New entrants will have access to a bidding phase on their own in the upcoming 5G auction scheduled for April this year. New entrants are reserved one lot in the 900MHz band and three lots in the 1800MHz band, along with national roaming provisions and limitations on the acquisition of certain lots, they are also granted a 25% discount on the final price of that purchased band spectrum. Lastly, in order to smoothen the financial burden that may arise of the auction, bidders for the 700MHz, 900MHz and 3.6GHz bands, are required to pay only 2/3 of the purchased spectrum and defer the remainder over a five-year period.
As Portugal is among the European countries with the lowest number of MNO’s, thus the allocation of rights of use of 5G frequencies by auction, that will take place in April, it is estimated competition will improve, with new business models and market offerings emerging.
The total reservation price for the spectrum auction is of 237,9 million euros.
Restrictions are set to 700MHz and 3,6GHz frequency spectrum acquisition, which guarantees each undertaking is able to acquire the amount of spectrum it needs for the business they intend to develop, stimulating and ensuring the efficient use of spectrum.
For the relevant 5G frequency bands (700MHz and 3,6GHz), the reservation prices were set in line with the average reservation prices from the auctions already held in Europe: to the 700MHz band, 19,20 million euros per lot, in a total of 115,20 million euros; to the 3,6GHz band, which is divided in 40 lots and amounts to a total of 45,7 million euros, with the exception of the restricted use of some lots.
For the remaining bands: 900MHz, 1800MHz, 2,1GHz and 2,6GHz, the values are the same as for the multi-band auction that took place between 2011 and 2012, in which these bands had already been made available.
By the end of 2020 Portugal will have fulfilled the European Commission’s ambition to have at least one city with 5G and, by the end of 2025, the full coverage of 5G communication networks.
According to ANACOM schedule, the consultation on the auction draft regulation shall be concluded within 30 working days, as of 12 February, and the final allocation of the 5G frequency usage rights is expected to occur in August 2020.
MV Conversation with Cláudia Fernandes Martins
Macedo Vitorino’s newest partner reflects on life as a lawyer, balancing the personal and professional, as well as an insight into her newest compliance initiative.
What Cláudia Fernandes Martins truly loves about the profession is how many options you have, both in practice and in terms of continuing to learn and grow as a lawyer. “Being a lawyer gives me a range of different challenges, which truly fits my personality and profile,” she explains. “When I started, I didn’t have a precise idea of what I was getting into, but, fortunately, it hasn’t disappointed!”
As Macedo Vitorino’s newly-elect partner, Cláudia Fernandes Martins is the second female partner at the firm. Her practice focuses on commercial and corporate law, competition law and intellectual property, and she heads up the Privacy and Data Protection department.
Looking back at when she began her studies, partnership wasn’t necessarily the plan. “I really wanted to become a law professor, but when I finished university, we didn’t have the options that are available now, and becoming a lawyer was the natural path to take.”
From theoretical student to practical lawyer
In 2003, after graduating from Lisbon University’s Law School, Cláudia Fernandes Martins joined Macedo Vitorino as a trainee. Completing a Postgraduate Degree in State Aid and Tax Law in 2005 and a Master’s in EU and Competition Law in 2008 focusing on private enforcement, her foundations as a lawyer have always been rooted in the area of competition. “The more I learned and delved into competition, the more I enjoyed it,” she says. “Competition covers such a broad range of topics and interlinks with so many other areas, that’s what keeps me so interested. And I relish that challenge.”
Cláudia Fernandes Martins’ biggest challenge was the switch from a theoretical mindset to a more practical one. “Being theorical is a huge advantage when studying. But when I started practising, I had to become far more practical and conscious of what actually works in reality. Clients want solutions, based on theory of course, but that work in practice and in the real world.”
It was a steep learning curve and Cláudia Fernandes Martins admits you never stop learning. “I’m always thinking about what clients need from us that they can put into practice. It’s a constant balancing act between legal theory and real-world practice.” This is something she notices has changed with the younger generations of lawyers. “They try to give answers and solutions straight away without necessarily taking into account the theory to support them.”
Her advice to the younger generation would be to gain as much practical experience as you can. “Anyone who is going to be dealing with clients day-to-day needs practical experience and to ensure to focus on both the law and the real world, taking both factors into account. I would also advise to grab every opportunity you can with both hands.” As you get older and have families, she explains, your options can become more limited, and your choices at times must be dictated by your personal lives. “The younger generation needs to take full advantage of this time in their lives when they are free to try it all. Study as much as you can, take on those projects that excite you and dedicate yourself to going for your goals.”
Balancing the personal and professional
One thing Cláudia Fernandes Martins has also had to perfect was how to hit the right balance between her professional and personal life, especially with a young family. “The balance has to be looked at every single day. You need to balance the needs of your children with those of your clients, all the while remembering you only have two hands, which sometimes isn’t enough!”
She ensures to keep her personal and profession lives separate, and not to do both at the same time. “When I’m with the children I’m 100% present, so I try not to take much work home. Once they’re asleep, then I can be 100% present for anything I need to finish for my clients.”
While the demands of a young family affect you more physically, now that Cláudia Fernandes Martins’ children are a little older the demands are more mental. “You have to be on alert 24-7 and anticipate: Is everything alright? Is there anything that isn’t apparent, any danger or something flying under the radar? I’m the mother, and my role is to find the solution.”
This is the approach she also applies to clients. “There really are transferable skills from both sides, and I feel I have really grown as a lawyer since being a mother. My maturity and practical side have improved dramatically. With children there’s only so much theory – you have to be hands-on and practical! I want my children to see what I do, how I do it and why I do it. I want to be the best as an example for them, and I want to do the same for my clients.”
Taking clients into the new compliance era
Cláudia Fernandes Martins credits much of her latter career path decisions to her young family. “This is something I’ve heard from other female lawyers, when you have children you gain a new perspective on your personal and professional life.”
When her youngest (four) was born, she remembers being at home reading up on the upcoming GDPR (EU General Data Protection Regulations) and wanting to get involved in what was coming. So as soon as she was back at work she began working on a new project on the GDPR. This led her to spearhead an initiative that has been supporting clients through the GDPR implementation period and beyond, as well as educating them on the power of data and its constant evolution. “This was really a moment of change for me.”
Cláudia Fernandes Martins is now developing another innovative offering for their clients in the area of compliance. “Compliance is integral to so many areas of law, and ever-changing with new rules, best practices and sanctions. We noticed when working day-to-day with clients that many were merely ticking boxes and conducting internal audits and thinking that keeps them compliant,” she explains. “Compliance goes so much deeper than that. Check boxes are no longer enough to keep you safe. So we want to educate and support our clients through every step of their compliance journey and ensure that they are complying 100% in every area of this complex field.”
She gives the example of internal and external audits. Internal audits run the risk of reasoning bias and that’s where things get overlooked or go undetected. This also applies if you are using the same auditing companies year-in year-out. “Clients need fresh, objective eyes to detect any errors or omissions that weren’t found through internal or usual external audits,” she says. “A partner that can help uncover the key issues that haven’t been identified and put clients on the right path in terms of transparency, compliance, ethics, social responsibilities etc – that’s where the added value lies.”
The goal is to make Macedo Vitorino a go-to firm for compliance, in the same way as with Data Protection, and the firm’s newest partner is confident their new product will prove to be the added value that clients are looking for.
This will be the year for 5G licenses in Portugal.
After, in February, the 700MHz band, which is rather relevant for 5G, being cleared of DVB-T, the frequency spectrum shall be auctioned in April 2020 by the Portuguese NRA (ANACOM – initially envisaging regional allotments of the frequency spectrum and 20MHz bands - will be segmented. The auction will not only cover the whole spectrum of frequency – which may advantage when compared with other European Union (“EU”) jurisdictions, currently attributing partial licenses for 5G, and may potentiate investment by operators.
Dividing the spectrum was necessary, according to ANACOM, because each operator has specific needs and different projects for 5G services, and to ensure a more efficient spectrum distribution: the efficient use of the whole frequency spectrum through projects of different sizes is crucial to increase competition between telecommunications players and to reduce costs for end-customers.
The greatest concern revealed by market players in October 2019 consultation by ANACOM was that the frequency spectrum was insufficient to meet all interested operators’ needs. This was, indeed, the reasoning for a dispute concerning a license attributed to Dense Air Limited until 2025 and that was reconfigured and redesigned – but it was not revoked – by ANACOM.
Redefining the spectrum is critical for the success of the bidding process: the spectrum of frequency within which operators may offer 5G network services is limited in size, meaning that sufficiency, on the one hand, and allocation, on the other, to each competing operator is very relevant for current and future outlooks of the telecommunications market.
5G licenses will be awarded in August 2020, after the bidding process comes to an end. Recent numbers on the impact of the 5G network in the Portuguese economy are estimated to reach 3.6 billion Euros in the next ten years.
According to Eurostat, the price of telecommunications in Portugal walks the opposite direction of that of EU’s: in Portugal, prices rose 12% in the last ten years, while in the EU, prices fell approximately 11%; Portugal is the seventh most expensive jurisdiction in the EU; and, in Portugal, prices are 15% to 25% higher than the European average regarding specific services, such as bundle services and internet, respectively.
Until recently, the launching of a public-private partnership (PPP) in Portugal was dependent on the verification of 16 legal requirements, including a cost-benefit analysis for the public sector, a study of the budgetary impact and an adequacy analysis of the partnership duration. Last week, the Portuguese Council of Ministers has enacted new regulation that alters the rules of approval, creation and modification of PPPs, granting the Council of Ministers discretionary powers (i) to define requirements that each partnership should fulfil; (ii) to approve the PPP project team; and to decide on whether to award or not to award the project, once the contracting process has ended.
This regulation also changed several aspect so of the legal framework of PPP, maintaining only two of the existing contractual models from the previous legislation, adding to these a model for the partnerships that do not entail any costs for the awarding public entity.
Although the new regulation will enter into force on the 1st February 2020, it will not impact on the existing PPP, nor in all decisions already taken on any PPP pending awarding procedures (as to these last ones, it is not clear whether the Finance Minister will maintain any awarding powers or those will be transferred to the Council of Ministers).
Finally, it is also worth noting that after these changes the PPP framework will no longer apply to municipalities, autonomous regions and related entities, thus allowing them to create their own PPPs without governmental supervision.
MV Conversations with João de Macedo Vitorino
With Lisbon touted as one of Europe’s Top 5 Start-Up Hubs, MV Conversations looks at the realities of Portugal’s Start-Up ecosystem and its true potential going forwards.
‘Start-up’ is a recent buzzword in Portugal. For the past few years, from the Government to the co-working spaces, people are embracing entrepreneurism and working towards living up to the hype of being one of the most promising innovation ecosystems in the world.
With Lisbon having recently hosted the Web Summit for the 4th consecutive year, bringing together investors and start-ups from around the world, the buzzword is again on the tips of everyone’s tongues.
One cannot forget, however, that the Portuguese start-up scene is still in its own incubation period, and for all the noise and attention we are yet to catch up to other hubs such as London, Berlin or Amsterdam, says João de Macedo Vitorino. Having got through the ‘seed stage’ and embracing its position in the ‘early stage’, Portugal’s ‘growth stage’ is yet to be conquered. “For this, one needs to look beyond a reliance on public funds and incentives, and follow the lead of other markets, as well as promoting and capitalising on the country’s traits that make it unique and conducive to a start-up ecosystem.”
Subsidies and Summits
In a bid to put Portugal on the start-up map, recent years have seen the Government drive through numerous initiatives and incentives to boost the start-up ecosystem and promote sustainable economic growth, innovation and opportunities. From a €200m venture capital fund aimed at boosting foreign investment in start-ups, StartUp Portugal (with over 20 initiatives for attracting new investment, talent and innovation) to a StartUp Visa for foreign entrepreneurs and tax incentives for non or new residents.
With over 70,000 attendees, the Web Summit has been a boost to various aspects of this country’s economy, such as tourism, and also created a demand for supporting facilities including incubators and accelerators.
Drawing investor attention to Portugal in any format is welcome, says João de Macedo Vitorino, whether via attractive initiatives, monetary benefits or events. But one needs to take these subsidies and summits with a pinch of salt, he adds. Many subsidies have a limited lifetime and an array of conditions that are very difficult to fulfil, while the Summit itself lasts four days and what we need is to ensure that our eco-system continues to attract ideas and investment for the rest of the year. “For that we need to promote the infrastructure we have in place to support it and the traits of our country and people – why Portugal is the right place to start up and invest.”
Market lessons
Looking to other markets that have started using similar public structures and subsidies to fund their start-up ecosystems, explains João de Macedo Vitorino, in the end you are attracting all kinds of ideas and paying for ideas which are not, or may not be successful when viewed from a market perspective. “If you look at the figures of the investments that were made in France this way, there were some tax companies founded and jobs created, but those jobs and those companies might have found better ways of existing and in a less costly way than by using public funds.”
If we look to the US, Germany or UK, these are of course far more dynamic markets, he says. “And their eco-systems have adapted. Big corporations have their own ideas and take their ideas to market, and they have started attracting entrepreneurs because they realize that it's much less expensive to invest in potentially good ideas than to have to buy them afterwards for a great deal of money. So the market itself created this thirst for new ideas and an environment that is favourable to seek and grow ideas from people who would not otherwise have the means to do it.”
These markets create solutions to cover gaps, such as corporations making their own labs, venture capital increasing and investing in diverse risks so they can invest more. “It's one thing trying to put ideas in people's minds or incentivising people to do things that they otherwise would not do,” explains João de Macedo Vitorino. “It is quite another to have a market where everyone is trying to succeed, sell their own ideas and invest in others.”
That is what the goal should be for Portugal, he adds. Ensuring the environment here is such that the market goes from publicly funded to a more self-sustaining one.
The Portuguese advantages
As the digital world tends to be focused on universal products, these days there are no frontiers for the digital economy. So you can really start anywhere, says João de Macedo Vitorino. “The key is to find an environment that supports your start-up, both the place and the people.”
He highlights the fact that the digital economy requires people that are open- and internationally-minded, free thinkers and flexible, who can move from idea to idea and adapt quickly and painlessly. “These are all Portuguese qualities that I believe make us more naturally capable to succeed in the digital world as we have in traditional commerce. It’s our natural way of being as a country and as a people, and if you do things against your own nature it becomes much harder. Working with a people who already possess these traits in their DNA is a distinct advantage.”
Portugal also benefits from having a very qualified and skilled work force of multi-lingual talent, and we are seeing this focus on our talent with big business establishing bases in Lisbon for their European operations, says João de Macedo Vitorino. Mercedes for example – and others who are especially taking advantage of Portugal’s young tech talent.
The country is also investing in infrastructure to support the start-up ecosystem with hubs opening across the country, such as the Beato Creative Hub, a large-scale incubator in the north of Lisbon for start-ups and other tech businesses, including the Daimler-Mercedes research centre. “And it is precisely this type of infrastructure, coupled with the people behind it, that will strengthen the foundations of our start-up ecosystem,” he says.
Additionally, with political uncertainty prevailing around Europe - Brexit being a case in point, this is a definite concern for any potential investors or entrepreneurs. Portugal’s stable political climate without a doubt plays a part in amplifying its attractiveness, says João de Macedo Vitorino.
“We have made great strides in getting Portugal on the start-up map, and while subsidies and summits are a good first step for Portugal’s start-up ecosystem, we now need to take this a step further,” he says. “We must look past exclusively publicly-supported environment and ensure that the Portuguese eco-system is an attractive marketplace of ideas and investment with the necessary infrastructure to support it for years to come.”
The Hub Criativo do Beato (HCB) is a modern startup hub in Lisbon under construction by the municipality of Lisbon. Located on the Tagus riverside in eastern Lisbon, its 20 buildings spread over an area of 35000 square meters are now being requalified to host both national and international creative and innovative technology industries.
Startup Lisboa will manage the entire HCB. Future tenants of the space will include the German group Factory, Mercedes-Benz (with its Lisbon technology hub Mercedes Benz.io) and Super Bock Group’s creative industry space and craft brewery.
MVA is advising Startup Lisboa on the tender for the Rehabilitation and Remodeling Contract for the future building of Startup Lisboa at HCB. The tender is set to rehabilitate a former bread and confectionery factory, covering an area of 7.000 square meters. The works contract has a base price of Eur 5.4 million. The works on the new Startup Lisboa building are expected to start by the end of March 2020 and to be completed within a year.
Interested parties should submit their applications until 12 PM on November 22nd 2019. In the first phase of the tender, ten companies will be selected to submit a proposal according to the building tender specifications. The tender program and ranking criteria can be found here.
The Portuguese Government has adopted end of September 2019 contingency measures applicable to financial services and social security matters in case a no-deal Brexit occurs.
Under the new rules, a UK credit institution, investment firm or fund manager authorised to provide services in Portugal under an EU passport will be allowed to continue to do so until end of 2020, provided that:
- Before Brexit, the relevant Portuguese authority (Bank of Portugal or CMVM) has received a notice from the relevant UK authority for the provision of services or the performance of an activity in Portuguese territory by such entity; and
- Within three months after Brexit, the relevant entity notifies the CMVM that it intends either to (i) unilaterally terminate the existing contracts or (ii) request authorisation to carry out its activity in Portugal.
Until the authorisation request is submitted, which must occur no later than six months after Brexit, the UK entities may not perform any new transactions with retail clients, save for the termination of existing contracts.
Banking contracts concluded before Brexit, such as deposits or other repayable funds, credit transactions, payment services and electronic money - as well as related ancillary contracts - will remain in force if the UK entities notify the Bank of Portugal within three months and comply with Portuguese laws.
UK investment funds may continue to be traded in Portugal provided that the relevant UK authority notifies the CMVM before Brexit and the fund manager provides the CMVM with the relevant information within the same deadline.
Finally, insurance contracts concluded with UK based insurance companies covering risks located in Portugal prior to Brexit will also remain in force, although they may not be extended.
In what concerns social security, UK individuals who have compulsorily paid contributions in Portugal will be entitled to claim benefits provided equivalent treatment is granted by the UK authorities to Portuguese citizens residing in the UK.
The new rules, approved by Decree-Law 147/2019, will enter into force if a no deal Brexit occurs and will expire on 31 December 2020.
Back in 2015, Spain levied a special tax on electricity producer which was suspended on the beginning of October 2018 for a six months period. Now that the suspension has ended, and as in Portugal there is no such tax, this was perceived as a competitive advantage to investors in the Iberian electricity market.
Apparently this is no longer the case as the Portuguese government has introduced a brand new special tax of €4,18 per MWh to be levied in 2019 upon all renewables not subject to a special regime. The Portuguese government argues that this fiscal disparity creates a market disturbance and should be treated as an extra-market event “which may influence the market price and revenues of the different Portuguese producers”.
The Portuguese government is in fact authorized by Decree-Law no. 104/2019 to create a payment on account in order to suppress such disparity between Portuguese and Spanish electricity producers.
This new tax was determined by the Secretary of State for Energy through the Ruling no. 8521/2019 after a proposal from the Energy Services Regulatory Entity and has entered into force on 27 September 2019.
This new tax was already foreseen in the State Budget for 2019 and its creation raises questions on its lawfulness.
The California Senate passed the new Assembly Bill 5 (“AB5”) - a controversial bill aimed at curbing the abusive use of the figure of the service provider in employment relationships.
As with the Supreme Court ruling in the Dynamex case, this new bill, published September 10th, establishes the “ABC” method, which requires the verification of three requirements for the qualification of a service provider: (i) the worker may freely carry out and organize his/her work; (ii) the execution by the employee of tasks outside the normal scope of the hiring company's activity; and (iii) usual involvement of the worker in independent businesses or occupations, with the same nature as the activity performed for the hiring company.
Should the amendments to the AB5 be approved by the California State Assembly, their entry into force will cover a wide range of professionals in many different areas: construction, security, domestic service, catering, doorkeepers and janitors – as well as Uber and Lyft drivers. It is estimated that in California there will be about one million professionals affected by this bill.
The approval of the bill will also imply that these professionals will benefit from, inter alia, health insurance, minimum wage, maternity and paternity leave, overtime pay, unemployment protection, and the possibility of unionization. This means that the lives of workers who currently have no labor protection will be radically changed.
The AB5 represents the first major political battle in the United States against the collaborative method which characterizes the gig economy – and it is an attack to the root of its business model. The new bill will deem the drivers of private transportation platforms, like “Uber” and “Lyft”, as employees.
Given the great influence of California, it is likely that other states, such as New York or Washington, where similar projects have already been presented (but which eventually had no continuity) may adopt similar measures.
Once approved by the California State Assembly, the new bill will come into force on 1 January 2020.
We will have to wait to confirm the practical results of this new bill. However, it is anticipated that not all companies will requalify their service providers as employees. In this sense, Uber is an illustrative example – the driver’s company has an history of resisting the labour regulation and the qualification of its drivers as employees.
With the wildfires afflicting again the country, and a general election in early October, the Portuguese cabinet launched two programs to combat the climatic changes and their negative effects on the environmental, social and economic domains: Program of Action and Adaptation to Climate Change (P-3AC) and Program of National Strategy of Active Cycling Mobility (ENMAC).
In the P-3AC program, the Portuguese Cabinet established as priority action lines, the prevention of rural fires, the improvement of soil quality, water management and urban vulnerabilities, reserving, to the effect, a financial package of 372 million euros to be spent up to 2020.
This package includes (i) 129 million euros to implement urgent measures, such as planting fire-resilient forest species, promoting the reduction of fuel biomass through intermunicipality structures, reconfiguration of telecommunications networks in forest areas and the installation of a communication system to alert the rural populations; and (ii) 127 million euros to make water consumption more efficient, for instance, favoring the conversion of crops to less water-demanding species, varieties and cultivars or promoting the installation of rainwater harvest system to support the industrial activity and improve the water savings.
The Portuguese Government forecasted a total spending of 560 million euros in coastal protection until 2030, to promote a more resilient coastline to erosion and coastal flooding and the removal of structures or buildings in high risk zones.
In parallel, the ENAMC program puts in place active mobility strategies in large urban areas for the 2020-2030 decade, with the intent of reducing the culture of individual transport.
Recognizing the health, traffic, economic and environmental benefits brought by cycling mobility, the program targets having 10,000 km of cycle paths until 2030 in the urban areas and creating an awareness program to universalize this mode of transport. Among the objectives of this program we can find:
- having cycling as extracurricular subject in the schools;
- building an articulated system of cycling stations;
- changing the Road Law to increase favorable and safer conditions for the users of this cycling vehicles, for example, creating more strict rules about the behavior in the cycling paths and assessing the chance of attenuation of the injured person's guilt as a cause of exclusion or reduction of compensation in the event of objective liability.
In addition, the Labour Law will be amended to improve conditions, in the medium and large companies, for workers to use bicycles, such as the right to specific space and bike lockers.