The European Union wants to be at the forefront of the regulation of artificial intelligence. The European Artificial Intelligence Act ("AI Act") aims to serve as the blueprint of future AI regulation in the world, in the same way as the General Data Protection Regulation ("GPDR") became the basis for regulation of data protection in many countries.
The advances in EU AI legislation are now seen as blocking investment in the field of AI with the risk of increasing Europe's lag in relation to the United States and China, and the exodus of its most talented engineers to locations free from the constraints of the AI Act.
The EU AI Act defines AI as “software that is developed with one or more of the techniques and approaches listed in Annex I and can, for a given set of human-defined objectives, generate outputs such as content, predictions, recommendations, or decisions influencing the environments they interact with”.
The companies that will be most affected by the AI Act are the developers of AI systems placed in the EU or whose system's outputs are used in the EU as well deployers, importers and distributors of AI systems.
Annex I of the AI Act lists the techniques and approaches that are considered as AI which include among other things:
- Machine learning, including supervised, unsupervised and reinforcement learning, using a wide variety of methods, including deep learning;
- Logic and knowledge-based, including knowledge representation, inductive (logic) programming, knowledge bases, inference and deductive engines, (symbolic) reasoning and expert systems; and
- Statistical, Bayesian estimation, search and optimization methods.
The EU AI Act chooses not to define artificial intelligence as a form of intelligence or intelligent behaviour, but as a series of technical tools with advanced capabilities. This choice is deliberate and shows that AI cannot be defined, even by approximation, as human intelligence. Taking the words of the AI Act on their face value the various techniques and approaches could be interpreted as including any algorithm or even any computing machine (going as far back as to the first computing in the fifties of last century) which can hardly be considered “intelligent” and more importantly could pose serious issues in present economic activities.
Because of the wide scope of its definition of AI, the EU AI Act excludes some techniques which are not to be considered as AI for the intended legal purposes:
- Software that does not generate outputs influencing the environments they interact with;
- Software that is solely based on predefined and static rules; and
- Software that is solely based on random generators.
These exclusions serve to free many existing technologies from the burden of the new regulation. Does this approach work? Most likely not, as the cumbersome set of rules imposed by the AI Act demonstrate.
It is apparent from the AI Act that the European lawmakers are not trying to regulate AI but to limit the “scary” consequences of the wide adoption of many technical systems that can be used to invade privacy or menace the wellbeing of human societies in general.
The core of the EU AI Act is not AI but the risks of advanced technical systems, which working separately or in conjunction can severely create risk for democracy, privacy or liberty. Face recognition systems are a good example of a technical advance that is not analogous to human intelligence (as it also exists in animals) and yet has the potential for creating a dystopic society or used to threaten and coarse individuals.
The EU AI Act looks at the potential dangers to classify AI systems (all of those in Annex 1) into four levels:
- Level 1. Unacceptable risk systems that are prohibited, which includes systems considered as threatening people’s safety, livelihoods and individual rights.
- Level 2. High risk systems, which are highly regulated, including systems that negatively affect safety or fundamental rights.
- Level 3. Limited risk systems, therefore requiring only certain transparency obligations, which include lower-risk AI systems, such as chatbots.
- Level 4. Minimal risk systems that call only for voluntary codes of conduct, such as spam filters and recommendation systems.
The application of this classification alone requires massive auditing work for businesses using and developing AI systems or software systems with AI components. Toll road managers, traffic controlling companies, banks, insurance companies, hospitals and health providers, courts and public authorities, among many others, will one way or another be affected by the application of the AI Act because they all use systems with AI components.
Many companies develop software tools using AI components, not only in the wide sense AI is defined by the AI Act but also including some of the "scary" elements of AI so much feared by EU legislators, such as face recognition or risk profiling based on background information that might ultimately lead to social, gender and racial biases even when such biases are not built-in from exiting biased data.
The AI Act is an attempt to put AI in a box that misses the real points of concern. It is not the technology that must be regulated but the wrong use of technology.
The following are the real points of concern that call for urgent regulation:
- Mental conditioning and mental warfare systems. Mental conditioning systems powered by AI are already in place. We see them every day in social networks, which use AI algorithms to promote engagement and favour the dissemination of fake news and promote aggressive behaviour. Leading people to illegal and vicious content in a conscious and deliberate manner should be prohibited and punished;
- Use of personal data. The data used in the models is not open for anyone to use. Consumers that publish posts, reels, photographs, video, text etc did not sign up for unrestricted use of their data by machines to do whatever the owners of those machines wants. Personal data should not be used for training, pattern recognition, marketing or similar activities.
- Use of proprietary data. Authors, publishers and media companies are raided everyday by AI systems. Their data is used to train models and to create new data. No consent was given to AI systems' owners to use such data. Usage by AI systems does not fall under the "private use" rule anymore. Copyright owners should have full control of any use that is not made by a human being.
Unfortunately, failing to correct what is wrong is not the only problem with the European regulatory spree. Another consequence of the AI Act is to scare off local and international investors, European entrepreneurs, start-ups and software developers.
If Europe does not backtrack some of its existing policies and does not create a favourable legal, economic, tax and regulatory environment, it will lose the AI war that is looming and be for a long time at the mercy of the United States and China and others that may come along.
In a statement issued on 21 January 2025, the Portuguese Government announced the completion of the reorganisation measures necessary to carry out its intention to privatise TAP, which was nationalised by the Portuguese Government following the turbulent time of Covid19.
TAP is the Portuguese flag carrier airline company that operates an extensive international network, primarily connecting Europe to Africa, North America and South America, with a strong focus on Brazil. In 2024, TAP flew 16.1 million passengers, an increase of 1.6% compared to 2023. The largest percentage growth in the number of passengers carried was seen on North American routes, which reached a total of 1.59 million passengers, 8.9% more than in the previous year. TAP was recently considered the safest airline in Europe and ranks 11th in the world ranking.
Incorporated nearly 80 years ago, TAP became state-owned in the 1970s. In 2016, the Portuguese government sold a 50% stake in TAP and gave operational control of the airline to Atlantic Gateway, a joint venture between HPGB and DNG Corporation.
In 2020, amidst the Covid-19 pandemic, the Government took full control of TAP and injected over €3 billion following negotiations with the EU Commission DGCom, as required by law. By January 2025, TAP completed the final reorganisation measures outlined in the restructuring plan, which included acquiring Portugália, UCS - Integrated Health Care, and Cateringpor. The approval from the Court of Auditors is still pending for the acquisition of Cateringpor.
On 26 January 2025, in an interview given to Portuguese media the Minister of Infrastructure reaffirmed the government’s intention to privatise TAP through direct negotiation, selling 100% of the company's capital while selecting a strategic partner that ensures strategic conditions, such as the continuity of the hub and TAP's headquarters in Lisbon, as well as the preservation of routes to North America and Brazil.
Potential buyers include companies such as Lufthansa, Air France-KLM, and the IAG Group, which reportedly are already engaged in discussions with the Government. However, the possibility of interest from other players should not be ruled out.
KEY INFORMATION
Ownership
100% owned by the Republic of Portugal (Directorate-General for Treasury and Finance)
Subsidiaries
TAP has the following subsidiaries:
- Portugália - Companhia Portuguesa de Transportes Aéreos S.A.
- UCS – Cuidados Integrados de Saúde, S.A.
- Cateringpor - Catering de Portugal S.A.
Key Financial Data
- Net profit: €177.3 million
- Revenues: €4,200 million (+21%)
- Recurring EBITDA: €872 million
- Recurring EBIT: €386 million
- Flight Load Factor (2024): 80.8% (+1.5%)
- Supply of seats measured in ASK (2024): +1.6%
- Revenue per seat measured in RPK (2024): +3.4%.
- Net debt: €2.452 million
- Credit ratings: BB- from S&P, B1 from Moody’s, and BBB from Fitch.
After five decades of deliberations and research on potential sites, the Government has directed ANA – Aeroportos de Portugal ("ANA"), the operator of the Portuguese airports, to move forward with the planning and development of a new airport in Lisbon to replace the current Humberto Delgado Airport.
The new Lisbon airport, to be named Luís de Camões Airport, will be situated in Alcochete, selected by an independent technical commission appointed by the Government for its public land availability, proximity to Lisbon and transportation connections.
Under the concession agreement signed in 2012 between the Portuguese government and ANA, the responsibility for building the new Lisbon airport was designated to ANA. This condition was a requirement for the acquisition of ANA by the French infrastructure company VINCI, as part of the privatisation process of ANA.
On 17 December 2024, ANA submitted the initial report ("ANA Report"), which outlines the projections, technical details, schedules and financing structure following the concession agreement. The Government announced its position on the ANA Report on 17 January 2025.
ANA (VINCI) POSITION
- Project: ANA proposes the construction of two runways, with an option for future expansion to four.
- Construction cost: The estimated cost is €8,500 million, higher than the €7,700 million initially projected by ICT.
- Construction period: Construction is projected to last six years, with work commencing once all permits and agreements are finalized. ANA expects to start operation mind-2037.
- Financial model: The financial model outlined in ANA's report does not involve any direct financial contribution from the Portuguese State. Instead, it suggests a gradual increase in airport fees between 2026 and 2030, with annual updates based on inflation until the end of the concession term. Additionally, ANA is proposing a 30-year extension of the concession agreement, which would extend it up to the year 2092.
- Financing structure: ANA proposes to fund the project with €1,500 million equity and €7,000 million of financial debt provided under a corporate finance structure based on ANA’s credit rating and the support of VINCI Group.
- State risks: ANA proposes that the following risk be assumed by the State:
- Environmental mitigation measures and costs.
- Expropriations and decontamination actions and costs.
- Highspeed railway, highway and supply infrastructures.
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State aid clearance: The Government should seek approval from the European Commission to confirm that any potential compensations provided to ANA for the development of the new Lisbon airport do not qualify as state aid under European laws, or if they do, that they are considered compatible state aid.
THE GOVERNMENT POSITION
- Project: The Government agrees with the ANA's proposal to build two runways.
- Construction costs: The Government has expressed concerns about the insufficient detailed financial information regarding construction costs and proposes to enter negotiations with ANA in order to reduce these costs.
- Construction period: The parties should explore ways to reduce the pre-construction phase and establish contingency plans to manage and minimize any potential delays in the construction schedule.
- Financial model: The Government emphasizes the need for additional financial information in order to properly evaluate the proposed increase in airport fees and extension of the concession term, which should be mitigated.
- Financing structure: The Government questions the use of corporate finance structure instead of a project finance, which is the usual structure in this kind of projects.
- State risks: The Government considers the risk allocation imbalanced in favour of ANA and while some risks and costs have already been assumed by the State (e.g. Highspeed railway), others, such as the environmental mitigation measures and costs, should be allocated depending on their endogenous or exogenous nature in relation to the Project.
- State aid clearance: The Government acknowledges the importance of ensuring compliance with State aid rules
NEXT STEPS
The Government has asked ANA to prepare an application for the new Lisbon airport, which ANA must do within 36 months.
To speed up the process, the Government proposed negotiating and executing a memorandum of understanding with ANA within the next 6 months.
Additionally, the Government established the Airport Projects Management and Monitoring Structure to provide technical support and oversee negotiations with the concessionaire for the construction of the new airport on behalf of the State.
The European Union's Pay Transparency Directive marks a monumental shift in the ongoing effort to address the gender pay gap, a persistent issue that has plagued industries across the continent despite decades of regulatory attempts. At its core, the directive seeks to dismantle the hidden structures that perpetuate pay inequality by mandating transparency in compensation, thereby empowering workers, employers, and social partners to identify and address unfair pay practices. The directive’s focus is not only on rectifying the gender pay gap but also on promoting a fairer, more inclusive workplace where compensation reflects the true value of work, regardless of gender.
A NEW LEGAL LANDSCAPE FOR PAY TRANSPARENCY
The introduction of this directive is timely and reflects growing societal, economic, and political pressure to ensure fair compensation practices. Despite some progress over the last 20 years, the gender pay gap in the EU remains at approximately 13%, highlighting the urgent need for action. The directive addresses the shortcomings of past regulations, including the 2006/54/EC Directive, by specifically targeting the lack of transparency in pay systems—a major barrier identified in the 2020 assessment report on equal opportunities and treatment in employment.
With the directive set to be implemented by 2026, companies in Portugal, as in other EU member states, are on the clock to prepare. This new legal landscape will require businesses to adopt transparent pay policies and practices, fundamentally reshaping how salaries are determined and communicated. As organizations grapple with these changes, they face significant challenges, particularly in understanding and complying with the directive's complex requirements.
NAVIGATING THE TRANSITION TO PAY TRANSPARENCY
To assist businesses in navigating these challenges, Pihr, a leading software provider specializing in pay equity, has partnered with the prominent law firm Macedo Vitorino. Together, they offer a comprehensive solution that addresses both the technological and legal aspects of compliance, ensuring companies can meet the directive's demands effectively. This partnership underscores the growing recognition that achieving pay equity is not just a legal or technical issue but a multifaceted challenge requiring integrated solutions.
In this article, we explore insights from representatives of Pihr - Pay Equity Software and MACEDO VITORINO on the implications of the directive, the hurdles companies will face, and how their collaboration can help businesses transition smoothly to a more transparent and equitable pay system.
Is the EU Pay Transparency Directive seen as crucial to tackling the gender pay gap, and if so, why did it arise only now?
Pihr: Since equal pay for equal work is one of the founding principles of the European Union, it is somewhat surprising that it has taken this long to initiate the directive. Although the gender pay gap has decreased in the union over the past 20 years, it is still around 13%, which led the commission to finally take action to close the gender pay gap.
Macedo Vitorino: As identified in the Directive itself, its transposition is crucial to enable workers, employers, and social partners to take appropriate action to ensure the application of the right to equal pay for equal work and work of equal value between women and men. Without the increased transparency imposed by the Directive to reveal gender bias and discrimination in pay structures, such actions can be thwarted. The Directive emerged as a solution to the shortcomings of the previous Directive 2006/54/EC, focused on equal opportunities and treatment in employment and occupation, identified in the 2020 assessment report.
As 2026 is the deadline for the implementation of the Directive, what can companies and other entities operating in Portugal expect in the coming year and a half?
Macedo Vitorino: Portugal has not yet implemented the Directive or provided full guidelines regarding its transposition. However, it can be expected that several measures will need to be adopted by companies from both a legal and practical standpoint. HR departments will play a key role in scrutinizing pay systems, identifying pay gaps, and complying with new duties, such as creating pay transparency measures prior to employment. Even before the Directive’s transposition, companies may adopt its rules voluntarily.
Will it be a smooth transition for companies in Portugal to adopt the Directive's specifics even before its implementation?
Pihr: Based on our experience from other countries, the directive will have significant implications for companies. We believe that companies should act sooner rather than later to prepare for the directive, even though it is not entirely clear how Portugal will adopt it into local legislation.
Macedo Vitorino: The transition will require a thorough assessment and adjustment of pay systems and compliance with additional legal duties such as reporting. Small and medium-sized companies may face more challenges due to their limited access to day-to-day legal and technological support and fewer resources.
What are the main factors impacting the Portuguese gender pay gap?
Macedo Vitorino: The gender pay gap in Portugal is influenced by several factors, some highlighted during the Covid-19 pandemic. These include unequal sharing of care responsibilities, overrepresentation of women in lower-paid jobs, and unjustified disparities in promotions favoring men. Lack of transparency also obstructs efforts to close the pay gap.
What specific challenges will companies face regarding compliance policies?
Pihr: Companies will need to move away from current pay practices and ensure they can confidently communicate about pay gaps and salary ranges.
Macedo Vitorino: The Directive’s requirement for equal pay, covering wages, salaries, and other considerations, will challenge companies to examine every payment and clearly define remuneration and evaluation policies grounded in performance and competence.
Which legal considerations do companies need to be aware of upon the Directive's implementation?
Macedo Vitorino: Companies will need to understand various legal issues that impact pay transparency, such as reporting duties, cooperation with workers’ representatives, and compliance with collective bargaining rules. Clear identification of remuneration policies and employment relationships is also crucial.
What inspired Pihr and Macedo Vitorino to form a partnership, and how does it address both the legal and technological aspects?
Pihr: Pihr sought thought leaders in employee law in Portugal, and our meeting with Macedo Vitorino felt like a great fit. Our partnership connects Pihr’s leading software with Macedo Vitorino’s legal expertise, providing a comprehensive solution for our clients.
Macedo Vitorino: The Directive poses both legal and practical challenges, so combining legal and technological expertise offers the best solution, tailoring support to each client’s unique needs rather than providing a one-size-fits-all approach.
What benefits do you see in combining legal advisory services with technology solutions to promote salary transparency and equality?
Pihr:Our software analyzes vast amounts of data to highlight pay equity issues, providing actionable insights. Clients can then leverage legal counsel to interpret results and navigate compliance challenges.
Macedo Vitorino: Legal advisory services and technology solutions together empower companies to comply with the Directive. Legal advice ensures implementation aligns with the law, while technology provides tools to identify, and address pay gaps.
How does pay equity software streamline key processes, and what features make it effective during the transition?
Pihr: Pihr’s application is highly efficient, saving up to 90% of the time spent on gender pay equity analysis. It identifies unjust pay gaps and offers actionable insights, allowing users to focus on strategic decisions rather than data crunching.
Macedo Vitorino: Innovative software like Pihr’s helps pinpoint equal pay risks, identify non-equal pay situations, and track adjustments. It also allows for phased implementation of equal pay measures until 2026 and facilitates collaboration with legal advisors.
CONCLUSION
The EU Pay Transparency Directive is a landmark initiative aimed at closing the gender pay gap by enforcing greater transparency in pay structures. The directive's requirement for companies to disclose pay information will shine a light on existing inequalities, compelling businesses to address unjustified disparities in compensation. While this regulation promises considerable progress in achieving pay equity, the path to compliance will not be without challenges. Companies in Portugal, especially smaller ones, will need to invest in adjusting pay systems, complying with new legal obligations, and effectively communicating changes to employees and stakeholders.
Pihr and Macedo Vitorino’s partnership highlights the critical need for an integrated approach that combines legal advisory services with advanced technological tools. By merging Pihr’s cutting-edge pay equity software with Macedo Vitorino’s legal expertise, the partnership offers a robust solution to help companies navigate the complexities of the directive. The software’s ability to quickly analyze vast amounts of data and identify pay disparities, combined with legal guidance on interpreting and acting on these findings, ensures that companies can transition smoothly and confidently into this new era of transparency.
Ultimately, the directive represents a pivotal moment for pay equity in Europe. By embracing the tools and support available, companies can not only achieve compliance but also set a new standard for fairness in the workplace. The efforts undertaken today will lay the foundation for a more equitable future, where pay reflects the true value of work and all employees, regardless of gender, can thrive.
João de Macedo Vitorino, Lawyer and Partner at MACEDO VITORINO, shares his viewpoint in the digital magazine ADVOCATUS from ECO on May 10th, regarding "Freedom and Slander," to the recent entry into force of Directive (EU) 2024/1069.
"As much as accusations are beneficial to the Republic, so too are calumnies pernicious. Continuing on this path will increase the Republic's exposure to slander and the risks of losing our freedom."
The recent entry into force of Directive (EU) 2024/1069 of the European Parliament and of the Council of 11 April 2024 on "strategic legal actions against public participation", reminded me of the wise words of Niccolò Machiavelli on the safeguarding of liberty in the Republic. He said that "to those who are proposed in a city for the guard of their liberty, no more useful and necessary authority can be given than that of being able to indict the citizens before the people, any magistrate or council, whenever they sin anything against the free state." At the same time, he warned that "slander is used more where accusation is used less and where cities are less ordered to receive it." Machiavelli understood that to repress slander, one cannot repress the possibility of accusing, but the opposite: the power to accuse is fundamental to freedom and must not be restricted. Rather, the powers of the magistrates should be ordered so that they could distinguish accusation from calumny and punish the latter.
The Directive says it aims to "remove obstacles to the proper conduct of civil actions while ensuring protection for natural and legal persons involved in public participation in matters of public interest". Among those targeted by the need for protection are entities with "public participation", namely, journalists and academics, but also political office holders. Among the instigators against whom they deserve special protection are the somewhat mysterious "powerful entities, such as individuals, lobbying groups, large commercial corporations, politicians, and organs of the state."
The Directive states that "it is important to protect natural and legal persons from abusive court proceedings against public participation". It emphasizes that these proceedings "are not initiated for the purpose of access to justice, but to silence public debate and prevent the investigation and reporting of breaches of Union and national law, usually resorting to harassment and intimidation."
And so, it obliges member states to create special safeguards to make it more difficult to bring proceedings against entities with public participation, namely, that the courts may require the provision of security and the so-called "corrective measures against abusive judicial proceedings against public participation", such as increased court costs and fines.
Confronting Machiavelli with the purposes of this Directive (EU) 2024/1069, the clash between Machiavelli's warning and what the Directive imposes on the Member States of the European Union becomes clear. It is therefore necessary to ask, politically, whether we are not encouraging slander by making it more difficult to prosecute entities with public participation; whether the European institutions are not reacting hotly in the face of recent circumstances; and whether it is legitimate for politicians to include themselves as beneficiaries of these measures.
From a legal point of view, we must ask whether there are not already sufficient means, at least in our legal system, to react against so-called abusive actions. In Portuguese civil procedure, in addition to the possibility of preliminary dismissal, naturally limited by the adversarial principle, there is the institution of bad faith litigation, which allows the court to impose fines of its motion on those who make improper use of the right of action. In criminal proceedings, it is up to the Public Prosecutor's Office, even in crimes that depend on private prosecution, to accuse or not to accuse; Which, things being done well, can only happen when there is enough evidence to bring the defendant to trial.
It is also left to the constitutionalists to ask whether, by making it difficult for some and not others, to access the courts for reasons that are difficult to objectify, we are not calling into question Article 20 of the Constitution of the Portuguese Republic, which establishes for everyone the right to access the law and to effective judicial protection, which means that everyone is granted the right to access the courts.
Above all, since freedom and equality are at stake, it is up to all of us to reflect on whether we want to pursue this path of restricting access to the courts to present our claims. And if, since the means already exist, we should not rather be more demanding of our judicial magistrates in sanctioning abusive actions, in "punishing slander" as Machiavelli would say, instead of creating restrictions on access to the courts for a few and only for the benefit of a few. For my part, I can only intuit that continuing this path will increase the Republic's exposure to slander and the risks of losing our freedom.
The announcement that ChatGPT had successfully passed the US bar exam with flying colours and the multiple examples of AI-generated contracts and legal documents spread fear among lawyers that a "killer application" had arrived and that robots would wipe out their jobs.
Some countries prohibited the use of ChatGPT, and Google delayed the launch of its generative AI solution, Bard, due to regulatory concerns.
Since November 2022, I have been testing ChatGPT and, for a few days, Bard, now available in Europe. Both ChatGPT and Bard have extraordinary capabilities, though we might say that they have different "personalities" and respond differently to the same question. One cannot say that either response is fundamentally better than the other.
Testing ChatGPT
In one of my tests, I asked ChatGPT to "improve the clarity" of a "force majeure" clause. For laymen, a force majeure clause is a contract provision that releases a party from liability (breach or delay in the performance of a contract) caused by an unforeseen, abnormal and uncontrollable event, such as war, earthquakes, etc.
The original clause submitted to ChatGPT stated:
"No party shall be considered to have breached its obligations under this Agreement or be held accountable for any delay if such party's failure to perform or delay is caused, in whole or in part, directly or indirectly, by war (whether war be declared or not), emergency, strike, industrial dispute, accident, fire, earthquake, flood, storm, tempest, any act of God or any other similar cause beyond its reasonable control."
ChatGPT presented the following text:
"Neither party will be deemed to have violated their obligations or held responsible for any delays if the failure to perform or delay is directly or indirectly caused, in whole or in part, by circumstances beyond their control. These circumstances may include war (whether declared or not), emergencies, strikes, labour disputes, accidents, fires, earthquakes, floods, storms, acts of God, or any other similar causes that are considered beyond their reasonable control."
Some of the changes are irrelevant and do not improve the clarity of the text: "neither party" instead of "no party", "be deemed" instead of "be considered," and other changes, some of which are highlighted in the text above, seem innocuous.
Other changes, however, significantly change the text and the scope of what can be considered "force majeure". In its response, ChatGPT divided the sentence into two sentences to simplify readership. The first sentence defines "force majeure" as "circumstances beyond" the parties' control. The second sentence gives examples of the circumstances beyond the parties' control, broadly reproducing the list in the original text with small changes that do not seem to change the text materially.
To a non-lawyer, the meaning of the two texts would seem identical, but that is wrong. ChatGPT's text considerably expanded the definition of force majeure and the situations in which the defaulting party would not be liable for the breach of contract. In ChatGPT's text, any circumstances beyond a party's control would release it from liability. The examples of the second sentence serve as examples to clarify the meaning but would not restrict the meaning of "circumstances beyond their control".
In the original sentence, "force majeure" only includes the events listed and other "similar" events. This means that the defaulting party would have to prove that the event causing the default was beyond its control and similar to the events listed in the clause. For instance, a delay caused by a supplier's default would be considered a force majeure event in ChatGPT's text but not in the original text because a supplier's default is not similar to an earthquake or a war.
The limitations (and dangers) of ChatGPT
This case is a good example of the limitations (and dangers) of ChatGPT. ChatGPT is a language model. The model identifies statistical patterns and relationships within its data set. ChatGPT "learns to predict the probability of the next word in a sentence given the context of the preceding words" (quote from ChatGPT).
In simpler words, ChatGPT generates text based on the information provided to it. This allows it to interpret a sentence and a request and give back an output based on the information that the model has digested from other texts. ChatGPT does not operate logically in the sense that we usually use the word "logic"; that is, ChatGPT does not "deduct" or "infer" on its own. ChatGPT compares and relates things in a different way than humans do.
Because ChatGPT feeds on information that is provided to it, if that information is wrong, incorrect or incomplete, ChatGPT's answers will be flawed. ChatGPT and other generative AI models are trained with large data sets to correct imperfections and further finetuned in specific subjects to eliminate errors.
Using our example above, ChatGPT can be taught that the general concept of "force majeure" is not, in principle, equivalent to any event outside the control of one party but to exceptional circumstances, thus avoiding misconstructions like the one cited above. However, this does not hide the fundamental fact: ChatGPT can generalize, can provide assertive answers, spot patterns and highlight differences, but (at least for now) ChatGPT cannot go to the deepest level of thought and identify a slight nuance that changes meaning in a fundamental manner. ChatGPT does not think. ChatGPT does not create.
This limitation can fundamentally impact how ChatGPT can be used to provide legal advice or draft a contract clause. If, in some cases, a change in a definition to include an element that is generally not within its usual meaning, although still acceptable, can be intentional, intent is not part of ChatGPT's construct.
ChatGPT may make suggestions that, while not being outright errors, can impact the ultimate result. A human must take the decision and bear the responsibility for accepting, rejecting or correcting ChatGPT's suggestion.
ChatGPT raises the bar for lawyers using it because they need to approve or correct ChatGPT's outputs. ChatGPT's suggested wordings are different from contract templates bought from a legal book of precedents. Lawyers have an extra duty of care when using ChatGPT. Lawyers have to decide if ChatGPT's suggestion is acceptable or not. Lawyers must turn ChatGPT's outputs into legal advice. So, while ChatGPT can massively improve the productivity of lawyers, when used without care it can lead to professional liability claims.
Lawyers must think and apply their knowledge and experience in providing legal advice based on ChatGPT's outputs.
Basic rules for using ChatGPT
The limitations and dangers of ChatGPT raise many issues beyond the general ethical and policy considerations that have appeared in the media.
The limitations and dangers of ChatGPT require a different approach and mindset when using ChatGPT and generative AI.
ChatGPT is a powerful tool. ChatGPT can lift heavy weights. ChatGPT can flatten the terrain like a bulldozer. ChatGPT can turn a stone into a perfect sphere or a perfect pyramid, but it cannot create La Pietà of Michelangelo. ChatGPT is a tool that can be like the chisel in Michelangelo's hands. We need to learn how to use it without harming ourselves and others.
For lawyers, ChatGPT can do a lot of the heavy lifting, ease work and help to achieve better results for clients. To do so, here are a few rules on how to use ChatGPT:
- Ask ChatGPT for information. Do not ask ChatGPT for advice.
- While ChatGPT's answer may appear valid and sound, check the sources of ChatGPT's results. Do a basic Google search and look for information from authoritative sources before using ChatGPT's outputs.
- Start small. Do not ask ChatGPT to draft a contract or provide advice. Ask ChatGPT to make minor changes to a piece of text. Ask to draft a paragraph with specific information. Given suitable prompts and using the right models, ChatGPT can help you achieve impressive results.
- Use ChatGPT to put you in the right direction. Do not ask for more than you can chew. If you do not know anything about a subject matter, learn about it before using ChatGPT's outputs.
- Build on ChatGPTs outputs. ChatGPT is a formidable tool. It can provide you with information almost instantly that will spark your intelligence and show different solutions (sometimes wrong) that make you think better about what you want to achieve.
To end, I asked ChatGPT to review these rules. Here is ChatGPT's answer:
Overall, the text is correct in providing guidelines on how to use ChatGPT effectively and responsibly for lawyers. It emphasizes using ChatGPT as a valuable tool to aid legal work and achieve better results for clients. Let's analyze each point:
"Ask ChatGPT for information. Do not ask ChatGPT for advice." This advice is sound. ChatGPT can provide factual information based on its training data, but it is not a substitute for professional legal advice.
"While ChatGPT's answer may appear valid and sound, check the sources of ChatGPT's results. Do a basic Google search and look for information from authoritative sources before using ChatGPT's outputs." This is a crucial point. Since ChatGPT generates responses based on patterns in its training data, cross-referencing its answers with reliable external sources helps verify accuracy and avoid potential misinformation.
"Start small. Do not ask ChatGPT to draft a contract or provide advice. Ask ChatGPT to make minor changes to a piece of text. Ask to draft a paragraph with specific information. Given suitable prompts and using the right models, ChatGPT can help you achieve impressive results." This is good advice to limit the scope of tasks assigned to ChatGPT. Starting with small, well-defined tasks can enhance the quality of the results and make better use of the AI's capabilities.
"Use ChatGPT to put you in the right direction. Do not ask for more than you can chew. If you do not know anything about a subject matter, learn about it before using ChatGPT's outputs." This is another important reminder. ChatGPT can provide useful insights, but users should have some foundational knowledge of the subject matter to evaluate and interpret the outputs properly.
"Build on ChatGPT's outputs. ChatGPT is a formidable tool. It can provide you with information almost instantly that will spark your intelligence, show different solutions (sometimes wrong) that make you think better about what you want to achieve." This point acknowledges the potential of ChatGPT as a valuable resource for generating ideas and exploring various perspectives. However, it also highlights that the generated responses should be critically evaluated before implementation, as they might not always be entirely accurate.
In conclusion, the text provides appropriate guidance for lawyers or any users using ChatGPT, promoting responsible and effective use of the tool to enhance their legal work and decision-making process.
Frederico Vidigal, Senior Associate Lawyer and Coordinator of the Energy department at MACEDO VITORINO, shares his perspective in the digital magazine ADVOCATUS by ECO on "CESE, Through the Labyrinth of Unconstitutionality," published on May 17, 2024.
As far as CESE is concerned, it is difficult to understand its classification as a contribution, given that there is no tangible service that benefits entities as diverse as those that operate.
On April 23, 2024, the Constitutional Court, in Ruling No. 338/2024, declared that the Extraordinary Contribution to the Energy Sector (CESE), insofar as it applies to renewable electricity generating centers, is unconstitutional for violating the principle of equality.
At the root of this decision is an assessment for 2019 that was unsuccessfully challenged by the Tax Authority and the Braga Administrative and Fiscal Court, after which the company appealed to the Supreme Administrative Court, where it also lost. In the end, the Constitutional Court reversed the decision and ruled in favor of the company, marking the first time the Constitutional Court has ruled on the application of the CESE to renewable energy producers.
The CESE was created in 2014 as part of the implementation of the Economic and Financial Assistance Program agreed with the European Union and the International Monetary Fund (the Troika) with the aim of financing mechanisms that would promote the systemic sustainability of the energy sector and the creation of a fund that would contribute to reducing tariff debt and financing social and environmental policies in the energy sector.
The CESE was thus created in the 2014 State Budget as an exceptional contribution (a real crisis tax!) on tangible fixed assets, applicable to companies that hold an operating license for power stations or a license to produce electricity, concessionaires for electricity transmission, or distribution activities, concessionaires for natural gas transmission, distribution, and storage activities, and holders of local distribution licenses, operators of crude oil refining and the treatment or distribution of petroleum products, and wholesale traders in crude oil, electricity, or petroleum products.
However, the reality of things and the passage of time have shown that the CESE is anything but an extraordinary tax. In fact, not only has the duration of the CESE been successively extended, turning it into an annual tax, to reduce the costs associated with the tariff debt of the National Electricity System (SEN); it has also extended its scope of application, first in 2015 to natural gas suppliers and then, in 2019, to renewable energy power plants covered by guaranteed remuneration schemes (except hydroelectric plants with an installed capacity of 20 MW or more).
One of the most famous stories in Greek mythology is that of the struggle between the Athenian hero Theseus and the Minotaur, a dark monster with the head of a bull and the body of a man, hiding in the labyrinth that the king of Crete had built to imprison him. When you try to find out what the CESE is, whether it's a tax, a contribution, or a fee, you find yourself in a labyrinth just like the one in which the Minotaur was hidden, where it's hard to see where you are, and with a sinister outcome for those who face it.
Traditionally, public taxes are distinguished between taxes and fees. Taxes are defined as a coercive and unilateral provision, dissociated from any provision by the public entity, while fees are characterized as a consideration for services provided or enjoyed by the taxpayer. Contributions, on the other hand, appear as an intermediate category of public taxes, halfway between a fee and a tax, in that they do not result from an exchange between the private individual and the public entity, but from an exchange between the public entity and a group of private individuals.
Among the contributions, the General Tax Law, in Article 4(3), defines "special" taxes as those that "are based on the taxpayer obtaining benefits or increases in the value of his property as a result of public works or the creation and expansion of public services or the special wear and tear of public property caused by the exercise of an activity...".
As far as the CESE is concerned, it is difficult to understand its classification as a contribution, given that there is no tangible provision that benefits entities as diverse as those operating, in particular, in the natural gas or renewable energy sectors. If it is not a contribution, it can only be a tax in the strict sense, and therefore subject to a more demanding regime in constitutional terms.
The interpretation of the CESE system has already been the subject of several decisions by the Constitutional Court, which, like Theseus navigating the labyrinth of the Minotaur, has ruled either that it is constitutional or that it is unconstitutional. On March 16, 2023, the Constitutional Court admitted the unconstitutionality of the regime for the first time, considering that the rule that obliges natural gas transmission, distribution, or underground storage concessionaires to pay this tax is invalid due to a violation of the principle of equality since it is no longer possible to affirm that these companies are presumed to be the cause or beneficiary of the public benefits that the Fund for the Systemic Sustainability of the Energy Sector (FSSES) is responsible for providing.
However, a few months later, in May 2023, the Constitutional Court took a different view, noting that "the charge to which the applicant is subject through the CESE cannot be understood to be out of context or disproportionate to the benefits it receives." The Constitutional Court also said that if natural gas companies were excluded from the CESE, this would represent unequal and unjustified tax treatment between operators.
As early as March 2024, the Constitutional Court was asked to rule on the application of the CESE to wholesale traders in crude oil and oil products and ruled that it was unconstitutional, considering that the levy had ended up becoming a tax and that the electricity tariff debt was not caused by the oil sector. The most recent episode was Ruling No. 338/2024, of April 23, 2024, which declared the unconstitutionality of the CESE when applied to renewable electricity generating centers for violating the principle of equality. The Constitutional Court held, in the same vein as the ruling of March 16, 2023, that, in particular, since the law was amended in 2018 and the majority of CESE revenue is now earmarked for reducing the electricity sector's tariff debt, it is no longer possible to say that companies owning renewable electricity generating stations can be held responsible for achieving the objectives of the CESE, let alone causing or benefiting from the public benefits of the FSSES.
The Constitutional Court noted that the CESE is not characterized as a financial contribution because, since there is no correlation between the taxable persons and the objectives of the collection of the tax, it translates into a real tax, and since there is no presumption that the taxable person causes or takes advantage of certain administrative services, the collection ends up violating the principle of legal equivalence (a corollary of the principle of equality).
Of course, all this can have its consequences.
The Constitutional Court's unconstitutionality rulings on the application of the CESE have the following consequences: they allow companies that challenged the collection of the contribution (tax!) to recover a few tens of millions of euros that they had to pay, as well as annulling the contested CESE assessments that the companies will not have to pay. On the other hand, the Constitutional Court's rulings open the door for other companies affected by the CESE to now challenge its collection (past and future), either by asking the Tax Authority to review the assessments paid or by filing a legal claim against its payment with the Administrative Courts.
In this respect, two situations should be distinguished: (i) companies that have paid the CESE and still have time to claim or challenge it can do so within the respective deadline, and (ii) companies that have paid the CESE but can no longer claim or challenge it because the respective deadline has passed can ask the AT to review the assessments.
In any case, and although the Constitutional Court's rulings are only effective in the specific cases that gave rise to them, and do not oblige the AT to return the CESE to other companies, nor the Administrative Courts to follow the Constitutional Court's understanding, it is expected that companies will use the arguments invoked by the Constitutional Court to refuse to pay the CESE because it is unconstitutional, with strong litigation expected between the companies affected and the AT.
It should be noted that any court decision that contradicts the Constitutional Court's rulings requires an appeal to the Constitutional Court itself, promoted by the Public Prosecutor's Office, with the third declaration of unconstitutionality in three cases involving the same interpretation of the rule having general binding force - i.e. applicable to all situations. This could therefore be the basis for challenging or complaining about acts of assessment of the CESE or, for those who are no longer within the time limit, for reviewing the assessment with the AT, using the arguments set out in the judgments to defend the illegality of the respective collection.
However, the story of the CESE could be different if, truly inspired by the hero Theseus, the new government has the courage and, without the help of Ariadne, kills the Minotaur, which is to say the CESE, putting an end to this extraordinary contribution once and for all.
According to local economic press, Novo Banco has started the process for selling BEST - Banco Eletrónico de Serviço Total, S.A. (“Banco Best”).
Banco Best is a digital platform operating in Portugal that provides a comprehensive range of banking products and services.
Banco Best was founded on 9 May 2001, as a result of a joint venture between Saxo Bank and the Espírito Santo Group. On 3 August 2014 and following the resolution procedure adopted by the Bank of Portugal on Banco Espírito Santo, its majority shareholder, Banco Best was included in the Novobanco’s group.
Banco Best operates as an online bank relying on its technological nature, based on national and international partnerships in the areas of Savings, Asset Management, and Trading. Overall, it operates as a universal bank focused on innovation and collaboration.
Banco Best serves clients from all private sectors with a diverse range of services such as banking, investment and savings solutions, financing, as well as day-to-day financial management. Its core business is related to investment and wealth management.
The bank offers a range of investment products, including mutual funds, exchange-traded funds (ETFs), and structured products. It also provides portfolio management services to high-net-worth individuals and institutional investors.
Banco Best is based in Lisbon and does not have physical branches. It provides its financial products and services via other channels, such as:
- The Internet, through its website and mobile banking;
- Investment Centres based in Lisbon, Porto, Braga, Aveiro, Leiria, and Faro, that rely on a network of Personal Managers;
- A network of Digital Managers, a permanent management team providing services, normally at a distance, to Customers requiring specialized once-off assistance; and
- The Call Centre, in addition to telephonic attendance, also intervenes in the opening of accounts via video call in a 100% digital process.
The bank has a network of business introducers and external advisors registered with the Bank of Portugal (Banco de Portugal) and the Securities Market Commission (Comissão do Mercado de Valores Mobiliários) that work as service providers.
Focusing on technology and innovation, BEST has implemented several initiatives to improve its digital offerings. For example, it has launched a robot-advisory service that uses artificial intelligence and machine learning to provide personalized investment advice to customers.
Banco Best, which is reported to have between 75,000 and 95,000 clients has had a significant growth in recent years. In 2021 the bank recorded a 41% growth in client acquisition and recorded a net profit of EUR 3.3 million, a growth of 83% compared to the previous year.
According to the latest available financial statements, on 31 December 2021, Banco Best recorded total assets of €860 million, of which €584 million of investments in credits institutions, €148 million in loans to clients, €67 million of cash and deposits and €43 million of financial assets.
Based on the 2021 financial statements, the bank presented the following ratios:
- Core Tier 1: 44,1%.
- Liquidity Coverage Ratio (LCR): 124%;Cost to income: 78,6%.
- Leverage ratio: 8,9%.
- Loan-to-deposit: 20.3%.
In 2021, Banco Best had an equity position of EUR 82 million. If we consider a price-to-book ratio of 0.70, the bank’s approximate valuation would be less than EUR 60 million.
According to the media, Novobanco has retained the services of Arcano and KPMG to organise the sale of Banco Best and a teaser has already been disclosed to potential investors.
Banco Best offers an interesting opportunity for players looking to acquire a digital bank fully licensed in the EU with a team and a client base that operate in a digital environment. As a setback, Banco Best may come with a legacy of technological choices that may not go in the direction of emerging digital banking technologies.
O Secretário de Estado da Energia português anunciou recentemente um aumento da tarifa paga aos produtores pela eletricidade (FiT) resultante dos leilões de 2019 e 2020. Este aumento corresponderá à taxa de inflação de 2022 e 2023. A lógica desta medida consiste em salvar até 700MW de projetos de PV adjudicados nos leilões que, devido ao seu FiT muito baixo, não são financiáveis e, por conseguinte, correm o risco de não serem concluídos. O governo português argumenta que as atuais circunstâncias inflacionistas excecionais justificam esta medida, mas apenas para os projetos com tarifas muito baixas (começando no histórico mínimo de 11,14Eur /MWh!). Esta situação mostra que, em certa medida, o modelo de leilão 2019-2022 teve as suas falhas, uma vez que privilegiou a fixação de preços arrojados, aceitando o risco de ter projetos não financiáveis. Entendemos que o aumento dos benefícios para as energias renováveis não é politicamente fácil de vender quando as energias renováveis estão no centro das atenções e a receber "benefícios de excecionais" do mercado da eletricidade. Mas, ao resgatar alguns desses projetos que não cumprem as suas obrigações de leilão devido aos preços anormalmente baixos oferecidos pelos seus promotores, o governo português está a absorver o risco de inflação para alguns, mas não para todos os projetos fotovoltaicos adjudicados nesses leilões.
Por isso, a primeira questão que se põe é a seguinte: "Onde é que vamos traçar a linha para este resgate?". Parece que a linha será traçada abaixo de um determinado preço para permitir poupar 700MWh em projetos. Qual é o preço e quais são os critérios para defini-lo? Sabemos que a viabilidade não depende apenas do preço, mas também, entre outros, dos custos de desenvolvimento que são diferentes de um projeto para o outro. Se a ideia é resgatar todos os projetos, independentemente de outros aspetos (incluindo a própria “bancabilidade” do promotor), estamos a distorcer o mercado e, mais do que isso, estamos a distorcer as condições do leilão, bem como as regras de contratação pública. Nestes casos, os termos e condições de um leilão só podem ser alterados se essas alterações não afetarem a concorrência entre todos os proponentes.
Pela mesmo motivo, podemos questionar por que razão excluímos qualquer ajustamento àqueles que optaram por pagar uma indemnização ao sistema elétrico e pagaram um montante elevado para corresponder às ofertas equivalentes da FiT. Em regra, especialmente depois de terem sido adjudicados os projetos, não deve ser permitido à entidade adjudicante favorecer os proponentes que fizeram ofertas mais baixas contra aqueles que prudentemente ofereceram preços mais elevados ou escolheram o mecanismo de compensação (que supostamente tem um peso financeiro idêntico ao correspondente das ofertas de preços fixos). Outros licitadores, se pudessem ter antecipado esta correção da inflação, poderiam ter feito ofertas FiT mais baixas.
Parece, portanto, claro que, a menos que as bases para esta medida sejam explicadas muito claramente, aqueles que ficarão de fora podem sentir-se tentados a contestar a legalidade do aumento da tarifa que o governo português está a oferecer uns excluindo outros.
Mas, pondo de lado as questões jurídicas, perguntamo-nos até que ponto esta medida será bem-sucedida. Será que um ajustamento à inflação de 2022 e 2023 (algo como 9% e 5% respetivamente) será suficiente para salvar projetos com o compromisso de vender cada MWh a 11 euros ou outro valor similar? Para alguns, provavelmente não. E para a maioria provavelmente não será um impulso tão significativo. Perguntamo-nos porque é que o governo português apenas considerou a atualização inflacionista da FIT e não teve em conta outras medidas como a redução dos 15 anos de compromisso com sistema para 12 ou mesmo para 10 anos. Isto seria mais eficaz a facilitar o financiamento dos projetos, sem custos imediatos para os consumidores. Naturalmente, esta redução da duração do compromisso deveria aplicar-se a todos do mesmo modo, incluindo os proponentes que optaram por pagar uma compensação ao sistema.
This article was published by Expresso, a Portuguese newspaper, on April 1.
There is no doubt that the world is at a turning point, in History, in the Economy, and in the lives of us all. In History, the veil is now falling away that for so long prevented us from recognizing one of the greatest tyrannies on Earth (and don't think that Russia is the only one that we have yet to admit as such, as we still have China and countries like Saudi Arabia, which we continue to treat as equals in values when they are not). In the Economy, we have entered an inflationary cycle, which was already inevitable as a consequence of the monetary policies followed in the fight against the effects of the Covid-19 pandemic. And which, with the Russian invasion of Ukraine, nobody can tell where it will lead us. In the lives of us Westerners, fortunate enough to live far from war and poverty, we feel squeezed by the rising prices of everything we consume and perplexed in our lack of understanding of the price-setting mechanisms. Some call for the taxation of capital gains that they adjectivize as unjustified, immoral, and the cause of the famine that affects the majority. Others, more moderate, question the universality of market rules and wonder whether it is not time for a new chapter in Economics too.
In this dire context, the European Commission recently proposed a plan called REPowerEU to erase dependence on Russian fossil fuels before 2030, to rebuild European gas reserves and to address rising energy prices in Europe. This initiative might, besides shaking the gas market, have a significant impact on the renewables sector, as it aims at allowing member States to take price regulation measures, to impose temporary windfall taxes, and to use of revenues from emission trading and state aid mechanisms. In the Iberian electricity market we have also seen discussions about electricity pricing mechanisms. The electricity wholesale prices in OMIE (where the daily price and the intra-daily price of electricity in the Iberian Peninsula are negotiated) are calculated through on a marginal prices mechanism that tries to mirror the meeting of forces between the supply and demand for electricity. There is an algorithm for these calculations called EUPHEMIA (who knows if named after the Greek saint tortured to death for not agreeing to participate in pagan sacrifices in the Roman Constantinople of the 3rd century) and we can say in this regard things are very complex; but, trying to simplify them, the setting of electricity wholesale price at OMIE works as follows:
OMIE puts the demand indicated by the operators of the Spanish (REE) and Portuguese (REN) grids together with the offers made by all different types of Iberian producers. The price established for the purchase of the electricity will be the price of the last offer to be entered into the system (normally, that of those who has less incentive to sell, i.e., those who obtain a lower profit margin). If this last offer comes from a combined cycle gas power plant producer it will reflect the costs of this producer and not, for example, the average of the production costs of all the offers made that day. A photovoltaic plant producer will sell its electricity in OMIE at the selling offer price of the producer of the combined cycle gas plant. This, in the current context, means having a significantly higher margin than it would be willing to accept if all the offers to the market were from photovoltaic production.
Here one may ask whether if, by aggregating different types of offers and choosing a price-setting criterion that seems incapable of reflecting the different production costs, we are not preventing the market from functioning properly as it would if the direct confrontation between comparable offers and demand was possible. Of course, the choice of the marginal prices’ principle has a technical explanation, a rationale that may seem more appropriate in a context of abundant supply and homogeneous costs (where the pressure to sell is similar for all producers) but it is apparently necessary because the system needs the energy produced by gas and other fossil fuels burning producers.
The creation of a special tax on renewable generation sources to match the so-called windfall profits (in the style of the infamous claw-back tax created by the Portuguese Government to eliminate the “unjustified” profits of Portuguese producers in MIBEL compared to the Spanish, victims of a special tax of 7%) implies a disincentive to what we are all saying we want to encourage. A disincentive with not only immediate impact, but also for the future of investment in renewable energy marketplace, which needs fiscal predictability. It is important to remember that the market operates based on a perception of risk, which includes factors within the market itself, such as technological developments or, conversely, negative developments in the cost of production factors. If we add non-market risks, such as administrative pricing or the imposition of taxes, the market will be disrupted, affecting, without discrimination, the supply (with high costs producers having to close doors) and the demand (which may have to endure either higher prices or shortages of electricity).
Therefore, ideas like the setting of a price ceiling at 180 euros per MWh, as has been suggested to the EU Commission by the Spanish and Portuguese Governments, will result production at a deficit in gas-fired plants. Certainly, producers with higher costs will withdraw their supply from the market generating supply shortages, unless they are subsidized (making the measure useless). We would risk not having electricity for everyone, because, at the present moment, the energy supply is not elastic (much has been said in this regard about the Portuguese Government's haste in anticipating the closure of the coal-fired plants).
Because all the above results of prices following natural laws and having no ideology, any electricity prices’ regulation is to be avoided. And taxation on the so-called windfall profits will naturally cause prices to rise or electricity to be in short supply for everyone. The least harmful way of State interference will be the direct support to those consumers who are least able to bear the increases in electricity market prices: the individuals and small companies with the fewest resources and the electro-intensive consumer companies whose activity is indispensable to the country's economic fabric. And the most efficient way of providing such support will always be paying individuals and companies in cash (and never by granting them new credit lines, the equivalent to offering water to a drowning person); or, better yet in the case of companies, offering them direct tax rebates.
Consequently, the EU Commission and the EU member States should, first of all, give priority to a consensual reassessment of the electricity pricing models and, if possible, adjust them so that they allow the market to function better, because it is not the market that is failing, but possibly the rules to which trading platforms like OMIE are subject to.