This country-specific Q&A provides an overview to competition litigation laws and regulations that may occur in Portugal.
This Q&A is part of the global guide to Competition Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/competition-litigation/
What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
Most of the claims brought before the Portuguese courts on the grounds of breach of competition law seek compensation for damages under national and European law for infringements of competition law provisions. However, it should be noted that it is also possible to file a claim for the nullity of agreements or of specific clauses that breach national or European competition law, as well as requests for interim measures related to conducts which breach both legal frameworks.
In more detail, the legal grounds for bringing an action for breach of competition law are Articles 9, 11, 12 and 36 to 59 of the Portuguese Competition Law, approved by Law no. 19/2012, of 8 May (“Portuguese Competition Law”), Articles 101, 102 and 107 to 109 of the Treaty on the Functioning of the European Union (“TFEU”) and the Council Regulation 139/2004 of 20 January 2004 on the control of concentrations between undertakings (“Regulation 139/2004”).
The prohibited competitive practices are basically the following three and are foreseen in Articles 9, 11, 12 of the Portuguese Competition Law and 101 and 102 of the TFEU: (i) collusive practices, including cartels and vertical agreements, such as agreements between undertakings, concerted practices or decisions by associations of undertakings; (ii) abuse of dominant position; and (iii) abuse of economic dependence.
The other legal grounds for bringing actions for breach of competition law are Treaty provisions on state aid, pursuant to Articles 107 and 109 of the TFEU, and potentially the breach of merger control provisions, pursuant to Articles 36 to 59 of the Portuguese Competition Law and Regulation 139/2004.
As most of the claims related with the breach of competition law seek compensation for damages caused by anti-competitive practices, we will focus our analysis on those claims, except when otherwise specified.
Law no. 23/2018, of 5 June (“Law 23/2018”), which transposes into the Portuguese legal framework the EU Directive 2014/104, of 26 November, sets out a new liability regime for damages due to infringements of competition law. The legal regime set out in Law 23/2018 is only applicable to claims for damages under national law brought as a consequence of infringements of competition law provisions related with the anti-competitive practices foreseen in Articles 9, 11 and 12 of the Portuguese Competition Law and Articles 101 and 102 of the TFEU mentioned above, i.e.(i) collusive practices, including cartels and vertical agreements, such as agreements between undertakings, concerted practices or decisions by associations of undertakings; (ii) abuse of dominant position; and (iii) abuse of economic dependence.
What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
In order to commence a competition damages claim an infringement to the competition law should have occurred that caused harm to the claimant.
The claimant is required to submit a statement of claim that, amongst other formalities, (i) identifies the competent court and the relevant parties, (ii) presents in detail the essential facts that constitute the grounds of the damages claim and the respective applicable law, (iii) clarifies the relief sought, (iv) states the value of the claim, and, if applicable, (v) submits a list of witnesses and other evidence to be produced.
The statement of claim before the court might be preceded by proceedings conducted before a competition authority. The court might, with some limitations, request for the proof collected in those proceedings to be made available to the judicial proceedings and in case a definitive decision is issued before the decision in the judicial proceedings, it establishes an irrebuttable presumption of the existence and nature of such infringement as well as of its material, subjective, temporal and territorial scopes, for the purpose of a claim for damages.
What remedies are available to claimants in competition damages claims?
In private enforcement cases the typical final remedy is the liability claim for damages under Article 483 of the Portuguese Civil Code. To rule in favour of the claimant, the court must conclude (i) that a breach of competition law has occurred, (ii) that damages have been caused to the claimant, (iii) that there is a relevant fault of the defendant and (iv) that a "causal link" exists between the breach of competition law provisions and the occurrence of such damages.
This duty of demonstration may be eased if a previous condemnatory decision is issued by the Portuguese Competition Authority or by an appeal court that confirms in the context of that decision that competition law has been breached. Such ruling establishes an irrebuttable presumption of the existence and nature of such infringement, as well as of its material, subjective, temporal and territorial scopes, for the purpose of a claim for damages. The same does apply, although in more limited terms, in respect of decisions issued by foreign competition authorities or foreign courts.
Another relevant final remedy is the declaration of nullity of an agreement or specific clause or practice considered to be in breach of competition law, according to Article 289 of the Portuguese Civil Code, which has retroactive effects and, when granted, requires that the defendant returns all considerations provided under the agreement, clause or behaviour.
What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
Law 23/2018 sets forth a general principle according to which the liability extends to the amount of damages arising from any of the unlawful conducts referred to under Question 1 above, notably (i) collusive behaviour, (ii) abuse of dominant position and (iii) abuse of economic dependence. In any case, the Portuguese rules also clarify that loss of profits arising from the infringement, as well as interest due from the date of the decision until full payment, are also eligible for compensation together with the damages caused directly by the same infringement.
Whenever any of the conducts referred to in Question 1 is carried out by two or more entities, as a rule all those entities will be jointly and severally liable. Nevertheless, under paragraph 1 of Article 5, whenever any of such entities is a “small and medium-sized enterprise” (“SME”) its liability will be limited towards (i) claimants whose damages cannot be fully compensated by the other entities that were involved in such breach, and/or (ii) towards its own direct or indirect customers and/ or suppliers, if: (a) the infringement occurs in a market where the SME in question holds less than 5% of market share throughout the duration of the infringement, and (b) if joint and several liability jeopardises the financial solvency of this entity. This exception is not applicable if this SME led the infringement, or compelled others to take part in it, nor if it has already been convicted for other competition law infringements.
Under the Portuguese leniency rules, a similar regime is applicable to leniency applicants, who will only be held liable towards (i) claimants whose damages cannot be fully compensated by any other entity, and/or (ii) towards its direct or indirect customers and/ or suppliers.
Whenever joint and several liability is applicable, a recourse right arises between the entities in question up to the limit of their own share of liability. Unless proven otherwise, each entity’s liability share will be calculated based on their average market shares throughout the duration of the infringement in the relevant market(s). The liability share for each entity can be determined by the role that they played in the infringement. As for leniency applicants, it should also be noted that their liability is capped by the amount of damages caused to their own direct or indirect customers or suppliers.
What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
A 5 (five) year limitation period is applicable in respect of competition law liability claims.
This statute of limitation period is triggered as of the moment the claimant has knowledge (or can reasonably be presumed that it has such knowledge) (i) of the factual circumstances that give rise to the claim, (ii) that such circumstances represent a breach of competition law, (iii) the identification of the offender and (iv) the existence of damages arising of such breach of competition law (independently of the knowledge in respect of the full extent of the damage). In any case this statute of limitation period will never begin before the actions that represent the infringement of competition law cease. Also note that the statute of limitation period is suspended if (i) a competition authority commences an administrative investigation related to the breach of competition law on which the liability claim is based or (ii) a settlement is being negotiated.
Which local courts and/or tribunals deal with competition damages claims?
The Competition, Regulation and Supervision Court is competent in respect of all cases that have to do with regulatory decisions under competition law, and also in liability claims based exclusively on the breach of competition rules.
How does the court determine whether it has jurisdiction over a competition damages claim?
Regarding regulatory issues, Portuguese courts are competent to decide in respect of the validity of decisions issued by the Portuguese Competition Authority. As to the remaining claims, Portuguese courts are entitled to take on a competition law case if internationally competent under the following criteria: (i) if European regulations or other international instruments so determine; (ii) if a valid choice of forum clause executed by the parties so determines; or (iii) if one of the following cases is verified: (a) the defendant, or one of the defendants, is domiciled, or is registered, has an effective office, branch, agency subsidiary or delegation in Portugal; or (b) the legal proceedings should be initiated in Portugal according to any criteria of territorial jurisdiction; or (c) the cause of action of some of the relevant facts were carried out in Portugal; or (d) in cases the right to claim may only become effective through legal proceedings initiated in Portugal, or if it is too burdensome for the claimant to initiate the legal proceedings abroad, provided that there is an important person or real link between the subject of litigation and the Portuguese jurisdiction.
If Portuguese courts are internationally competent, the Competition, Regulation and Supervision Court shall be competent to rule in respect of (i) decisions, appeals, reviews and their respective enforcement provided by the Portuguese Competition Authority; (ii) private enforcement actions based exclusively on breach of competition law, and the eventual right of recourse between the defendants; or (iii) requests for access to evidence relating to such actions, as well as corresponding rules of other Member States.
How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
According to Regulation (EC) No 864/2007 (Regulation Rome II), that defines the law applicable to non-contractual obligations, the law of the country in which the damages occur is applicable. However, if the claimant and defendant both have their residence in the same country at the time when the damage occurs, the law of that country shall be applicable. Nonetheless, if it is clear from all the circumstances of the case that the matter is manifestly more closely connected to another country, the law of that country shall be applicable.
Nevertheless, the applicable procedural law is the law of the country where the proceedings should be filed. Therefore, in case the Portuguese courts are competent, the standard of proof required is a “balance of probabilities”, whereby the judge has the freedom to decide according to his prudent assessment, unless a legal assumption is provided, or a certain type of evidence is required for certain facts to be considered proved.
To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
The decision issued by a national or an international competition authority regarding the existence of a breach of competition law constitutes an irrebuttable presumption for the courts on the existence, nature, and material, subjective and temporal scopes for purpose of liability claims for the damages resulting therefrom.
To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
If the decision on a private damages claim is dependent on an investigation or a decision by a competition authority or the subsequent ruling of the competent court that is called to decide on the validity of an administrative decision, the court may stay the proceedings relating to that damages claim. In these circumstances, the stay of the proceedings may be ordered by the court, on its own competence, or by request of the parties.
What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
For claims subject to the general provisions of the Portuguese Civil Procedural Code, third parties may join the proceedings as co-parties on an “opt-in” basis. In class action claims (“ação popular”), an "opt-out" system applies under Portuguese law, as the final decision will bind all potential claimants, except for those who formally “opt-out”. Although individual claims do not require any specific criteria besides the general rule, class action claims are a mechanism only available to citizens, foundations and associations in the context of consumer protection, as well as associations of companies that were injured by the specific infringement of competition law.
Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
Law 23/2018 provides for a unique “pass on” mechanism for competition damages claims, consisting in the possibility for the defendant to invoke that the claimant has passed on (partially or totally) any additional costs that resulted from the competition law infringement downstream in the production or distribution chain, in which case the burden of proof lies with the defendant.
In addition, indirect customers may also claim damages based on the repercussion of additional costs resulting from competition law infringements. The burden of proof lays with the indirect customer, although there is a presumption that additional costs are passed on when the indirect customer shows that: (a) the defendant has committed an infringement of competition law; (b) this infringement had an additional cost for the direct customer of the entity involved in the infringement; and (c) that the indirect customer acquired goods or the services affected by the infringement, or goods or services derived from the goods or services affected by the infringement.
Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is also permitted in competition litigation and, pursuant to the general rules that are also applicable in this context, it can be requested by the parties or ordered by the court. The expert evidence may be produced by a single expert or a panel of experts, with a limit of three experts. In case the expert evidence is to be produced by only one expert, that expert is chosen by the court, although the parties may suggest to the court potential candidates to act as experts. In case of the production of evidence by a panel of experts, each party appoints one expert and the third member of the panel is chosen by the court.
Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
A typical trial process is ruled by only one judge and is initiated by the written submissions of both parties. The evidence production before the court follows said stage of written submissions and is predominantly oral.
Witnesses will be firstly examined by the legal representative of the party who appointed them, and afterwards subjected to the examination of the counterparties legal representative. In any case, it is possible to direct and cross-examine witnesses, either by request of the parties or by order of the court.
How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
Depending largely on the complexity of the case, a civil liability procedure is expected to last between two to three years to have a first instance judgment rendered. As always, there are exceptions to this timeline, as very complex cases can indeed take longer to be decided.
Judicial decisions are subject to appeal in case of (i) breach of jurisdictional competence, (ii) contradiction by the decision of prior higher courts case law in respect to the exact same legal issues or (iii) if the value of the court proceedings exceeds a certain threshold: claims higher than € 5,000 allow an appeal to be filed to the second instance Courts of Appeal (Tribunais da Relação) and over € 30,000 allow an appeal to the Portuguese Supreme Court of Justice (Supremo Tribunal de Justiça).
In addition, in case the competition claim invokes a breach of any provision of the Portuguese Constitution, it is also admissible to appeal to the Constitutional Court.
Do leniency recipients receive any benefit in the damages litigation context?
The Portuguese leniency legal framework is foreseen in Articles 75 to 82 of the Portuguese Competition Law. Under these rules, immunity or reduction of fines may be granted in the administrative proceedings concerning cartel infringements pursuant to Article 9 of the Portuguese Competition Law and, if applicable, pursuant to Article 101 of the TFEU.
Under Portuguese Competition Law, immunity from civil claims is not granted to leniency applicants. However, pursuant to Article 5, paragraph 4 of Law 23/2018, the successful leniency applicants (i.e., applicants that have been awarded with immunity from fines) will only be liable towards their own direct and indirect customers or suppliers, except if the injured parties other than the direct or indirect customers or suppliers do not receive full compensation for damages from the other entities involved in the infringement, in which case the leniency applicants will be subsidiarily liable.
How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
In general terms, the right to compensation covers actual loss and profit loss, plus interest, which is calculated separately, as default interest set out by law.
“Umbrella effects” have been recognized in Law 23/2018, as the cartels are responsible for the damages derived from infringements of competition law. In case the quantification of damages is considered to be excessively difficult, the court shall proceed with a close estimate, taking into account the available evidence and the assistance of the Portuguese Competition Authority, as well as taking into consideration the Communication from the European Commission on the calculation of damages in claims for damages based on breaches of Article 101 or 102 of the TFEU.
Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
Liability is allocated between defendants considering their contribution to the occurrence of the damages, which is presumed to correspond to the average of their market share in the markets affected by the infringement of competition law, unless if it is proved that the role taken by each of the defendants in the infringement was not identical.
In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
Parties may agree on an out-of-court settlement at any time. When parties agree to start negotiations that may lead to settlement, the court may stay the proceedings regarding those parties for up to a year. The settlement that is negotiated and agreed by the parties is usually subject to homologation by the court.
What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
Portuguese law does not provide for any particularities in respect to collective settlement, which is allowed in general terms, being subject to the homologation of the court.
The only specificity in collective actions is that the Prosecutor may replace the claimant in case of discontinuation of the claim.
What procedures, if any, are available to protect confidential or proprietary information disclosed during the court process? What are the rules for disclosure of documents (including documents from the competition authority file or from other third parties)? Are there any exceptions (e.g. on grounds of privilege or confidentiality, or in respect of leniency or settlement materials)?
Law 23/2018 provides specific rules for the disclosure of confidential information. The court may only request the production of evidence that contains confidential information when it considers that it is relevant for the damages claim.
In that scenario, the court adopts measures in order to protect that information, such as (i) occultation of sensitive parts of the documents, (ii) order restricted trials and (iii) restrict the access to the confidential documentation, allowing its access only to the parties, legal representatives of the parties and experts (subject to an obligation of confidentiality), and (iv) request the elaboration of summaries of the information gathered from the confidential documents, or redact it in terms that are non-confidential.
The court may not, in any case, order the production of evidence that is subject to the lawyer’s legal privilege.
In addition to confidential documents, in the context of the proceedings a party may ask the court, or the court may issue such decision on its own competence, to order the other party or any third parties (including competition authorities) to submit any evidence in their possession, provided that the request is grounded, proportional and relevant for the case. The Portuguese Competition Authority may even issue an opinion on the proportionality of the means of proof requested.
Specifically, regarding evidence to be presented by a competition authority, the court may never order the filing of any statements that parties have previously submitted before that entity for the purposes of being granted with the exemption or the reduction of a penalty or of any transaction agreement proposals.
Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
In principle, the losing party bears the litigations costs and should reimburse the winning party for any litigation costs it has incurred during the proceedings. Notwithstanding, in case of a partial conviction, the costs are proportionally divided between the parties.
Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
Law 23/2018 does not prohibit third parties from funding competition litigation.
What, in your opinion, are the main obstacles to litigating competition damages claims?
Law 23/2018 is still very recent, thus it is not possible yet to assess its full impact. However, it is expected that this new regime, due to the procedural changes that it brings, will bring about an increase in the number of actions for damages resulting from competition law infringements.
No additional or specific obstacles can be foreseen regarding competition litigation claims. Nevertheless, the general obstacles of a damages claim may be visible in the competition damages claims, mainly the difficulties on demonstrating the competition law infringement by the defendant, the quantification of damages and the existence of a “causal link” between the infringement and the damages suffered by the claimant.
What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
We believe that the procedural changes brought by Law 23/2018 will substantially increase the number of claims and actions for damages based on competition law infringements. However, it cannot be excluded that the likelihood of a substantial increase in litigation resulting from damages claims may have as indirect effect a decrease in the number of leniency applications, since leniency applicants are not granted immunity from civil claims.
Bearing in mind how the Portuguese regime has been shaped, we may also anticipate that most of those claims will most likely be shaped as follow-on actions, i.e., claims occurring after a definitive decision is issued by the Portuguese Competition Authority. Thus, it should be highlighted that both the number of cases and the success of private enforcement litigation will be inherently associated to the intensity of public enforcement by the Portuguese Competition Authority, and to the types of cases the Authority will pursue.
Additionally, ECJ case law will also be a valuable tool in order to fully understand the exact extent of some concepts introduced by Law 23/2018.