The Portuguese Competition Authority (Autoridade da Concorrência – ‘AdC’) issued a statement of objection against three major supermarket chains, Modelo Continente, Pingo Doce and Auchan, and the supplier of cosmetics and personal care products, Beiersdorf, for a potential ‘hub-and-spoke’ arrangement.

‘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.

In this case, AdC considered that Modelo Continente, Pingo Doce and Auchan (the spokes) used the commercial relationship with the supplier (the hub) Beiersdorf – which markets, among others, the Nivea, Harmony, Hansaplast and Labello brands – to align the retail prices of most cosmetics and personal care products, to the detriment of consumers.

‘Hub-and-spoke’ arrangements differ from traditional horizontal cartels in the lack of direct communication between the horizontal competitors, even though the adverse market effects may be similar – both may result in a hard-core price-fixing cartel to detriment of consumers. Unlike in horizontal cartels, 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.

In fact, it can be challenging to set boundaries between legitimate exchanges and indirect horizontal collusion and be required to go as far as exchanges about forward-looking pricing information and find evidence of the players’ purpose of undertaking an 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.

The current case is not the first ‘hub-and-spoke’ case investigated by AdC. In the large retail chains sector, this recent case adds up to six other cases in place and for which statements of objection were also issued in March 2019, and June and July 2020. In the large retail chains sector, which is a key-sector, AdC is pursuing above ten investigations, some of which are still under legal secrecy and that should see further developments next year.

In addition, considering an increased use of pricing related tools, e.g. online platforms, third-party algorithms, online price monitoring and adjustment tools, which can enable ‘hub-and-spoke’ arrangements, it is likely that the current legal framework and enforcement means will need improvement to address these risks in a near future.

The Portuguese Competition Authority (AdC) imposed their highest sanction ever applied on a single company for violation of competition rules. MEO, the Altice group incumbent telecom company in Portugal, was sentenced to pay a €84 million fine for engaging in pricing strategies and market sharing with Nowo regarding mobile and fixed communication services. In addition to the fine, and as an ancillary penalty, AdC also publish an excerpt from the condemnatory decision.

AdC reported that MEO and Nowo made an anti-competitive arrangement after entering into a MVNO (Mobile Virtual Network Operator) contract. Through this arrangement, Nowo “committed itself not to launch mobile services outside the geographical areas where it provided fixed services, in order to not compete with MEO in Lisbon and Oporto", causing an increase in prices and a decrease in the service quality provided, as well as restrictions on the geographical availability of services, which affected Portuguese consumers negatively.

Nowo also agreed not to provide mobile services at €5 or less or at prices lower than the ones charged for similar market offers. In return, MEO would provide better conditions in the MVNO contract with Nowo, especially in regard to its prices, infrastructure use and solving of operational problems.

This agreement prevailed at least from the beginning of January until the end of November 2018, when Nowo reported the situation and AdC carried out a search and seizure procedure at both companies’ facilities. As a consequence, Nowo was waived from the payment of any fine thanks to the leniency application it filed. Portuguese leniency rules allow a waiver or reduction of fines in cartel cases, with the first company to report a cartel in which it has participated becomes eligible for a waiver, and the next reporting ones may benefit from a reduction of the fine.

It is likely that MEO will appeal from this decision. AdC's decisions are appealable to the Competition, Regulation and Supervision Court.

The Portuguese Data Protection Authority (Comissão Nacional de Proteção de Dados – “CNPD”) has recently issued guidelines on the processing of health data following the new (partial) lockdown. CNPD identifies some potential inconsistencies on Decree 8/2020, 8 November 2020, ruling the new lockdown, with the General Data Protection Regulation (GDPR), regarding body temperature control, SARS-CoV-2 diagnosis tests and other measures to strengthen the disease tracing.

Currently, to access workplaces, public transports, public institutions, prisons, etc., body temperature control is allowed only if non-invasive means are used. CNPD clarifies that digital devices controlling the body temperature carry out electronic processing of personal data – body temperature – are subject to GDPR. Although it is forbidden to record body temperature by identifying the person involved, the fact is that such person may be identifiable and hence this processing is not excluded from the application of GDPR.

Health data is a special category of personal data. To be lawful, the processing of health data must be used in preventive or occupational medicine, to access the working capacity of employees, medical diagnosis by a professional under professional secrecy duty or another person subject to a confidentiality duty.

When stating that the temperature control may be carried out by an employee, the lockdown regulation does not safeguard individuals’ rights, since the employee involved is not subject to a confidentiality duty, says CNPD.

As to the diagnosis tests, CNPD says the test must be carried out by a health professional under professional secrecy. Regarding test results, the privacy of the individuals must also be shielded to avoid stigma and discrimination against  who tested positive. It will be crucial to define the procedures following a positive test.

Regarding disease tracing measures, which are reinforced, if the tracing is not carried out by a health professional, CNPD points out the need to bind this person to a specific duty of confidentiality. Otherwise, individuals from whom health data is collected will be treated in a different way, depending on whether the person collecting their data is under a secrecy duty.

The above measures must be implemented in compliance with GDPR, which continues to apply, even if the current situation is exceptional. Otherwise, heavy fines may be applied by the supervisory authority. The only exceptions allowed should be those set out in GDPR.

ANACOM, the Portuguese telecoms regulator, released yesterday the rules of the auction procedure for 5G spectrum and other relevant bands (700 MHz, 900 MHz, 1800 MHz, 2.1 GHz, 2.6 GHz and 3.6 GHz) (5G Regulation). It also announced that the auction will be launched this month of November.

The 5G Regulation lays down the conditions for access to the spectrum that will be made available to the market, the procedural rules for the auction and the conditions that will be associated with the use of the spectrum that will be awarded to operators.

Although there are some differences, these conditions do not differ substantially from those in the draft regulation released in March this year that raised strong negative reactions from three mobile operators in Portugal. NOS has already announced that they will take the case to court and to the European Commission to stop the 5G Regulation from becoming effective.

Yesterday, the 5G Regulation was published in the official gazette. The Portuguese Government approved the 5G Regulation as released by ANACOM, which means that if NOS does not succeed in their intentions, the auction will be closed in January and the first commercial 5G offers may be in the market in the beginning of 2021.

We will publish in the coming days an in-depth analysis on the 5G Regulation. In the meantime you can read here our review of the ANACOM draft regulation published in February.

Following the declaration of public calamity in Portugal due to Covid-19 pandemic, he Portuguese Government adopted new measures, including the return of mandatory telework, along with  new rules regarding the organization of working time.

The new rules are the following:

Municipalities with great epidemiological focus
  • Obligation to adopt remote work, whenever the job in question allows it.
Other municipalities
  • Possibility of adopting remote work, under the Terms of the Portuguese Labor Code, by agreement between the parties;
  • Obligation to adopt remote work if the employee requests it, in the following scenarios:

a) If the employee is immunosuppressed and chronically ill, provided that such condition is proven by a doctor;

b) If the employee is a disabled person or has a debilitated in 60%, or more, of their capacity;

c) If the employee is a parent of children or other dependents under 12 years old, or, regardless of age, with a disability or chronic illness, who are unable to attend classes and other educational activities in person;

d) If the employer does not comply with the guidelines of the Portuguese Health Agency (“Direção Geral de Saúde”) and the Portuguese Labor Agency (“Autoridade para as Condições do Trabalho”) in the workplace (e.g. physical distance between workers).

If it is not possible to adopt remote work under the terms of the Portuguese labor law, specific work organization measures may be implemented, among them:

  • Staff rotation between remote work and workplace attendance, which may be daily or weekly;
  • Different working schedules regarding employees ‘entry and exit, breaks and meals.

The new rules come into force on November 4th and last until the November 19th.

Following the set of measures enacted under the COVID-19 pandemic, a proposal to amend the Extraordinary Support for Progressive Resumption was approved by the Council of Ministers, aiming at reinforcing the aid to the companies affected by the pandemic crisis.

The main changes proposed to improve the measures already adopted through the Decree-Law nº. 46-A/2020 of 30 July are the following:

(i) New percentages of reduction of the normal working period

Different from the regime currently in force that only allows a maximum reduction of the normal working (NWP) period up to 60% for companies with a break in invoicing equal or superior to 60%, the new proposal establishes the possibility for companies with a break in invoicing equal or superior to 75% to reduce the NWP up to 100%. The worker is always guaranteed the minimum of 88% of the retribution, assuring the Social Security the payment of 100% of the compensation. For companies that record a drop in invoicing equal to or greater than 75%, a partial exemption of 50% of the employer's contribution to Social Security is also provided.

(ii) New concept of “business crisis”

The regime now includes companies with the following breaks in invoicing in relation to the same month of the previous year or in relation to the monthly average of the two previous months:

  • Break in invoicing ≥ to 25%: reduction of NWP up to 33%;
  • Break in invoicing ≥ to 40%: reduction of NWP up to 40%;
  • Break in invoicing ≥ to 60%: reduction of NWP up to 60%;
  • Break in invoicing ≥ to 75%: reduction of NWP up to 100%;

(iii) Increased support for training

The proposed amendment to the law also establishes an increase in the value of the training program. On the one hand, the amount currently foreseen for the employer is increased from €66.00 to €132.00. On the other hand, as far as the employee is concerned, the amount is increased from €66.00 to €176.00.

In short: the new proposal of law is aimed at increasing support to sectors in greatest difficulty, expanding access to more employers, reinforcing incentives for training, and providing complementary support for employers.

The Portuguese Supreme Administrative Court recently ruled on the concept of tax residence when applied to taxable persons whose activity, employment and income are not connected to the Portuguese territory, in Case no. 3/2020 of 6 October 2020.

Until now, Portuguese Tax Authorities and some Courts considered that it would be sufficient that one of the members responsible for the household had his/her residence in Portugal for all the other members to be considered tax residents in Portugal, even if they did not have any other link with this territory.

The criteria for the definition of residence was discussed based on two theories: the prevalence of the principle of “residence by dependency”, implying the residence of the taxable person when the family members resided in Portugal or the prevalence of the criteria defined by the international treaties entered into by Portugal.

The Supreme Administrative Court has ruled that conventional rules of international law should prevail over domestic law, by virtue of the supremacy of international law, in accordance with the Portuguese Constitution and the Portuguese General Tax Law.

The Court also considered that the meaning conferred to the concept of "residence by dependence" in the Portuguese Personal Income Tax could not override the concept of residence resulting from conventional provisions which follow Article 4 of the OECD Model Convention, given the supremacy of international law over domestic law.

Although article 4 refers the definition of the concept of residence to the internal legislation of the contracting States, the Supreme Administrative Court considers that this should not be done unconditionally, since it assumes that the question of residence is examined individually, on a person by person basis, without reference to the family situation of the taxable person.

Thus, the concept of residence for the purpose of applying domestic law will only apply in situations where there are only elements of connection with the Portuguese legal system or in situations where, if there are connections with other legal systems, there is no convention entered into between Portugal and the State with which that connection occurs.

Now that this dispute has been resolved, there is no doubt that the conventional concept of residence in the Conventions for the Avoidance of Double Taxation entered into by Portugal takes precedence over the rules of domestic law, with the result that tax residence cannot be determined exclusively by the taxpayer's family situation.

The Portuguese Government approved Decree-Law 78-A/2020, which extends the public moratorium from 31 March 2021 to 30 September 2021 and amends Decree-Law 10-J/2020 for the fourth time.

The new extension has different rules regarding principal and interest payments.

From 1 April 2021, as a rule, only the principal payments will be suspended, which means the beneficiaries will have to pay interest accrued from that day onwards.

However, the following credits may continue to benefit from the suspension of both principal and interest payments:

  • Mortgage credit, as well as residential property leasing;
  • Consumer credit granted under Decree-Law 133/2009, as currently drafted, for education, including for academic and professional education; and
  • Credits granted to companies in sectors that were most affected by the pandemic and whose main activity is covered by the CAE code listed in the Annex to Decree-Law 78-A/2020.

Companies whose main activity is included in the CAE code list also benefit from a 12-month maturity extension, in addition to the extension already contemplated in the moratorium regime.

However, this maturity extension will cease immediately in the case of (i) default by the beneficiary entity of any payment obligation towards any institution or (ii) in the event of judicial enforcement requested by a third party of any payment obligation of the beneficiary entity or in the event of seizure or any act of judicial apprehension of the assets of said entity. In these cases, the original reimbursement profile plus the extension originally granted shall be resumed.

As of 1 October 2021, the moratorium will cease to apply and from that date the principal and interest must be repaid.

Although the additional extension will automatically apply to persons or entities already covered by the moratorium, those who do not wish to benefit from the moratorium must notify their intention to the banking institution at least 30 days before the date on which they intend to end the moratorium effects.

If the beneficiary entity distributes profits, reimburses credits to its shareholders or acquires its own shares or quotas it will cease to be eligible to the moratorium.

Notwithstanding the extension of the moratorium, the deadline for the application (30 September 2020) remained unchanged.

Following the measures adopted in the first months of the COVID-19 pandemic, the new "Simplified Lay-Off" was approved by the Portuguese Council of Ministers, now dubbed as "support to employment in the resume of activity".

The new bill creates an extraordinary support for the gradual resume of business activity for companies, in a business crisis situation, through a temporary reduction of the normal working period.

The new measure applies to private employers, including employers in the social sector who see themselves in business crisis.

The requirements to access are the following:

(i) Business crisis situation:

(a) drop in turnover of 40% or more in the full calendar month immediately preceding the initial application for support or extension, when compared to the same month of the previous year or compared to the monthly average of the two months preceding that period; or

(b) for those who started the activity less than 12 months ago, when compared to the average monthly billing between the start of the activity and the penultimate complete month before the calendar month to which the initial request for support or extension refers.

(ii) Documents:

The employer will have to submit an electronic form, on the website of the Portuguese Social Security (Segurança Social Direta), as the business crisis situation is certified by statement of the employer, alongside with the certificate of the certified accountant of the company. The form will also be accompanied by a nominative list of workers to be covered.

(iii) Tax and social security situation up to date:

The employer must have, verifiably, their tax and contributory situation up to date before the Social Security and the Tax and Customs Authority, authorizing the online consultation of their tax situation with the Tax and Customs Authority.

(iv) Maximum limits and reduction of the normal daily work period:

Between August and September, the new support will be assigned in a differentiated way according to the invoicing breakdown: (a) a reduction of up to 50% in the working hours may take place in the event of a drop in revenue of 40% or more; (b) a reduction of up to 70% in the working hours may take place in the event of a drop in invoicing of 60% or more.

Between October and December: (a) a reduction of up to 40% in the working hours may take place  in the event of an invoicing break of 40% or more billings; (b) a reduction of up to 60% in the working hours may take place in the event of a drop in invoicing of 60% or more billings.

(v) Amount:

The amount of this support matches the salary of the worker covered by the reduction, calculated proportionally to the hours of work provided.

The worker is also entitled to a monthly compensation payment, with a maximum limit of 3 Minimum Monthly Salary, that is, up to €1950,00, paid by the employer, in the amount of (a) 2/3 of his normal illiquid remuneration corresponding to hours not worked, in the months of August and September 2020; and (b) 4/5 of his normal gross remuneration corresponding to hours not worked, in the months of October to December 2020.

In the case of companies with a turnover shortfall of between 40% and 70%, employers are responsible for paying in full for the hours worked and 30% for a variable part of the hours not worked (66% between August and September and 80% between October and December), with “Segurança Social” also paying a portion of the latter (70% of the 66% and 80% respectively).

In the case of companies with a loss of income above 75%, an additional support is given for the payment of hours worked, corresponding to 35% of normal gross remuneration.

(vi) Duration:

The initial lenght of this incentive is one month. It may, however, be extended exceptionally, monthly, until 31 December, 2020. The interruption of the temporary reduction, with the respective suspension of the support, does not affect the possibility of its extension, which may be requested in non-consecutive months.

(vii) Notice to workers:

The employer has to communicate in writing to the workers covered about the decision to access the new support, the percentage of reduction in working hours and the expected duration of the implementation of the measure. In case of there being trade union representatives and/or workers' committees, the communication must be preceded by their hearing.

(viii) Total and partial exemption from payment of social security contributions:

The employer benefiting from the new aid is entitled to total exemption or partial waiver of the payment of the employer's contributions in respect to the remuneration and compensation due to the employees covered, as well as regarding the remuneration of managers and directors or members of equivalent statutory bodies. When this aid comes to an end, companies may resort to other measures to reduce or suspend work, in agreement with the "normal" lay-off regime provided for in Article 298 of the Portuguese Labor Code. On the other hand, companies that benefit from the extraordinary incentive to normalize business activity can not access the new support, as well as companies that are  simultaneously benefiting from the "Simplified Lay-off" scheme.

In a landmark preliminary ruling on data transfers between the European Union (EU) and the United States of America (US), the Court of Justice of the European Union (CJEU) the  EU-US Privacy Shield decision (Privacy Shield) void.

This decision of 16 July 2020 (Schrems II case) is the sequel to a previous ruling, where the CJEU the EU-US Safe Harbour (Schrems I case). The EU-US Safe Harbour was the predecessor of the Privacy Shield, now considered inadequate to ensure the level of protection required by the General Data Protection Regulation (GDPR). In turn, the CJEU considered the Commission Decision 2010/87/EU of 5 February 2010 on standard contractual clauses for the transfer of personal data to processors established in third countries (SCC) to be valid.

This CJEU ruling follows a complaint lodged by M. Schrems. The Austrian citizen and Facebook’s user, lodged his complaint with the Irish data supervisory authority seeking to prohibit Facebook Ireland from transferring his personal data to the US. Personal data of Facebook users, who are residents in the EU, is transferred to servers of Facebook Inc. located in the US where they are processed under SCC. M. Schrems claimed that SCC would not offer sufficient protection against access by US public authorities to the data transferred to the US.

Following the Advocate General’s Opinion (non-binding opinion published on 19 December 2019), the CJEU considered SCC as adequate. The Court points out, in particular, that SCC decision imposes an obligation on the data exporter and on the recipient of the data to verify, prior to any transfer, whether that level of protection is respected in the receiving country and that the decision requires the recipient to inform the data exporter of any inability to comply with SCC, the latter then being, in turn, obliged to suspend the transfer of data and/or to terminate the contract with the former.

On the other hand, the CJEU challenged the level of protection afforded by the Privacy Shield on the grounds that it does not include satisfactory limitations to ensure the protection of EU personal data from access and use by US public authorities on the basis of US domestic law.

Although SCC remain as valid for international data transfers, organisations currently relying on SCC will have to consider whether considering the type of personal data, the purposes and context of the data processing, and the importer country, an "adequate level of protection" exists as required by EU law. Otherwise, they should consider adopting additional safeguards. Organisations relying on the Privacy Shield will have to urgently seek alternative solutions, in particular the derogations provided for in the GDPR (e.g. data subject’s consent, where the transfer is necessary for the conclusion or performance of a contract). SCC, binding corporate rules, approved codes of conduct or certification mechanisms may be also alternative solutions.