DIA Portugal offers commitments to the PCA

Press Release 7/2016
DIA Portugal offers commitments to the PCA
On 3 April 2014, the Portuguese Competition Authority (PCA) opened proceedings against DIA Portugal Supermercados, Sociedade Unipessoal, Lda. (DIA Portugal), for alleged infringement of national competition rules in the context of the Franchise relation between this company and its Franchisees.
The investigation carried out, which included the analysis of all Franchise Contracts, a questionnaire addressed to all Franchisees (around 300) and inquiries and inspections in several locations, revealed the existence of competition concerns in relation to the definition of resale prices in the context of the Franchise relation at stake.
Essentially, it was necessary to clarify if the prices set by DIA Portugal were fixed resale prices, which are forbidden, or if they were just recommend and maximum resale prices, intended to prevent price raises that could hinder the brand’s market strategy.
On 15 March 2016, DIA Portugal offered a set of commitments to meet the competition concerns expressed by the PCA.
The commitments offered include the mailing of a Circular Letter to its Franchise Network (“Circular Letter”) clarifying that DIA Portugal only recommends resale prices or determines maximum resale prices and that Franchisees are free to adopt inferior prices.
Notwithstanding the right to recommend or determine maximum resale prices, DIA Portugal also commits not to adopt any Franchise Contracts with clauses which limit the freedom of Franchisees to autonomously determine resale prices, clarifying in these Contracts that no contractual provision should be interpreted as restricting that freedom and attaching a copy of the Circular Letter.
According to Law No 19/2012, of 8 may, the PCA may accept the commitments offered by the undertakings at stake in the proceedings, when it considers that the commitments offered are able to eliminate the negative effects of the investigated practices on competition.
DIA Portugal is obliged to comply with the set of commitments offered to the PCA, under the Authority’s supervision.
The commitments offered by DIA Portugal are, from today onwards, subject to public consultation for a period of 20 working days.
The results of the public consultation will be published on the PCA’s official website.