Ruben Lapa Maximiano
Merger Control Department/ECN Network
Portuguese Competition Authority*
For competition pundits in Portugal, the year 2003 brought with it new hope, with the passing into law of a decree that provided for the birth of a new star, in March that year - the Portuguese Competition Authority ("Autoridade da Concorrência ")1.
Equally significant was the overhaul of the competition regime with the entering into effect of Law 18/2003, of 11 June (hereinafter the "Portuguese Competition Law" or "Competition Law"). This legislation has updated and modernised the competition rules in Portugal, and, which is of particular relevance to the current article, the merger control regime.
This article does not purport to provide a detailed account of the merger rules in Portugal. Instead, it aims to portray the main rules and changes from the previous system, that may be discerned not only from the applicable laws, but also from the published practice of the Competition Authority - an Authority that, as an introductory remark, is clearly showing a growing sophistication in its decision making.
At the forefront of the changes is the fact that merger control has been largely taken out of the political arena, and there is now only a limited and residual possibility of a ministerial decision on a notified operation.
Two more changes - with significant impact on the transparency of the application of merger control- have also been introduced: (i) a notification form has now been introduced, which is very similar to Form CO used under the EC merger rules, and (ii) all decisions (non-confidential versions) are now made available to the public, and may be accessed on the Internet.
Clearly the new Portuguese merger control regime now follows the EC Merger rules more closely, even if there do remain some differences with the new Council Regulation 139/2004 of 20 January (hereinafter the "EC Merger Regulation").
Mandatory notification under the Portuguese Competition Law is based on the following two alternative thresholds:
(i) a market share threshold (a creation or reinforcement of a 30% market share), and
(ii) an aggregate turnover in Portugal, in the previous financial year, by all the participating undertakings of more than 150 million euros (net of taxes).
Interpretation of the market share threshold initially raised doubts in the legal community, as several operations were notified in 2003 and 2004 involving acquisitions by undertakings without presence in the relevant market - operations where there was a mere transfer of market share. The issue therefore arose as to whether the creation or reinforcement of the 30% market share threshold for notification set out in the Competition Law was considered to be satisfied in such cases. The Authority decided that such operations do meet the threshold provision, since from a competition law point of view, it might not be indifferent the operator holding the market share referred to above2.
As regards the turnover threshold, a further hurdle to the aggregate turnover threshold has been added, so that to comply with this threshold at least two of the participating undertakings must have had a turnover in the previous financial year above two million euros. In practice this has resulted in certain concentration operations involving a large undertaking - that do not comply with the market share threshold - acquiring a smaller player or a small part of an undertaking, not being caught by the notification requirement.
Under the rules issued by the Portuguese Competition Authority, the filing fee depends upon the turnover of the participating undertakings. There are three categories of fees, ranging from 7,500 euros for aggregate turnover of below 150 million euros to 25,000 euros when the aggregate turnover of the undertakings is above 300 million euros3.
Finally, it should be noted that these rules apply to any operation that "have or may have" an effect on the national territory, while Article 10(3) of the Portuguese Competition Law provides that the turnover of the participating undertakings to be taken into account is the result of "product sales or services rendered to companies or consumers in the Portuguese territory". The practice of the Portuguese Competition Authority clearly shows that this will include sales by agents4.
3. WHAT CONSTITUTES A NOTIFIABLE TRANSACTION.
The definition of the concept...