AdC issues Statement of Objections to MEO, NOS, NOWO and Vodafone for cartel to limit competition in online advertising

​Press Release 11/2020
 
AdC issues Statement of Objections to MEO, NOS, NOWO and Vodafone for cartel to limit competition in online advertising
 
The AdC issued a Statement of Objections to  the telecommunications operators MEO - Serviços de Comunicações e Multimédia (MEO), NOS Comunicações, SA, NOWO - Communications, SA (NOWO) and Vodafone Portugal – Comunicações Pessoais, SA (Vodafone) with respect to a cartel agreement to limit competition in advertising on the Google search engine, to the detriment of consumers.
 
In terms of the agreement, when users search on Google for telecommunications services containing the name of one of the operators, the more visible results of the search do not list offers for the same service from the other competitors, which makes comparison difficult.
 
In practice, the cartel functioned by the voluntary restraint of communication with consumers by three competitor operators through the results of greater visibility on Google, whenever their name was not mentioned in the query. This deprived the consumer of easy access to alternative proposals.
 
Under normal conditions of competition, any operator would want its proposal to appear whenever a consumer searches for telecommunications services.
 
In a market where this comparison is already complex for any consumer, given the specificities involved in telecommunications packages (number of channels, internet traffic, fixed telecommunications, among others), the cartel between operators MEO, NOS, NOWO and Vodafone makes searching and consequent consumer mobility even more difficult.
 
This cartel agreement reduces the incentive and the ability to compete for the submission of proposals with the best prices and conditions, thus harming consumers by reducing competition.
 
The AdC investigation revealed that the cartel started in 2010, with no evidence that it has ceased.
 
The proceedings were opened by the AdC in January 2019 and originated in a complaint made under the Leniency Program.
 
This is the second cartel case opened by the AdC in telecommunications, a “market in a situation of limited competitive dynamics for several years”, as the President of AdC said at arecent hearing at the Portuguese Parliament.
 
In December 2019, the AdC had already issued a Statement of Objections to MEO - Serviços de Comunicações e Multimédia, SA and NOWO - Communications, SA for a market-sharing and pricing cartel for mobile communications services, sold alone or in bundles.
 
This proceeding, opened by the AdC in November 2018, also followed a complaint under the Leniency Program.
 
In these two cases, evidence was obtained in unannounced inspections conducted by the AdC in November and December 2018 in several premises of the targeted telecommunications companies.
 
The AdC emphasizes that sending a Statement of Objections does not prejudge the outcome of the investigation. At this stage of the procedure, undertakings have the opportunity to exercise their rights of defence against the infringement allegations and possible applicable sanctions.
 
The telecommunications sector has been the object of particular attention by the AdC, as it is an  important sector for the economy and for Portuguese households.
The AdC recently issued recommendations for the sector, with the objective of assuring more and better information for the consumer, easier switching and less onerous options to loyalty obligations, which will promote greater competition.
 
Barriers to consumer mobility make switching operators difficult and result in reduced competition, absence of alternatives for consumers and increased market power for operators.
 
While digitization was well under way across sectors, remote working, distance learning and online commerce during the pandemic have made communications services even more essential for all.
 
The focus on enforcement against cartels, namely in sectors with significant weight in the economy, such as electronic communications, continues to be a high priority of the AdC's activity, taking into account the substantial losses cartels inflict on consumers and companies, forcing them to pay higher prices. while reducing the quality and diversity of the goods and services available.
 
The violation of competition rules not only reduces the well-being of consumers, but also undermines the competitiveness of companies, penalizing the economy as a whole.
 
The Statement of Objections was adopted on 16 July.
 
 
July, 17, 2020