Although the 2008 financial crisis triggered further legislation to protect banking clients and investors, the relationship between banks and customers had been a focus of legislators and regulators long before the banking collapse. Rules and regulations in this regard concern deposit compensation, bank-client relationships, consumer complaints, breaches of contract, residential mortgage loans and minimum information duties.
The Banking Law establishes that the management and supervisory bodies of credit institutions in Portugal are responsible for defining, overseeing and implementing adequate governance to ensure the institutions' effective and prudent management, including the segregation of duties and the prevention of conflicts of interest. Further, banks must disclose information regarding the remuneration of corporate bodies and employees to the Bank of Portugal or the Single Supervisory Mechanism.
Following the 2008 banking crisis, the Banking Law was amended to protect depositors of all credit institutions and safeguard the stability of the EU banking system as a whole. Under the law, the Bank of Portugal may apply a number of resolution measures to failing institutions which do not involve obtaining prior consent from their shareholders or a third party. It can also create a resolution fund, which aims to provide financial support for the implementation of measures to help failing credit institutions.
The Portuguese supervisory system has changed following the recent establishment of a single supervisory mechanism and a single resolution mechanism, which are comprised of the European Central Bank (ECB) and national competent authorities. The ECB is responsible for the overall functioning of the single supervisory mechanism and the single resolution mechanism, as well as having direct oversight of eurozone banks in cooperation with national supervisory authorities.
The new Competition Authority president recently completed her first full year in office with impressive results. Since November 2016 the authority has adopted six infringement procedure decisions, one commitment decision and two fining decisions. Further, the transposition of the EU Directive on Antitrust Damages Actions into national law appears to be close to completion. As a result, it seems likely that 2018 will start with the approval of a new legal framework for the private enforcement of competition law.
The Competition Authority recently ended an investigation into the exchange of prospective prices between pork meat producers, meat processors and slaughter houses with no finding of anti-competitive practice. This is the first Competition Authority decision to validate an information exchange scheme involving (but not limited to) competitors. As such, more straightforward guidance from the authority on how this case differs from prior cases and justifies such a benign approach would have been welcomed.
To date, 2017 has been a busy year for the Competition Authority. During the first half of the year, the Competition Authority made 36 dawn raids on companies operating in several economic sectors. Although no details of the dawn raids have been released, the authority has clarified that it gathered evidence concerning cartel activities and other practices concerning the offering of goods and services with a direct impact on the final consumer.
In a significant defeat for the Competition Authority, the Lisbon Court of Appeal has partially reversed a first-instance judgment and repealed the main fine imposed in a margin squeeze case which involved pharmacies' sales data for prescription medication and consumer health products. The decision re-emphasises the autonomy, for antitrust liability purposes, of separate legal parties in the same economic group.
The Fighting Bid Rigging in Public Procurement campaign is a highlight of the Competition Authority's recent advocacy initiatives. The campaign is intended to raise awareness among the state bodies that regularly award public contracts of the most common issues concerning bid rigging in public procurement. It also advises on how to detect illegal practices in the context of public tenders and design tender programmes in a way that inhibits potential collusive tendering.
The Portuguese Tax Administration recently concluded that payments received for the sale of 'standard software' (ie, software not subject to any customisations) do not fall within the scope of Article 12 of the Organisation for Economic Cooperation and Development (OECD) Model Convention. Instead, the right to tax income deriving from such payments falls within the purview of the beneficiary of such payments' state of residence under Article 7 (business income) of the OECD Model Convention.
The government recently presented its 2019 Budget Law Proposal, which includes several measures for the energy sector. As per the proposal, energy sector extraordinary contributions will be levied on generators operating renewable energy power plants licensed under the guaranteed remuneration scheme, which to date had been exempted from paying such contributions.
Pursuant to the State Budget 2017, the liquefied petroleum gas, petroleum-derived products and biofuels sectors, which were previously under the National Fuels Market Authority's supervision, are now subject to the Energy Services Regulatory Entity's (ERSE's) supervision. Minor changes have also been made to the ERSE's consulting bodies.
With the increasing number of projects being licensed under market rules, renewable energy generators are now faced with energy trading under organised markets, without a traditional power purchase agreement with the off-taker. The new reality of operating without a feed-in tariff is challenging – particularly as regards meeting bankability requirements. However, stakeholders are exploring alternatives.
The 2018 state budget amended Article 33-F of Decree-Law 172/2006, which establishes the criteria that applicants must fulfil to generate electricity via renewable and non-renewable endogenous resources on a market basis in order for the licensing authority to grant a generation licence or accept a prior notification. The amendment aims to establish new rules for when the relevant network has insufficient capacity to support the additional load that results from requests submitted to the licensing authority.
The government recently approved a decree-law which establishes the legal framework for medium, high and low-voltage private service electrical facilities powered by the public service electric network and temporary and itinerant self-generation facilities. The law will enter into force on January 1 2018 and revoke the Electrical Facilities Licensing Regulation, as amended, but only with regard to the provisions applicable to private service electrical facilities covered by the new framework.
The Portuguese insurance regulator recently entered into an agreement with Portugal Fintech – a network focused on start-ups that connects fintech founders, investors, academics, consultants and legal advisers – to establish Portugal Finlab. From an insurance regulatory perspective, Portugal Finlab will be a useful tool to ensure an appropriate balance between innovation and consumer protection in the insurance sector.
A number of amendments were recently made to the Insurance Supervision Act in the context of transposing the EU Markets in Financial Instruments Directive. The main amendments concern the protection of communications to the Portuguese insurance regulator regarding violations, the imposition of fines on insurers that violate the EU Benchmarking Regulation and the rules applicable to insurers' marketing of insurance products linked to investment funds.
Under the General Data Protection Regulation, the processing of health data for insurance purposes requires the data subject's 'explicit consent', which poses enormous challenges for the insurance industry. Portugal has no specific legislation concerning the processing of health data for insurance purposes. However, it is hoped that the anticipated Data Protection Act will provide specific grounds for the processing of such data in this context.
The EU Insurance Distribution Directive (IDD), as amended, should have been transposed into national law by 1 July 2018, with the date of application of the new rules set for 1 October 2018. Although the IDD has yet to be transposed in Portugal, the government has submitted the proposed text of the new statute to Parliament for discussion.
When an insured event takes place, the insurer is bound to compensate the insured for the corresponding loss. However, the law is not entirely clear as to the moment when this payment should occur. Although Portuguese judicial decisions on this subject have thus far been inconsistent, a recent Supreme Court judgment appears to have shed light on the intended scope and meaning of the relevant legal provisions.