CPI TV Ten Minutes With ADC President Margarida Matos Rosa

Below, we have provided the full transcript of the interview with Margarida Matos Rosa, President of the Portuguese Competition Authority, the Autoridade da Concorrência (ADC), recorded on August 19, 2021.

This is part of a series of videos that CPI is producing where we will interview the heads of various NCAs all around the world.

Thank you, Ms. Matos Rosa, for sharing your time for this interview with CPI.

A video of the complete interview is available HERE.

Sam SADDEN:

Hello, everyone, and thanks for tuning in for this exclusive CPI Talk. Today, we have the pleasure of speaking with Margarida Matos Rosa, president of the Portuguese Competition Authority, the Autoridade da Concorrência (ADC).

Thank you for being with us today, President Matos Rosa.

Margarida MATOS ROSA:

Thank you, Sam. Thank you for the invitation to be here.

SADDEN:

I’d like to kick things off by asking how the ADC dealt with the pandemic, and are there any learnings or anything that you’ve learned that you can share with us coming from this period?

MATOS ROSA:

Sure. I think we all have a lot to learn from this pandemic on all sorts of fronts, but if I can first focus on what the lessons were for the agency, then I would say that it was very important for us to focus from the onset of the pandemic on our business continuity. So this was early March, 2020. We had no idea, like nobody had, how long the pandemic was going to last. So our focus was really to ensure a smooth transition into remote working and then into reassuring our stakeholders that our tasks were going to be carried out at the same pace as before. But I think no one really expected this change in scenario to persist for so many months, so although we had quite good tools to carry out most of our tasks remotely, there was some fine tuning that had to be done along the weeks, including upgrading the tools that we had to work remotely.

Maybe another important aspect was to ensure as much as possible the safety of our staff and over the months we not only focused on that, but we also engaged with them through specific seminars on managing remote working, nutrition, and sleep during this period. So ultimately it was really gratifying to witness the commitment with which everyone really continued their work and committed to remain fully operational throughout this period of time and committed to continue to have an impact on people’s lives and firm’s business.

SADDEN:

What are some of your authority’s biggest accomplishments or recent accomplishments or achievements?

MATOS ROSA:

I think if I look into the many years in which we have reinforced our commitment to enforcement, I would say that one of our biggest achievements was probably to change the paradigm for the Portuguese Competition Authority so that its work is now one that has an impact: it’s constant, it’s predictable in its determination, and its respect for due process. It’s also, because of all that, dissuasive for firms that may not intend to act lawfully. So that’s really one of the biggest achievements for all of us. We’ve also become, I believe, a trustworthy agency to which many firms and their lawyers resort when they think their sector is one where competition law is not being respected. But if I answer your question more directly in terms of our hallmarks in the last 18 months or so, I think one of them has to be the total amount of Euros that have been levied in fines for anti-competitive behavior, and that amounts to almost 400 million euros.

2020 was also a year in which we looked at serious infringements, not only cartels, which has been our focus, but also infringements such as a hub and spoke arrangements. First of all, I think we looked at sectors that were either of structural importance to the whole economy, for example, telecommunications, or those that had a very big impact on citizens’ lives. That’s for example, is of course food retail, but also labor markets. As I was mentioning in hub and spoke arrangements, we had two sanctioning decisions that resulted in fines of up to about 304 million euros on very large food retail chains and several suppliers. These were the first two sanctioning decisions for hub and spoke arrangements in Portugal and it’s important that we communicated them very well to the markets. Not just for the firms in the sector, but also to consumers in general.

But also, the sanctioning decision that we had on mobile and fixed communication services was very important because it was already a very important sector for consumers in general and I’m talking about families, households, but also firms. Everybody depends on communications, but even more so during the pandemic. So it was really an important decision for us. Of course, the facts had been occurring prior to the pandemic, but the timing of the decision was important to raise awareness to what our work is.

But moving on also, I think one of the decisions that we adopted in 2020 involved a cartel in railway maintenance in public tenders, and it was also the first time in which we prevented two companies from continuing to bid in public tenders for a period of two years. So there was a disqualification of these two firms for a period of time, in this case two years, and that was also the first time we applied that sanction provided for in the law. Then finally, I think it’s worth mentioning that this year already we issued a statement of objections for a no-poach agreement in the labor markets, and that was the case in the sports sector with the Portuguese Professional League and 31 sports companies.

SADDEN:

Speaking towards the technology sector, we all know that it has been a big protagonist in this period, not only because it has actually helped us during COVID in many ways, but it has also gained increased scrutiny by national competition authorities from all over the world. What is your view on the current challenges posed by the technology sector, and do you think there is a need for reforms?

MATOS ROSA:

Let me maybe start by saying that I like to look at technology, and in particular digital, as a feature of many sectors. It’s a feature that has become present in most sectors, if not all, and it has changed business models along with people’s way of living, as I mentioned, including and even more so during the pandemic. There was already, of course, an ongoing transformation before the pandemic, but that has accelerated because of lockdowns, of course, and that may have stayed forever with us. But I think in general competition law and its tools are adequate to face up to the challenge. But of course they may be a need to fine tune certain aspects. One example may be clearly the need to extend agencies’ powers in terms of obtaining relevant proof, and I mean proof in different digital or electronic supports. This, of course, has been provided for by the ECM Plus Directive in the EU, which has been transposed in a number of countries, including Portugal, but that’s very important.

Then, of course, the other aspect that everybody thinks of is that market dynamics have changed and digital markets certainly have distinctive powerful features that can affect not just competition dynamics between firms, but also consumers and citizens in general in many other aspects of their lives. So the impact on competition is what antitrust agencies are looking at closely, but there are other areas such as privacy and consumer protection that seem to need adequate regulation. In terms of antitrust action, an example of what the Portuguese Competition Authority looked at closely is the power of algorithms and possible new ways of colluding or abusing market power. But we also welcome developments aimed at addressing the many challenges such as the European Commission’s Digital Markets Act, which, as everybody knows, aims to ensure that some large gatekeepers in digital market platforms behave in a fair way online. This, together with a Digital Services Act, of course is extremely important in my view.

Competition policy also plays a role in ensuring that consumers and firms are able to seize the benefits of the digital economy, such as innovation. I see and I view the Portuguese Competition Authority’s work, in some ways, a forerunner in sparking a much-needed debate in the topic in Portugal with visible results. So if I move away a little bit from the gateway discussion and into digital and innovation, we had a serious amount of work done in what we call the FinTech sector, so innovative technologies applied to the financial sector at large. This was done in 2018 and it still needs to be perfected. I mean, we did this work. There was a lot of discussion engaged with stakeholders and other sector regulators in Portugal, but there still seems to be a lot to do and if possible, this is something that will continue to occur as innovation continues.

Then more recently, in 2019, we issued a paper on digital ecosystems and big data in algorithms. In that paper we warned that firms are responsible for the algorithms they use and that employing these tools with the aim of coordinating prices or otherwise weakening competition in the market is incompatible with Portuguese competition law. So to sum up, I think the fast development and growth in the digital sector poses several challenges. The current competition framework is robust, but we may need to have some fine tuning of the tools we have, and that is being a thought with the DMA.

SADDEN:

You’ve already sort of touched on this question, but beyond the technology sector, what are some other industries that you think merit specific enforcement attention. You mentioned telecoms, railroads, the food sector, but is there anything else or any other sectors that you think need specific attention?

MATOS ROSA:

Well, certainly. I think it’s worth mentioning that most countries are now facing a post pandemic strategy for recovery, if I may say so. That means that a lot of support is going to be given by countries so that the economy recovers swiftly. So I’d say that one of our focus is really to put competition policy at the core of policy makers’ efforts so that when they design other policies, they think about those policies also through a competition lens. For us, it means that we have more specifically issued a report to the attention of the government in Portugal so that the principles of competition in the context of economic recovery are taken into consideration. I would say that there are three that are important to take into account and that’s, of course, promoted competition and efficiency when applying state support, but also promoting competitive and efficient public procurement procedures, and then finally taking the opportunity that we have right now and looking into a wide array of sectors and taking this opportunity to remove unnecessary barriers to entry and expansion in the number of sectors.

It’s a fantastic opportunity that countries have. Decision-makers may be busy with many other important aspects, but it’s important that they are aware of the work they can also do in terms of competition policy and do it together with their support measures. So that’s one area that keeps us busy. Then another one that I think, and responding to your question regarding sectors that merit specific enforcement attention, certainly one that we have been looking at even before the pandemic, but even more so now is labor markets. I’d say it’s even more important now to look at the labor markets because with the severe economic impact that the pandemic had, it’s important that people who are out of jobs or which may be out of jobs can recover rapidly and go back into the workforce rapidly without facing unnecessary barriers to that conversion, if I may say so, because they may need to change jobs or adapt their regular profession.

In these times of job loss or career change, it’s even more important to do this. This is why we have been advocating to remove unnecessary barriers, for example, on self-regulated professions. This falls, by the way, what we had issued as recommendations together with the OECD in 2018 after a project that we carried out, extensive project that we carried out, with them. But there’s also, of course, a need for labor markets to be free, not only of regulatory barriers, but also of anti-competitive behavior and this is where our enforcement and activity comes into play. As I mentioned earlier, we opened in 2020 an investigation regarding a standalone, no-poach agreement and reissued even an interim measure to cease that behavior in 2020. The statement of objections has come out in the meantime, but there was more actually.

We also in 2020 issued a recommendation regarding an initiative by the Portuguese Football Federation to set a cap on wages of female football players. I mean, it’s a coincidence this happens in the sports sector. Of course, there are many sectors we’re looking at that may have such an anti-competitive behavior, but this is an example of the amount of work and focus that we’re giving to this area. I think it’s worth mentioning as well that it’s an area to which companies may not be as aware in terms of competition law as others, especially in Europe, I would say. In the U.S., this has been the focus of action by the DOJ in the past, but a lot less in Europe. In tandem with our specific issues paper on agreements in labor markets and competition policy, we issued a guide of good practices that advises companies to eliminate these types of agreements along with raising awareness to firms, employees, human resources, professionals, so that we decrease the amount of anti-competitive behavior that may exist in this area. So basically I think these two areas are some of those that keep us busy right now.

SADDEN:

Lastly, what in your view is the possible future direction of antitrust enforcement, both domestically and internationally?

MATOS ROSA:

Right. Well, I like to look at antitrust and think there’s currently no over-enforcement of competition law. This is my take from experience. I think there’s still a lot to be done both in enforcement and in advocacy terms, but I believe that what continues to lack is a general representation, or there is a general under-representation, if I may say, of the values of competition and its benefits for us all. For firms, for citizens, for consumers, and I think these values should be nurtured by policymakers a lot more than they are in general, and be promoted to the general population maybe at the early stage or an early age together with other values that for sure are important, like freedom of speech. Agencies, I think, find themselves many times having to redo their work or reconvince policymakers over and over again when the political cycle churns the benefits of what they do.

This is why I say that it seems to be an under-representation of the values of competition in the population in general. There’s still a lot to be said, and to be promoted in general about this. What is the future of antitrust? Well, in my view it has to be to consolidate its standing in areas such as the EU and the U.S. and in general OECD countries, and also to improve its stand in countries where it is making still its initial steps. So two features must, in my view, be maintained or strengthened; a vigorous enforcement and an independent enforcement and all of this accompanied by communication efforts that enhance the population’s general awareness of the benefits of competition policy and here I have to thank CPI for contributing to this.

SADDEN:

Well, thank you so much. This has been really great and we really appreciate you speaking with us today, President Matos Rosa and for sharing your thoughts with CPI. Obrigado.

MATOS ROSA:

Thank you. Obrigada.