Press Release 16/2024
July, 24, 2024

The Decision
On July 17, 2024, the AdC (Portuguese Competition Authority) sanctioned a business association and five major laboratory groups operating in Portugal with fines totalling €48,610,000 for their involvement in a cartel that operated in the Portuguese market for clinical analyses and COVID-19 tests, between 2016 and 2022.

This cartel, established among the laboratories through their participation in the association's management, aimed to fix prices and geographically divide the market for clinical analyses and COVID-19 test supplies.
The coordination between the five laboratories allowed them to increase their bargaining power with public and private entities negotiating clinical analyses and COVID-19 tests, leading to the fixing of prices and commercial conditions potentially more favorable than those resulting from individual negotiations in a normally functioning market, thereby preventing or delaying price reductions.
The widespread availability of testing sites and the capacity for mass COVID-19 testing were crucial in supporting the National Health Service's (SNS) efforts to combat the pandemic in Portugal. Over 40 million tests were conducted in Portugal by March 30, 2022.
Since the process originated from a leniency application under the Leniency Program, the company that submitted the application and met all applicable requirements was granted immunity from fines.
This decision follows two previous decisions in the same case, issued on December 21 and 26, 2023, resulting from the use of the settlement procedure by two multinational laboratory groups. These companies, by opting for the settlement procedure, refrained from contesting the AdC's accusations and voluntarily paid fines totaling €8,900,000, choosing to cooperate with the investigation and provide the AdC with relevant evidence of the anti-competitive practices in question. One of the companies that used the settlement procedure also benefited from an additional fine reduction under the Leniency Program.
The settlement procedure is a procedural tool aimed at adopting decisions more swiftly and effectively, promoting public interest by saving resources, reducing litigation, and strengthening general deterrence, based on the cooperation of the implicated party and its reward through fine reduction.
The Leniency Program provides for a special regime of immunity or fine reduction in cartel cases investigated by the AdC. The first company to report a cartel in which it participates may benefit from immunity, while other companies that also apply under this Program may benefit from a reduced fine, with the reduction percentage decreasing progressively.
Thus, overall, this process involved a total of seven laboratory groups and a business association, with total fines amounting to €57,510,000, of which €8,900,00 were voluntarily paid within settlement procedures.
As it is not possible to exclude that some of the investigated behaviors may still be ongoing, the AdC has also imposed the immediate cessation of the practice on the targeted entities.
Upon concluding the investigation, the AdC determined that the association and the involved laboratories agreed on a strategy for negotiations with public entities, such as the SNS and ADSE, and private entities, such as insurance companies, which sought their clinical analyses and COVID-19 testing services.

Practice Prior to the Covid-19 Pandemic
Within the scope of their activities, the targeted laboratory groups enter into agreements and protocols with both public and private health systems.
In this context, according to the AdC’s investigation, at least since 2016, the targeted laboratory groups agreed not to accept price reductions and to boycott the provision of services if they were indeed faced with a reduction in the prices agreed upon with the SNS (National Health Service). In fact, they ended up boycotting the application of the discount established in an agreement signed with the Ministry of Health aimed at the sustainability of the SNS.
The proven facts show that the actual intention of the targeted laboratory groups was to promote a general price increase, altering the price determination paradigm, which was focused on sustainability.
The same collusive practice was also observed during the reduction of the price of Vitamin D analysis by ADSE in October 2016. The targeted laboratory groups agreed on a position of reaction and rejection of the said reduction, despite the reduction being due to a need to control expenditure.
The same collusive practice was also observed in the context of negotiations with private insurers. The targeted laboratory groups agreed on a strategy to leverage negotiations with various insurers based on the negotiating strength of the sector association, with members acting accordingly. This, in fact, prevented price reductions at certain times, forcing insurers to negotiate under the terms determined by the laboratory groups.

Practices During the Pandemic
Starting in March 2020, the targeted laboratories colluded to set prices for providing COVID tests to SNS and ADSE users, imposing these prices in negotiations with the authorities. The targeted laboratories also threatened the authorities with a boycott of COVID test supplies in retaliation.
In the midst of the COVID-19 pandemic, the Health Authority again resorted to private laboratories to begin mass testing in schools and daycare centers in February 2021. At this point, the involved entities coordinated a price based on their commercial interests, which was higher than expected. The five laboratories not only set the prices for COVID-19 tests but also divided the school market among themselves.
To enable the resumption of travel between mainland Portugal and the Azores, the Regional Health Secretariat of the Azores signed an agreement for the provision of COVID-19 tests to passengers traveling from mainland Portugal to the Azores within 72 hours before their flight. Similar price-fixing behavior occurred in this agreement.
In summary, the seven implicated laboratories engaged in behaviors that resulted in price fixing or other transaction conditions, service boycotts, and the exchange of sensitive commercial information in the context of providing clinical analyses and COVID-19 tests to the SNS, ADSE, and private insurers.
The annual growth rate of the combined business volume in clinical analyses in Portugal by the implicated laboratory groups was about 50% and 60% in 2020 and 2021.
In September 2020, the price of COVID-19 tests (PCR) in Portugal was comparable to European prices. By June 2021, Portugal had the highest price for COVID-19 tests (PCR) in Europe.

The AdC Investigation
The investigation was initiated by the AdC on February 24, 2022, following a leniency application. The AdC later received a second leniency application. In March 2022, the AdC conducted unannounced inspections at the headquarters of the implicated companies in Lisbon and Porto to investigate the evidence in the case.
The Statement of Objections was issued on December 13, 2022, making the process public according to Article 31 of the Competition Law. All implicated entities that wished to exercise their rights of defence and contradiction presented their responses to the Statement of Objections in March 2023, requesting hearings and additional evidence procedures, which took place in April and May 2023. The implicated entities also had the opportunity to consult the full version of the process at the AdC's premises and obtain copies of the non-confidential version under Article 33 of the Competition Law.

The Fines
The fines imposed by the AdC are determined based on the business volume of the companies in the affected market during the years of the practice. According to the Competition Law, fines cannot exceed 10% of the business volume in the year prior to the decision. When setting the fine, the AdC considers the severity and duration of the infringement, the degree of participation of the companies, and their economic situation, among other factors (cf. AdC Guidelines on fine methodology).

Combating Cartels as an AdC Priority
Combating cartels is a high priority for the AdC due to the harm they invariably cause to families and businesses, forcing them to pay higher prices and reducing the quality and variety of goods and services available to them. In 2021, amid the pandemic context, the AdC prioritized remaining "vigilant regarding the detection of abuses or anti-competitive practices exploiting the situation, such as price fixing or market division, at any level of the supply chain."

Violating competition rules not only reduces consumer welfare but also harms the competitiveness of companies, penalizing the country's economy. The AdC's final decision is subject to judicial appeal.
For additional information on process PRC 2022/22, please visit the AdC's website.