Competition Authority sends out warning against false and misleading statements

Main takeaways

The Portuguese Competition Authority has recently set a new sanction trend by imposing its first fines for the provision of false, inaccurate or incomplete information in response to a request addressed by the Authority.

Last June, Peugeot Portugal was the first company to be sanctioned on these grounds, with a fine of EUR 150,000, in the context of “an antitrust investigation into the motor sector”, which later led to the imposition of an equal fine on Ford in September.1

Meanwhile, during the proceedings regarding an alleged abuse of dominant position in the market for rail freight transport– which has been closed since December, 2014 – the Authority fined CP Carga in the amount of EUR 100,000.2

Regrettably, the press releases made public by the Authority do not clarify whether the fine levied on these three cases was so on account of false or inaccurate or incomplete information, or all the three combined. This would certainly be a relevant aspect for companies and the legal community to apprehend, since the gravity of each of such practices does not seem equivalent.

With regard to the sanctions imposed on the motor sector companies, the Authority has neither confirmed which proceedings triggered the information request that led to the wrongful response given by Peugeot and Ford, but it is possible that the case might be related to the antitrust investigation carried out into Peugeot Portugal and Ford Lusitana in June 2013 and concluded last March and July (respectively), with the imposition of commitments to deal with concerns of exclusionary vertical effects arising from the companies’ extended warranty policy for motor vehicles. According to the Authority, the companies allegedly refused warranty coverage to their brand’s vehicle owners when they used independent repair centres outside the authorised repair network for the maintenance of their vehicles. The Authority’s preliminary assessment found that their extended warranty agreements made the activation of the warranty conditional on the selection of a repair centre within Peugeot and Ford’s network of authorised repairers and thus the Authority accepted a number of commitments from the companies to change their existing restrictions.

As for CP Carga, the information request referred to the investigation of an alleged abuse of dominance by practices of predatory prices in the rail freight transport corridor of Sines-Entroncamento, which was initiated by a complaint from a competitor in June 2012. After the preliminary competition assessment, the Authority concluded that CP Carga had not priced below its average avoidable cost (“AAC”) and, thus, its conduct did not constitute an abuse of dominant position.

Comment

The lack of response to a request made by the Authority in the use of its sanctioning or supervisory powers, or the provision of false, inaccurate or incomplete information following such request is a serious breach of the obligations imposed on undertakings by the competition act. Offenders are subject to a fine that may be up to 1% of their turnover in the year immediately preceding the decision.

In these cases, there is no readily available data that may help to determine the percentage of turnover that served as a basis for the calculation of the fine. In any event, it is likely that the intensity of the fine might have been reduced since this was the first time the Authority applied a such type of penalty.

Given that these were the first fines imposed by the Authority on these grounds, they provide an important precedent for future proceedings, not only in antitrust proceedings but also in the field of merger control or even market studies and enquires conducted by the Portuguese competition agency. Further, and considering that all three companies were fined over the last months, its seems the Authority is now more willing to make use of its punitive prerogatives whenever it feels companies are intentionally or negligently obstructing an investigation.

It goes without saying that this impetus needs to be carefully balanced against companies’ rights of defence, in particular the right against self-incrimination.

This article was co-authored by lawyer Leonor Bettencourt Nunes.

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