AdC accuses Portuguese advertisers and advertising agencies of limiting the normal functioning of the market

​Press Release 14/2019
  
AdC accuses Portuguese advertisers and advertising agencies of limiting the normal functioning of the market
 
The AdC (Autoridade da Concorrência) accuses the Portuguese advertisers association APAN (Associação Portuguesa de Anunciantes) and the advertising agencies association APAP  (Associação Portuguesa de Agências de Publicidade, Comunicação e Marketing) of restraining the free functioning of the market by setting a rule to prevent the participation of its associates in procurement tenders of advertisement services.
 
This rule, included in a Guide for Good Practices on Advertising Procurement approved both by APAN and APAP, sets out that associated advertisers should limit procurement bids to three advertising agencies or to a maximum of four, if the current service provider also participates.
 
The investigation carried out by the AdC revealed that this rule was included in that Good Practices Guide, approved in 2009, which was subsequently transformed into a Commitment in 2015, with the purpose of restricting competition between undertakings. Compliance with this rule was monitored by members: if any procurement tender involved a larger number of companies, participating members or customers were issued a warning.
 
The AdC issued a Statement of Objections having considered that the two associations infringed the Portuguese Competition Law.
 
This kind of decision by business associations reinforces obstacles to entrance into the market, depriving consumers (in this case, the advertisers) of better choices in the acquisition of goods and services with better prices.  Infringement of competition rules not only reduces consumer welfare, but also undermines the competitiveness of businesses and penalizes the economy as a whole.
 
This investigation was opened by the AdC following a complaint. In September 2018, the AdC carried out dawn raids to obtain evidence supporting the present Statement of Objections.
 
APAN represents the interests of advertisers, with 84 members, including the largest advertisers in the country. Currently, the board of APAN is composed of Unilever Fima, Central Society of Beers and Beverages, McDonald's Portugal, Millennium bcp, L'Oréal Portugal, Vodafone Portugal, Seat Portugal, Modelo Continente Hypermarkets and Granvision Portugal. According to APAN, its members represent a turnover of more than 46 billion euros and approximately 75% of advertising investment in Portugal.
 
APAP represents corporate communications agencies (including advertising, media planning and purchasing, digital marketing, relational marketing, events, brand activation, public relations and communications) and has 31 associates with an annual turnover of 184 million of euros.
 
The board of APAP is composed of Fuel Publicidade, APAME (Portuguese Association of Media Agencies), Fullsix Portugal - Interactive Marketing, Wunderman Cato Johnson - Direct Communication Services, NIU Sistemas - Power for Brands, BAR Ogilvy Portugal and Nossa, Communication Agency.
 
Decisions and recommendations by business associations that may alter the free functioning of the market, when they promote or facilitate uniform behaviour by their members and possible third parties, may contravene the Competition Law. Each company should independently determine its commercial strategy, generating competition in the market.
 
The AdC produced, and has available on its website, a Good Practices Guide specifically directed to Business Associations, that may be consulted at www.concorrencia.pt (in Portuguese only).
 
Promoting competition in business associations is one of the priorities of the AdC for 2019.
 
The AdC emphasizes that issuing a Statement of Objections does not determine the final outcome of the investigation. 
 
At this stage of the procedure, the undertakings are given the opportunity to exercise their rights of defence against the alleged infringements and possible applicable sanctions.
 
The Statement of Objections was issued on July 17, 2019.
 
 Lisbon, July 22, 2019