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The Portuguese Competition Authority (AdC) once again sanctioned three of the biggest supermarket chains in Portugal – Auchan, Modelo Continente and Pingo Doce – for a ‘hub-and-spoke’ arrangement, this time with the common food supplier Bimbo Donuts of packaged bread, Donuts, Bollycao or Manhãzitos.

‘Hub-and-spoke’ arrangements are horizontal restrictions on the supplier or retailer level (the ‘spokes’), which are carried out through vertically related players that serve as a common ‘hub’ (e.g., a common retailer or service provider). The hub enables the coordination of competition between the spokes without direct contacts between the spokes.

The three largest food retailers, Auchan, Modelo Continente and Pingo Doce, established the alignment of retail prices in their supermarkets through contracts entered upon with Bimbo Donuts. The AdC investigation determined that the practice lasted for at least eleven years - between 2005 and 2016.

Although ‘hub-and-spoke’ arrangements differ from traditional horizontal cartels in the lack of direct communication between the horizontal competitors, the adverse market effects may be similar – both may result in a hard-core price-fixing cartel, through a common supplier, thus restricting price competition between players and depriving consumers from price differentiation.

AdC considered these practices to be highly damaging to consumers since the chains involved represent a large part of the Portuguese food retail distribution market, affecting the generality of the Portuguese population. Such a practice jeopardizes competition, depriving consumers from opting for better prices, while generating profit for the entire distribution chain, including supplier and supermarket chains.

For competition authorities, it could be however challenging to prove a ‘hub-and-spoke’ arrangement. The strategic nature of information exchanged between suppliers and retailers (which could be a necessary pro-competitive practice) cannot be the ultimate criterion for an unlawful ‘hub-and-spoke’ arrangement.

It can be tricky to set boundaries between legitimate exchanges and indirect horizontal collusion and be necessary to go beyond the exchange of forward-looking pricing information and try to demonstrate that the operators’ goal was to carry out indirect horizontal collusion.

The following potential issues could arise: (i) the ‘hub-and-spoke’ evidence (e.g., retail price setting/alignment, control and monitoring of retail prices, retail price deviation corrections); (ii) the legal framework of the arrangement, depending on either it is an horizontal or vertical arrangement; (iii) the means used to carry out the anticompetitive practice, e.g. Resale Price Maintenance agreements (RPM); and (iv) the purpose and awareness of the involved players.

Considering this, it is apparently justified that AdC has provided evidence for the allegedly eleven year arrangement available at its website.

Bimbo Donuts will have to pay the largest fine amount, € 7.353 million, followed by Pingo Doce, with € 7.196 million, Modelo Continente, with € 7.161 million and Auchan with € 2.981 million, in a total of € 24.691 million. The fines imposed were determined by the sales volume of the four undertakings in the affected markets during the duration of the arrangement.

Under Portuguese Competition Law, these fines are limited up to 10% of the overall annual turnover of the involved undertaking(s). The 10% maximum limit may be based on the turnover of the group to which the undertaking belongs if the parent company of that group exercised decisive influence over the operations of the subsidiary during the infringement period.

The starting point to determine the fine is the percentage of the undertaking’s annual sales regarding product related to the infringement during the last full year of the violation. The fine is also linked to the duration of the infringement. For instance, an infringement that lasts for eleven years is assumed to be eleven times more damaging than an offense that lasts for three years.

All the undertakings involved said to reject AdC’s decision and that they were going to appeal. Appealing will not, however, suspend the execution of the fines. Undertakings may however request the appeal court to suspend the enforcement of the decisions if (i) they demonstrate that it causes them considerable prejudice and (ii) they provide an effective guarantee in its place.

In December 2020 and recently, on November 2, 2021, AdC had already sentenced these and three other supermarket chains and three beverage suppliers, Sociedade Central de Cervejas, Primedrinks and Super Bock, for the same type of practice.
‘Hub-and-spoke’ arrangements in the large retail chains sector are in the loop of AdC and it is likely that new developments are expecting in a near future.

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The Portuguese government published yesterday the bases of the new solar energy auction dedicated to floating solar.

The new legislation unifies tender procedures for the simultaneous allocation:

• Of reservation of capacity titles for the injection into the Public Service Electricity Network of electricity from floating photovoltaic plants to be installed in water dams; and
• Of titles for the private use public domain for such purpose.

Unlike the 2019 and 2020 auctions, this auction will focus exclusively on water reservoirs. Promoters will make not one, but two bids:

• One bid for the price to produce electricity through solar energy; and
• Another for the occupation of the public water domain.

In any case, the bidding will again follow the two already available modalities: remuneration to the network and fixed tariff, for a period of 15 years.

This solar energy auction will include the Paradela, Alto Rabagão, Vilar Tabuaço, Salamonde, Alqueva, Cabril and Castelo de Bode reservoirs, with a total maximum implementation area of 445 hectares and an estimated total connection power of 362.5 MVA.

The procedure details for the new auction will be published in the next few days.

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The Portuguese government wants to leave its mark on the sector with a new regulatory framework for the National Electrical System (NES), which is under public consultation since November 10 and until November 24. Here is a list of the main points of the draft regulation to be submitted to the Portuguese Parliament by the end of November.

Prior control of NES’ activities and network planning

The differentiation between Ordinary Regime Generation (ORG) and Special Regime Generation (SRG) and the different procedures for licensing the activity of electricity generation will be extinguished.

The activities of generation, self-consumption and storage will be covered by a single regime of prior control which may take the form of prior notification, prior registration and operating certificate, or production and operating license.

The draft Decree-Law makes new investments in network infrastructures dependent on a cost and benefit analysis in relation to other alternatives, such as storage.

Tender mechanisms for the exercise of NES activities

The awarding of (i) Last Resort Supplier, (ii) Last Resort Aggregator, (iii) issuer of guarantees of origin and (iv) Logistics Operator for Switching Suppliers and Aggregators licenses will be subject to a prior public tender procedure.

The draft decree-law creates a new market agent: the integrated operator of the high-voltage, medium-voltage and low-voltage distribution networks, which will exercise the activity under a concession scheme, awarded after a prior public tender procedure.

Electricity generation and storage activities will be remunerated exclusively at market price or through bilateral contracts, eliminating once and for all the guaranteed remuneration regime. This notwithstanding the possibility of granting by public tender specific support schemes for production from renewable energy.

Active participation of consumers in electricity generation and in the markets

Passive consumers are to become active agents producing electricity for self-consumption or for the sale of surpluses and storage with:

• The installation of smart grid infrastructures, which include communications and energy data processing systems and technologies and smart meters;
• Consumer participation in electricity markets through the creation of the aggregator;
• New schemes for collective self-consumption and energy sharing through the establishment of energy communities.

The duties of the suppliers have been strengthened since they must offer electricity contracts at dynamic prices when they have more than 200,000 customers, provided the respective consumption facilities have a smart meter.

If the customer has a smart meter, the supplier is now also required to include in the bill a breakdown of average energy consumption by day of the week and time of day.

If the consumer has a smart meter, he shall be entitled, upon request, to access to the actual electricity consumption and the actual period of use, and this data shall be easily accessible and free of charge. The consumer is also entitled to additional information related to consumption history and detailed data regarding periods of use.

The draft Decree-Law also provides a scheme for the unlawful appropriation of energy.

New realities: re-equipment, hybrids or hybridization, and storage

Three Technological Free Zones (ZLT) are planned to facilitate development in new realities:

• The first intended for research and development pilot projects in the scope of offshore electricity generation, from renewable energies of oceanic source or location;
• The second to be developed under the decommissioning process of the Pego coal-fired thermoelectric power plant; and
• The last one, to be located in Perímetro de Rega do Mira, intended for the establishment of innovation and development projects in the scope of compatibility of land use for agricultural activities and electricity generation.

The draft also provides that the re-equipment of a solar or wind power plant will not subject to the environmental impact assessment procedure. Additionally, upon total re-equipment of the generating station, the connection power is increased up to a maximum of 20% of the connection power initially allocated, subject to a simple prior control procedure of mere amendment to the production license or prior notification only.

The first challenge to the market has been set: to respond within 15 days to such a broad project to change the legal framework of the Portuguese electrical system.

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MACEDO VITORINO released today the new edition of its report WHYPORTUGAL.

WHYPORTUGAL 2021 provides entrepreneurs considering investing in Portugal essential information on the creation and organisation of companies, partnership contracts, employment law, tax law, intellectual property, real estate and litigation.

After more than a year of pandemic with successive confinements, the second half of 2021 has been a time of recovery.

As part of the European response to the pandemic crisis, gave the Member States a total amount of €806.9 billion, Portugal adopted a Recovery and Resilience Plan (RRP), to be implemented until 2026, which seeks, among other things, to promote climate transition and digital transition, strengthen the National Health System, and invest in infrastructure and business capitalisation and innovation. By 2026, the government plans to invest around EUR 50 billion.

Since 2013, MACEDO VITORINO publishes the WHYPORTUGALreport annually, having created in 2018 electronic platform where the report is available, along with essential legal and economic information, including: legislation, official forms, international and national reports.

“The WHYPORTUGAL 2021 report reflects a country heavily scarred by the pandemic still and a chronic lack of improvement in key sectors as well, notably justice, public administration and taxation. The RRP promises significant investments in public administration and the public sector in general. Let us hope that they happen” said António de Macedo Vitorino, the partner responsible for the project.

“The main goal of the report is to provide an objective view of reality and, because of that, we cannot fail to point out that we are far from the countries of reference. But even so Portugal has shown that it has the capacity to attract international investors. Security, social consensus around the values of openness and freedom of European society, which are so important today, as well as the qualifications of our workforce are today the essential factors in attracting investors in all sectors, namely tourism and real estate, industry and technology” added António Vitorino.

WHYPORTUGAL 2021reviews the main aspects to be considered by foreign investors looking at Portugal as a country worth investing in: such as how to set up a business, government incentives, employment, tax system, intellectual property protection and judicial system.

Visit us at https://www.macedovitorino.com/en/why-portugal/.

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The Portuguese Government submitted to the Parliament the State Budget proposal for 2022. In this newsletter we review the main tax changes proposed by the Government, which will now be discussed and approved by the Parliament.

Personal Income Tax (PIT)

In what concerns Personal Income Tax (PIT), the main changes are as follows:

• Return Programme. The return programme, which exempts 50% of the employment income and professional income obtained by taxpayers who became Portuguese residents in 2019 and 2020, will be extended to taxpayers that become residents in 2021, 2022 and 2023 provided that they have not been residents in the three previous years.
• Youngsters partial PIT exemption. A partial PIT exemption will apply to employment income and professional income obtained by taxpayers with the ages of 18 to 26, who are not dependents, after the conclusion of an education level equal to or higher than level 4 (in the case of level 8, the exemption may extend until the age of 28). The exemption will apply in the first 5 years after the conclusion of the required level of education and will cover:

(i) 30% of the income in the first two years, with a limit of 7.5 times the value of the Social Support Index;
(ii) 20% of the income in the following two years, with a limit of 5 times the value of the Social Support Index; and
(iii) 10% of the income in the last year, with a limit of 2.5 times the value of the Social Support Index.

• Inclusion of capital gains in the annual tax returns. The positive balance between capital gains and capital losses arising from the disposal of shares and other securities held for less than one year will cease to be subject to flat rate of 28% and will have to be included in the annual tax returns if the taxpayer has a total taxable income equal to or greater than €75,009. The negative balance can be deducted in the following 5 years.
• Change of PIT brackets. The current seven PIT brackets will be increased to nine, with the introduction of the following new brackets:

(i) A new third bracket (between €10,736 and €15,216) subject to a rate of 26.5% (instead of 28%); and
(ii) A new sixth bracket (between €36,757 and €48,033) subject to a rate of 43.5% (instead of 45%).

In parallel, the maximum limit of the eight bracket will be reduced from €80,882 to €75,009 and, as such, any income above this amount will be subject to the higher rate of 48%.

Corporate Income Tax (CIT)

On the Corporate Income Tax (CIT) side, we highlight the following changes:

• Non-deductible expenses. Invoices issued by taxpayers who are not registered with the tax authorities will not be deductible for CIT purposes.
• Tax exemption on IP income. The PIT exemption on income derived from the assignment (or temporary use) of industrial property rights subject to registration will be increased from 50% to 85%.
• Special advance payment. The Special Advance Payment (the so-called “Pagamento Especial por Conta” or “PEC”) will be eliminated. The rules on the deduction and refund of the PECs paid in the previous years will remain in force.
• Autonomous taxation relif. The 10% increase of the autonomous taxation will not apply to micro, small and medium-sized companies in 2022 if they (i) have obtained taxable profit in one of the three previous tax periods and (ii) have filed the annual tax returns in the two previous tax periods.

Value Added Tax (VAT)

The Budget proposal also includes a few changes on the Value Added Tax (VAT):

• Filing of VAT returns. The deadline for filing the VAT returns will be the 20th day of the second month following the relevant month or quarter (depending on whether the taxpayer is subject to the monthly or quarterly VAT filing regime).
• Payment of VAT. The deadline for the payment of the VAT will be the 25th day of the second month following the relevant month or quarter (depending on whether the taxpayer is subject to the monthly or quarterly VAT filing regime).
• Filing of the IES / DA and submission of the SAF-T file. The implementation of the new rules set out in Ordinance No. 31/2019 for the submission of the SAF-T (PT) file on accounting was postponed to the years 2023 and following, with first delivery scheduled to the year 2024.
• Suspension of ATCUD in 2022. The affixing of the unique document code (ATCUD) on invoices and other documents relevant for tax purposes was postponed to 2023.
• Excess energy from self-consumption. Invoicing of the excess energy from self-consumption will be issued by the buyer instead of the supplier.

Excise Duties

In what concerns Excise Duties, the Budget Draft contemplates the following changes:

TAX ON OIL AND ENERGY PRODUCTS (TOEP)

• Electricity produced for self-consumption. A tax exemption will apply to electricity produced for self-consumption from renewable energy sources up to a limit of 30 kW of the installed capacity.
• Additional to the TOEP rates. The additional TOEP rate of 0.007 euros/l for gas and 0.0035 euros/l for diesel and colored and marked diesel will remain in force in 2022, up to a limit of €30,000,000 per year.
• Products used in the production of electricity, electricity and heat or city-gas. Some products will be taxed at 100% of the TOEP rate and at 100% of the CO2 rate while others will be subject to lower rates (e.g. cogeneration processes).

TAXES ON DRINKS AND TOBACO

The Government proposes an increase on taxes on alcoholic drinks and non-alcoholic drinks. Tabaco tax rates will also increase.

VEHICLES TAX

The Vehicles Tax rates applicable to the acquisition of cars, motorbikes, tricycles and quadricycles will be adjusted upwards taking into account their cylinder capacity and environmental component.

SINGLE CIRCULATION TAX

The Budget Draft includes a general increase of around 1% in the Single Circulation Tax rates applicable to all vehicles and keeps in force the additional tax for diesel vehicles in categories A and B.

Real Estate Transfer Tax (RETT)

In what concerns Real Estate Transfer Tax (RETT), the main highlights are:

• Extension of RETT. RETT will apply to the following transactions:

(i) Transfer of real estate by the shareholders to the company for the payment of accessory capital contributions;
(ii) Award of real estate to the company’s shareholders upon a share capital reduction, the repayment of accessory capital contributions or the performance of other company’s obligations towards its shareholders; and
(iii) Award of real estate to participants in closed-end real estate investment funds in connection with the redemption of the investment units or the reduction of the funds’ capital.

• Amendment to the tax brackets. The RETT brackets applicable to the acquisition of urban buildings or units of urban buildings allocated to housing will be updated.
• Transfer of parts of a building. Upon the transfer of parts of a building, a surface/usufruct right or the land separated from the building RETT will be charged at a rate corresponding to the overall value of the building, considering the part or right transferred.
• Incentives to urban rehabilitation. The RETT exemption on the first transfer of buildings or units subject to urban rehabilitation will expire if:

(i) The property is used for a purpose other than primary residence / lease for primary residence within six years from the date of transfer; or
(ii) The property is not used as primary residence within six months from the date of transfer; or
(iii) A lease contract is not entered within one year from the date of transfer.

Real Estate Tax (RET)

The Budget Draft does not include material changes to the Real Estate Tax, save for the following:

• Urban buildings rented prior to the Urban Rental Regime. The communication of rents due under rental contracts entered before the Urban Rental Regime must be made between 1 January and 15 February of the following year according to the official models and procedures.
• RET exemption. The €153,300 household income threshold applicable to the RET exemption on urban buildings or units built, improved or acquired for residential purposes will be assessed based on the total household gross income instead of its taxable income.

Stamp Duty

According to the Budget Draft the 50% increase of the stamp duty rates applicable to consumer credit contracts will remain in force in 2022.

Special Contributions

The following special contributions will also remain in force in 2022:

• Banking Sector Contribution;
• Banking Sector Additional Solidarity Levy;
• Audio-Visual Sector Contribution;
• Pharmaceutical Industry Contribution;
• Energy Sector Extraordinary Contribution (CESE);
• Extraordinary contribution on the suppliers of medical devices industry of the National Health Service; and
• Contribution on single-use plastic or aluminum packaging in finished meals.

A new special contribution for the conservation of forest resources will be approved and must be regulated within 90 days.

Tax Benefits

The Budget Draft proposes the following amendments to the tax benefits:

• Recovery Tax Incentive. A new Recovery Tax Incentive applicable to CIT taxpayers will be created. The incentive will consist of a CIT deduction in 2022 equal to 70% of the investment expenses (up to an accumulated amount of € 5,000,000) which are made in the first 6 months of the 2022 tax period, corresponding to:

(i) 10% of the eligible expenses (e.g., tangible fixed assets (with some exceptions) acquired as new and that have entered into operation by the end of the 2022 period or intangibles subject to depreciation), up to the amount corresponding to the simple arithmetic average of the eligible investment expenses of the three previous tax periods; and

(ii) 25% of the eligible expenses, in the part exceeding the above-mentioned limit.

To benefit from this incentive, among other conditions, the taxpayer may not:

(i) Terminate employment contracts during three years from the beginning of the tax period in which the eligible investment expenditure is incurred, either through a collective dismissal or a job extinction procedure; and

(ii) Distribute dividends during three years from the beginning of the taxation period in which the eligible investment expenses are incurred.

• Support for the implementation of SAF-T (PT) and ATCUD. For micro, small and medium-sized enterprises, the extraordinary support corresponding to 120% of the respective expenses accounted in the 2022 tax period will remain in force.
• VAT on donations. The exemption from VAT of transfers of goods and services provided free of charge is now limited to 25% (as a whole) of the amount of the donation received.

Other Fiscal Measures

The Budget Draft also includes the following COVID-19 related support measures:

• Payment of debts in instalments. In the tax enforcement proceedings initiated between 1 January and 31 December 2022, the number of monthly instalments will be increased up to five years, regardless of the amount owed. Until 31 January 2022, debtors with installment plans in force may request the application of this exceptional regime, in which case the remaining installments will be added to the approved installment plan up to a limit of five years.
• Deferral of tax obligations in the first half of 2022. In the first half of 2022, PIT and CIT withholding tax and VAT may be paid in three or six-monthly instalments in a minimum amount of € 25.00, without interest or penalties, by submitting a request until the end of the period for voluntary payment. These rules will also be applicable to taxpayers that fulfil one of the following conditions:

(i) Recorded in 2020 a turnover up to the thresholds applicable to micro, small and medium companies and, cumulatively, declare and demonstrate a decrease in turnover reported through the e-invoice of at least 10% of the monthly average of the calendar year of 2020 in relation to the same period of the previous year;
(ii) Have as main activity the accommodation, catering and similar, or culture; or
(iii) Have initiated or restarted the activity on or after 1 January 2021.
With regards to the obligation to pay VAT, in the case of taxpayers subject to the quarterly VAT filing regime, in the first semester of 2022 VAT may also be paid in three or six-monthly instalments in a minimum amount of EUR 25.00, without interest or penalties.

Legislative Authorisations

In addition to the above proposed changes, the State Budget contemplates the following legislative authorisations for the Government to approve the following amendments:

• Inland Support Programme. The Government will create, within the scope of the Inland Suppport Programme, a set of tax benefits for the creation of jobs in inland territories, including a deduction of 20% of the expenses incurred with the creation of jobs that exceed the value of the statutory minimum wage.
• Start-up support. The Government will regulate the concept of "start-ups" for the purposes of granting financial or fiscal support, with a view to promoting the national entrepreneurial ecosystem and defining specific investment policies.
• Stock option plans. The Government will approve a special tax regime applicable to gains derived from option plans, subscription plans, allocation plans or other plans with equivalent effects on securities or equivalent rights that are created for the benefit of employees or members of corporate bodies.

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The Court considered such a differentiation not to be "reasonable, rational and objectively founded" as well as contrary to the Portuguese Constitution.

In its reasoning, the Court stated that attracting foreign investment is not a sufficiently strong and weighty reason to justify, within the scope of the law applicable to the coalition of companies, an unequal treatment that would derive from the attribution of different guarantees for labor claims to employees of controlled, dependent, or grouped companies, depending on whether the company with which it is related had its head office located abroad or in national territory.

In conclusion: the interpretation of the law declared unconstitutional is based on the impossibility of applying the regime of joint and several liability of a company that is in a relationship of reciprocal participation, dominion, or group, when it is headquartered outside national territory, for credits arising from an employment contract, or from its breach or termination, that are overdue for more than three months.

The scope and the reasoning of the decision only involves labour credits, which means that it is not expectable that the Constitutional Court would rule in similar terms for other type of credits.

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Four years after the elimination of roaming charges in the UE on June 15, 2017, the Portuguese Presidency of the Council will start negotiations with the European Parliament to recast the rules on roaming services. Regulation (UE) 2015/2120, used to abolish roaming service charges, will remain in force until June 30, 2022. As a result, Member States' ambassadors have agreed on a negotiating mandate to extend the current regulatory framework on roaming on public mobile communications networks in the UE.
The increase in the use of voice, SMS and, in particular, citizen data roaming services does suggest that there are benefits in abolishing roaming charges. Nevertheless, the European authorities consider that a true internal telecoms market requires the complete elimination of discrepancies between domestic and roaming services.
A market assessment carried out by the Commission on November 29, 2019, shows that, in essence, not only has there been no change in the level of competition, but that it is not expected to change. Considering also that there is no single mobile network covering all member states, providers depend on access from different operators in the visited member states to provide mobile communication services to their customers across the UE, the Commission concludes that the market is not ready to remove the current regulation.
In addition to measures for certain segments, the proposal establishes that the duration of the free "roam-like-at-home" experience should be extended for another ten years, until 2032. Wholesale prices, for example, will be increased, as is essential to ensure the sustainability of the market, from €0.004/sec and €2.00 for SMS messages and per gigabyte of data transmitted to €0.007/sec and €2.25 respectively.

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The European Commission (EC) published the final version of the Standard Contractual Clauses (SCCs) on June 4, following the draft proposal on November 12, 2020. The topic is of great interest for companies operating outside the European Economic Area (EEA) or working with companies that are. SCCs should give these companies a hand at being GDPR-compliant.

For those less acquainted with SCCs, these take part in ensuring safer international data transfers. A principle of accountability applies to controllers which export personal data to countries outside of the EEA: controllers must ensure that no matter what mechanism and supplemental measures govern a data transfer, the data must receive the same protection at its destination as it would in the European Union (EU), or else the data transfer will be violating the GDPR.

For international data transfers to be possible, the GDPR requires the adoption of mechanisms/measures that ensure that transfers are carried out safely, which may include obtaining the data subject’s consent, adopting Binding Corporate Rules (BCR), ad hoc contractual clauses, approving codes of conduct or certification mechanisms, and/or SCCs.

SCCs set out appropriate safeguards regarding data transfers from (i) controller to controller, (ii) controller to processor, (iii) processor to processor, and (iv) processor to controller.

The new SCCs include general provisions that are applicable to all transfers of data, regardless of the nature of the parties, and specific provisions that the parties should include if they see fit to their specific situation (again, a principle of accountability applies). General obligations include ensuring that data protection rules in the country of destination do not prevent the processing of personal data according with the standard contractual clauses applied, as well as ensuring the minimization of data disclosure to public authorities, a shared responsibility between the parties in case of a data breach, etc.

The new SCCs also address both onward transfers and subscription by third parties. Onward transfers of personal data can lawfully occur, provided the third party subscribes to the SCCs. Subscription to the SCCs is enabled through a docking clause.

The EC sets out a transitional period, within which companies relying on old SCCs under existing data transfer agreements will be able to rely on those outdated SCCs for 18 months after the publication of the new SCCs. For companies entering into new data transfer agreements, the new SCCs ought to be the mechanism to rely on for the purpose of international data transfers, as the new SCCs will be repealed for future use three months after their publication.

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The General Contractual Clauses Legal Regime (or 'LCCG') has been amended and now forbids fine print and tight line spacing in contractual terms drafted without prior individual negotiation with their addressees – usually consumers.
General contractual terms are one of the most frequently used contractual instruments in consumer contracts, for example, when opening a bank account, in insurance contracts or contracts for electricity, water or electronic communications supply.
Since there is no negotiation (between the parties) involved, since its recipients merely subscribe to or accept its content, LCCG provides mechanisms to prevent abuse, such as special duties of information and communication towards recipients and a list of prohibited clauses. There are two groups of prohibited clauses under LCCG: (i) absolutely prohibited clauses, which are void, such as clauses excluding or limiting liability for life damage, moral or physical integrity or health, or for non-contractual property damage and (ii) relatively prohibited clauses, which, depending on the situation, may or may not be forbidden, meaning that, in case of a dispute before a court, the clauses will be subject to review. These are, for example, clauses setting excessive deadlines for the acceptance or rejection of bids or penalty clauses disproportionate to the damage.
To enhance transparency, recently published Law 32/2021 of 27 May 2021 (which amends the LCCG), establishes drafting rules: font size may not be smaller than 11 or 2.5 millimetres, and line spacing cannot be less than 1.15. In case of non-compliance, the clause will be null and void, as this prohibition becomes part of the list of absolutely forbidden clauses.
This does not mean, however, that "small print" was allowed before. This issue has been addressed by case law on the violation of the duties of information (in this regard, for example, the ruling of the Supreme Court of Justice of 15 May 2008, the ruling of the Lisbon Court of Appeal of 13 October 2016 and, recently, the ruling of the Court of Appeal of 28 January 2021), all of them considering that it is not enough to formally comply with the duties of information, and that this obligation must be fulfilled in accordance with a “reasonableness criterion” to make all pieces of information of the contract known by the consumer.
Law 32/2021 also provides for a control and prevention system of unfair terms to be set up in the upcoming months to ensure that clauses forbidden by a court decision are not applied by other entities. Entities using general contractual clauses will have to be more careful with disputed cases involving general contractual clauses that have already been prohibited by a court decision. This mechanism intends to decrease imbalance between the parties.

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Almost 100 days and over 500 bids into the main bidding phase of the Portuguese 5G auction, on May 31, 2021, ANACOM proposed an amendment to the auction’s regulation (Regulation 987-A/2020 of November 5).
According to available data, bidding in the 700MHz, 900MHz, 2,1GHz and 2,6GHz bands stalled as of the 24th day, with an aggregated price of 154,58 million euros. However, in the forty available 3,6GHz blocks (frequency blocks H1 to J30), a furious bidding contest is still ongoing with bids reaching 162,89 million euros, i.e., a 244% increase over the reserve price of 44,86 million euros.
Although the bidder’s identities are yet to be confirmed, the increase in the current bid average price per MHz (in the 3,6GHz band) from 0,38 million euros to 0,61 million euros and an unusually vocal dispute in the media, suggest an undergoing bidding war among new entrants and incumbents. With the total amount reaching 317,47 million euros, mixed reactions are heard throughout the market with the Government simultaneously expressing satisfaction with the unexpected tax windfall and concern over the consequences of the delay, and incumbent operators voicing concerns over the detrimental impact that mounting spectrum costs might have on network rollout investment.
The proposed amendments will extend the length of the rounds, which will now take place daily between 9:00 and 19:00. Also, each round duration will be halved from the current 60 to 30 minutes, thus allowing 12 rounds to occur.
With these changes, ANACOM expects to prevent the excessive extension of the 5G Auction. If approved, as of June, bidders are expected to form more robust and refined expectations about the spectrum they are most likely to win and the maximum amount they are willing to bid for it, which should lead to a reduction in the time needed for bidders to complete their bids. An important feature in the draft Regulation, ANACOM recognized that the unexpected extention of the Auction already affected short-term investment in commercial offers and hinted that further action may be taken in the near future.
Bidders will now have five working days to comment on these proposed changes. One question remains: are these too little too late?