Member Article

Therefore, we expect that, in the coming days, weeks and months, the number of notifications to the European Commission in the field of state aid will see a significant increase. Indeed, the Commission has already relaxed the rules currently in force by introducing a new temporary framework for state aid measures to support the economy in the current COVID-19 outbreak.

In parallel, the Portuguese Competition Authority (“PCA”) has issued a statement to the effect that it will focus on detecting any anticompetitive practices that exploit the current situation and especially on any practices that harm families and companies. This is in line with what has been done by other competition authorities, in particular the Italian authority.

1 How should companies react

a) State aid: companies should focus on closely monitoring any opportunities for financing in view of the changes being made to the legal rules on state aid, and they should also ensure that all the public support they are granted is in accordance with these rules. It is important to note that, if the European Commission decides that certain state aid is incompatible with the internal market, the companies benefiting from it will have to pay back any aid they have received, plus interest.

b) Possible adaptation of business strategies: it is very important to carry out a preventive analysis of the competition and regulatory risks associated with adapting business strategies, in particular, to deal with crisis situations at a time when the effects of scarce resources can lead companies to act in breach of competition rules.

These commercial strategies may include unilateral actions, such as setting excessive prices; restrictions of a horizontal nature, such as entering into cooperation agreements with competitors; or the imposition of certain vertical restrictions within the distribution chain, particularly with regard to the resale price of the products.

c) Merger control: At the moment, there are no operational reasons to prevent the notification of transactions to the PCA. Merger cases continue to be submitted to the PCA through the SNEOC website and the PCA will continue to analyse them.

The European Commission has issued a communication on the merger notifications that must be submitted to it and this communication discourages companies from submitting notifications until further notice. However, this possibility is not excluded outright.

2 In what terms can companies benefit from state aid?

The legal rules on state aid are primarily contained in articles 107 and 108 of the Treaty on the Functioning of the European Union (“TFEU”). These rules are intended to eliminate distortions in the internal market caused by public interventions that selectively benefit certain companies (“incompatible aid”). However, in certain circumstances, it is understood that the benefits of public intervention outweigh the distortions caused and, therefore, the state measures are implemented (“compatible aid”). As a rule, and putting aside the exceptions that exist, states are under a duty to give notice to the European Commission of the state measures in question. If they do not do so, the aid will be considered illegal. Under the legal framework currently in force, it is important to note the following:

For complete reading of the article, see here