AdC issues sanctioning decision for anticompetitive agreement in the labor market for the first time
Press Release 06/2022
The AdC has sanctioned for the first time in Portugal an anti-competitive practice in the labor market.
In this case, the 31 sports companies participating in the 2019/2020 edition of the First and Second Leagues and the Portuguese Professional Football League (LPFP) were sanctioned for having entered into a competition restrictive agreement preventing the recruitment by First and Second League clubs of players who unilaterally terminated their employment contract invoking issues caused by the Covid-19 pandemic.
Known as 'no-poach' agreements, these are horizontal agreements between companies, whereby they agree not to hire or make spontaneous offers to each other’s workers.
No-poach agreements are prohibited by the Competition Law since they limit the autonomy of companies to define strategic commercial conditions, in this case, the companies' human resources hiring policy, and may occur in any economic sector.
The practice is also likely to affect workers by reducing their bargaining power and wage levels, as well as depriving them of labor mobility.
The sports companies in question are:
- Os Belenenses - Sociedade Desportiva de Futebol, SAD,
- Boavista Futebol Clube, Futebol SAD,
- Clube Desportivo das Aves - Futebol, SAD - company in liquidation,
- Vitória Futebol Clube, SAD,
- CD Tondela - Futebol SAD,
- Futebol Clube de Famalicão - Futebol SAD,
- Futebol Clube de Paços de Ferreira, SDUQ, Lda,
- Futebol Clube do Porto, Futebol, SAD,
- Gil Vicente Futebol Clube - Futebol, SDUQ, Lda,
- Marítimo da Madeira, Futebol, SAD,
- Moreirense Futebol Clube - Futebol, SAD,
- Portimonense Futebol, SAD,
- Rio Ave Futebol Clube - Futebol, SDUQ, Lda,
- Santa Clara Açores - Futebol, SAD,
- Sporting Clube de Braga, Futebol, SAD,
- Sport Lisboa e Benfica, Futebol, SAD,
- Sporting Clube de Portugal - Futebol, SAD,
- Vitória Sport Clube - Futebol, SAD,
- Associação Académica de Coimbra - Organismo Autónomo de Futebol, SAD,
- Académico de Viseu Futebol Clube - Futebol, SAD,
- Casa Pia Atlético Clube - Futebol SDUQ, Lda,
- Clube Desportivo da Cova da Piedade - Futebol SAD,
- Clube Desportivo Feirense - Futebol, SAD,
- Clube Desportivo de Mafra - Futebol, SDUQ, Lda,
- Estoril Praia - Futebol, SAD,
- Futebol Clube de Penafiel, SAD,
- Leixões Sport Clube, Futebol, SAD,
- Sporting Clube da Covilhã - Futebol, SDUQ, Lda,
- União Desportiva Oliveirense - Futebol, SAD,
- Varzim Sporting Club - Futebol, SDUQ, Lda.,
- União Desportiva Vilafranquense, Futebol SAD,
Through a no poach agreement, the companies refrain from hiring each other's workers, thus renouncing competition for the acquisition of human resources, besides depriving the workers of labor mobility.
As a result of this agreement, a player who took the initiative to terminate his contract due to issues caused by the Covid-19 pandemic, would not be hired by another club in the First or Second Professional Football Leagues in Portugal.
The investigation led to the conclusion that the object of the agreement was to keep the players tied to the sports companies by limiting their incentive to terminate their contracts and was therefore not aimed at cooperation objectives which could be regarded as essential in the context of the Covid-19 pandemic.
The agreement is therefore capable of reducing competitive pressure between the sports companies concerned, being capable of altering the result which would be obtained through competition, by replacing it with a result which is influenced, or even determined, by the coordination of conduct aimed at restricting demand on the market for hiring professional players.
Furthermore, the agreement was also capable of reducing the quality of football matches and thereby harming consumers by reducing the competitive environment between clubs, preventing the recruitment of players who could fill gaps in football teams and forcing talented players to leave the country to pursue their professional activity.
The case was opened ex officio by the AdC in May 2020, following two press releases issued by the LPFP on 7 and 8 April, which referred to a deliberation/decision, adopted by agreement between the First League clubs, with the participation of the President of the LPFP, and to which the Second League clubs adhered. This deliberation/decision stated that clubs would not hire players who unilaterally terminated their employment contract due to issues caused by the Covid-19 pandemic.
Given the nature and characteristics of the behavior, as well as its potential serious and irreparable, or of difficult reparation, harm arising from it to the competitive functioning of the markets, the AdC imposed interim measures on 26 May 2020.
In April 2021, the AdC issued the Statement of Objections in this case, giving the companies concerned the opportunity to exercise their right to be heard and to defend themselves, which was duly considered in the final decision.
In the present case, the AdC determined that the practice ceased following the interim measures.
For further information on the case, read the website.
The sanction now decided resulted in a total fine of approximately EUR 11.3 million.
The total fine is applied as follows:
|Os Belenenses – Sociedade Desportiva de Futebol, SAD||€ 135 000|
|Boavista Futebol Clube, Futebol SAD||€ 99 000|
|Clube Desportivo das Aves – Futebol, SAD – company in liquidation||(no fine)|
|CD Tondela – Futebol SAD||€ 139 000|
|Futebol Clube de Famalicão – Futebol SAD||€ 192 000|
|Futebol Clube de Paços de Ferreira, SDUQ, Lda.||€ 137 000|
|Futebol Clube do Porto, Futebol, SAD||€ 2 582 000|
|Gil Vicente Futebol Clube – Futebol, SDUQ, Lda.||€ 164 000|
|Marítimo da Madeira, Futebol, SAD||€ 199 000|
|Moreirense Futebol Clube – Futebol, SAD||€ 152 000|
|Portimonense Futebol, SAD||€ 111 000|
|Rio Ave Futebol Clube – Futebol SDUQ, Lda.||€ 163 000|
|Santa Clara Açores – Futebol, SAD||€ 132 000|
|Sporting Clube de Braga, Futebol, SAD||€ 340 000|
|Sport Lisboa e Benfica, Futebol, SAD||€ 4 163 000|
|Sporting Clube de Portugal – Futebol, SAD||€ 1 666 000|
|Vitória Futebol Clube, SAD||€ 3326|
|Vitória Sport Clube – Futebol, SAD||€ 506 000|
|Associação Académica de Coimbra - Organismo Autónomo de Futebol, SDUQ, Lda.||€ 24 000|
|Académico de Viseu Futebol Clube – Futebol, SAD||€ 24 000|
|Casa Pia Atlético Clube – Futebol SDUQ, Lda.||€ 8000|
|Clube Desportivo da Cova da Piedade – Futebol SAD||€ 32 000|
|Clube Desportivo Feirense – Futebol, SAD||€ 22 000|
|Clube Desportivo de Mafra – Futebol, SDUQ, Lda.||€ 20 000|
|Estoril Praia – Futebol, SAD||€ 27 000|
|Futebol Clube de Penafiel, SAD||€ 15 000|
|Leixões Sport Clube, Futebol, SAD||€ 19 000|
|Sporting Clube da Covilhã – Futebol, SDUQ, Lda.||€ 26 000|
|União Desportiva Oliveirense – Futebol, SAD||€ 16 000|
|Varzim Sporting Club - Futebol, SDUQ, Lda.||€ 26 000|
|União Desportiva Vilafranquense, Futebol SAD||€ 14 000|
|Liga Portuguesa de Futebol Profissional||€ 141 000|
The fines imposed by the AdC are determined by the sales turnover of the sanctioned companies in the affected markets in the years of the practice. In addition, according to the Portuguese Competition Law, fines cannot exceed 10% of the company’s turnover in the year prior to the sanctioning decision.
In setting the fine, the AdC takes into account the seriousness and duration of the infringement, the degree of participation of the companies in the infringement, the economic situation of the companies, among other circumstances, in accordance with international best practices (see the AdC’s Guidelines on the Methodology to be Used in the Application of Fines [in Portuguese]).
These AdC’s sanctioning decisions may be appealed. The appeal does not suspend the execution of the fines. Undertakings may request the Competition, Regulation and Supervision Court to suspend the enforcement of the decisions if (i) they demonstrate that it causes them considerable prejudice and (ii) they provide an effective guarantee in its place.