no. 19/2012, of 8 May (the “Competition Act”), that is to say, on the conduct of infringement proceedings for anticompetitive practices.

The Guidelines focus on some of the main innovations introduced by the new Competition Act and help to clarify the PCA’s understanding of some of the applicable legal rules, with the goal of “ensuring greater transparency and predictability” on the conduct of infringement proceedings (paragraph 2 of the Guidelines).

The PCA may itself become aware of anticompetitive practices or receive such information on the basis of a complaint submitted by third parties. In relation to opening the initial stage of an investigation, the new Competition Act has introduced a model based on a principle of opportunity (as opposed to strict legality) according to which the Authority is no longer legally bound to open an inquiry each time it receives a complaint. It can now assess the public interest in pursuing the inquiry based on the specific aspects of each case, notably in light of its “competition policy priorities” (Article 7(2) and 7(3) of the Competition Act) which must be defined each year.

Among the fact-finding powers at the PCA’s disposal, the Guidelines clarify the Authority’s understanding on several topics, such as, for example, the fact that the seizure of open correspondence (including e-mails) is considered admissible in the context of infringement proceedings given that “After it has been opened, correspondence becomes a mere written document, which may, without limitation, be seized in the course of an inspection” (paragraph 51 of the Guidelines).

On the other hand, some of the new provisions introduced by the Competition Act are emphasised in the Guidelines, such as (i) the possibility of conducting inspections – subject to mandatory authorisation by a judicial magistrate – to the homes of shareholders, directors, employees or agents of undertakings and associations of undertakings (Article 19 of the Competition Act) or (ii) the possibility of the PCA conducting inspections and audits subject to the consent of the undertakings in question, which must be notified at least 10 days in advance of the Authority´s intention to carry out these actions.

In accordance with Article 24(1) of the Competition Act, the initial stage of an investigation (the inquiry phase) is now subject to a maximum duration of 18 months, although this is merely indicative and not mandatory, and can be concluded with one of four types of decisions: (i) the investigation advances to a second stage (the instruction phase) with the PCA issuing a statement of objections to the undertakings in question, if it considers there is a reasonable likelihood of proving the infringements; (ii) the investigation is closed; (iii) a decision finding an infringement is adopted in the context of a settlement procedure; (iv) the investigation is closed in exchange for commitments offered by the undertakings in question.

In the event the proceedings advance to the instruction phase, this should be concluded within a (once again, indicative) a maximum period of 12 months following the statement of objections. The defendant undertakings have a time period of not less than 20 business days in which to present their written defence, although the PCA states that “As a rule, the Authority shall set a term of 30 business days” (paragraph 93 of the Guidelines). This deadline may be extended, at the most for an equal period of time, if there is a reasoned request. In their written response to the statement of objections, defendants may request an oral hearing (which is recorded) to complement their written defence.

The two main developments in the structure of infringement proceedings are, however, the possibility for cases to be closed if the undertakings offer commitments and, on the other hand, the introduction of a settlement procedure.

Defendant undertakings may now, both in the inquiry and instruction phases, offer voluntary commitments to remedy the anticompetitive effects of the practices under investigation. If these (structural or behavioural) commitments are accepted by the PCA, it will adopt a decision closing the investigation in light of those commitments and imposing conditions. This possibility – which is not available for more serious infringements, such as cartels – allows undertakings to avoid an infringement decision and the corresponding fines, and enables the PCA to restore competitive conditions on the affected markets more swiftly. Commitments must be fully implemented within 2 years of the PCA’s decision and, if this is adopted at the instruction stage, any breach of conditions is liable to fines of up to 10% of turnover.

In addition, the Competition Act has introduced a settlement procedure which allows an undertaking to acknowledge its participation in an infringement and, as a result, obtain a reduced fine. In order to do so, the undertaking must present an irrevocable settlement proposal, which it can do both during the inquiry and the instruction phases. Unlike the offer of commitments, in this case the PCA adopts an infringement decision. The facts admitted by the company in question cannot be judicially challenged for the purposes of an appeal and, when the fine is paid, the settlement is converted into a definitive infringement decision.

In these and other matters, the Guidelines provide a useful indication of how the PCA proposes to apply the new Competition Act in the context of infringement proceedings.

This article was written by lawyer Gonçalo Machado Borges.