By Andrea Hargraves 
The Competition Authority fined Multibanco's owner €14 million last month and accused the company of “abusing its dominant position” in the payments sector. In contact with Jornal Económico, lawyer Miguel Miranda, Partner at Raposo, Sá Miranda & Associados, explains the consequences of this practice for both SIBS and consumers.
Lawyer Miguel Miranda, Partner and Coordinator of the Competition and EU Practice Area at Raposo, Sá Miranda & Associados (PRA), believes that the €14 million fine imposed by the Competition Authority (AdC) on SIBS could cause harm to the owner of Multibanco. Its business model has changed, making it more “friendly” to pro-competitive practices. In an interview with Jornal Economico, the lawyer explains the concrete effects of this fine on the company and consumers. It is a risk of up to two years without the ability to participate in public procurement procedures.
What competition laws are not adhered to?
It is important to clarify, first, that the final decision of the AdC has not been published to this date, so the answer to the questions raised depends on Communication and information available. On this assumption, and from what is known, the offense approved by the Competition Authority is the abuse of a dominant position in the payment services sector, by SIBS, by forcing issuers and purchasers of payment cards seeking access to the Group's payment systems to also contract with private processing services. Their – This violation is clarified, at the national level, in Art. 11 of Law No. 19/2012, of May 8 (competition legal regime), and at the European level, in Art. 102 of the Treaty on the Functioning of the European Union (TFEU for short).
In addition to the fine, what other consequences might the owner of Multibanco face?
The bottom line is that, in addition to fines, violating companies may be subject to other penalties. Examples of additional penalties include the publication, at its own expense, of an excerpt of the decision or condemnation in Diário da República and in one of the largest circulation newspapers, as well as deprivation of the right to participate in public procurement procedures for a maximum period of two years. Furthermore, when the AdC also includes remedial measures (measures aimed at resolving or redressing the wrongful conduct), the offending company may be subject to a mandatory financial penalty for each day of non-compliance with the AdC.
Are there precedents for appealing the decision?
There is no record in Portugal of previous, identical convictions for SIBS. In any case, AdC sanctioning decisions are always subject to appeal to the Competition, Regulation and Supervision Tribunal (TCRS). But it should be noted that the appeal does not stop the implementation of fines. Where appropriate, decisions, interlocutory orders and other measures imposed are subject to judicial appeal. In contrast, the rulings handed down by the TCRS can still be ultimately appealed to the Court of Appeal in Lisbon, as well as questions about the interpretation and condensation of the law can be brought to the Court of Justice of the European Union.
Can affected companies request compensation?
Yes, in parallel with the condemnation decision of the AdC, under Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 and the relevant national transport law (Law No. 23/2018, of 5 November 2014), which regulates the right to compensation for Violations of the Competition Law. Any natural or collective person who suffers damages as a result of this type of violation may request full compensation for it. The compensation covers both consequential damages and loss of profits already incurred. Repayment is pursued through legal proceedings, with the Competition, Regulatory and Supervisory Court – so-called proceedings Private enforcement.
Contest refers to practice linkThis restricts competition and innovation in this sector. For example?
Hey link (Linked/Secondary Sale) is a situation in which customers who purchase a product (Linked Product) are also obligated to purchase another product from that company (Linked Product) – in this case, according to the AdC statement, buyers and issuers of the product cards will also have to process their transactions with SIBS Group. The deal will be a condition of access to key products/services. Specifically, regarding the impact of innovation in the sector, this may occur mainly due to the closure of the transaction market (secondary market). Once controlled by product dependency, there will be little interest and diminished incentives and investments in researching and developing new products or improving existing ones, available substitutes being reduced or stagnant, less interest in resource allocation and less resources. Quantity and quality of supply.
The practice where people who buy one product have to buy another product from the same company results in little interest and less investment in researching and creating new products.
How are consumers affected by the practice of which SIBS has been accused?
According to the AdC statement, this practice will have an impact on two levels. On the one hand, this will have limited the entry and expansion of alternative processors for SIBS FPS, because to gain access to the payment systems of the SIBS group, card holders and issuers will have to start processing their transactions with this group. This would limit the possibility of these entities choosing alternative processors, capable of providing a service more suitable to their needs, in terms of prices or functionality. In fact, some acquirers may have the ability to process their own transactions, and would not be able to do so if they accepted payments under the SIBS Group's systems.
On the other hand, this behavior will limit the differentiation and innovation capacity of acquirers and exporters, with a negative impact on the services they provide to merchants and consumers. Because of these restrictions, there are limitations on the supply of products and services, both in terms of quality, alternatives and functionality, and thus do not guarantee a wide range of consumer choices. Moreover, this type of practice also tends to increase market prices, which may ultimately have an impact on the consumer.
This type of practice also tends to increase market prices, which may ultimately have an impact on the consumer.
How might this fine change the way the group's payment systems operate?
The fines imposed by the AdC have, in addition to the effect of conviction, a deterrent effect, so after the conviction process, it is estimated that attention and care to comply with the rules of competition law will be more likely (not least because frequency is the criterion) to determine the value of the fine in future operations) . Therefore, as a result of the conviction, it can be expected to introduce a business model more in line with competitive legal values: free from imposing barriers to entry into the market of payment and transaction systems, and from being aggressive and restrictive. Practices committed due to their high market position and imposing unenforceable obligations on other players, due to this greater negotiating pressure, which means not subjecting access to certain products to the acquisition of other products and allowing the use of alternative processors within the scope of the relevant services and markets.