Portugal’s Competition Court has halved the €9.3 million fine handed to Galp Energia as the company was ‘negligent’ rather than ‘wilful’ in condoning an anti-competitive structure among its bottled gas distributors.
Galp Energia still has to pay €4.09 million of the fine issued by the Competition Authority in February last year, a reduction that the company says is "partly positive."
Galp appealed against the original fine, which the company referred to as "the highest fine ever paid in Portugal for an infringement of competition rules," and in the final ruling Judge Marta Campos said the company's actions has been "negligent rather than wilful."
At issue was the prohibition by Galp of its distributors to sell gas outside their defined geographical sales areas. This meant that consumers could not take advantage of any local price differences in a market where 2 million Portuguese spend an average of €250 a year each.
The Competition Court considered that Galp was guilty of negligence and despite this situation being highlighted in 1997 the company had failed to change any of its distributor contracts to accord with competition rules.
The judge considered that Galp had not broken any European competition rules, "which also contributed to the reduction of the fine," but called Galp's conduct "highly irresponsible" and said this situation was not acceptable for a large company such as Galp Energia.
The Court took into account the fact that the company does not have a background in competition expertise and that it has cooperated with the inquiry, but stressed that as a high profile national company, Galp must be punished otherwise what point are the competition laws.
Galp was knowingly acting illegally by controlling its distributors in Portugal’s mainland, the Açores and Madeira, each regional Galp company being fined proportionally.
Some 199 contracts of the 240 analysed in continental Portugal restricted the business strategy of distributors so they could not sell outside their designated area, leaving customers "unable to exploit opportunities in price differences between areas."
In Galp’s appeal, the company said it had misunderstood the criteria that allowed the Competition Authority to apply the highest fine ever paid in Portugal, even though Galp already has been accused in the past of operating cartels and of price fixing.
Galp claims that it "did not conduct any business practice that impacted on the price of bottled gas or that otherwise harmed Portuguese consumers or the free functioning of the national bottled gas market."
The company is of course appealing that Judge Marta Campos' generosity is insufficient.
"The expectation of the company was to be acquitted, because it does not recognise the practices of which it was accused by the Competition Authority. And to that extent, although we congratulate ourselves on a substantial reduction in the fine, the aim is to achieve the acquittal of the company" according to Galp lawyer Ricardo Bordalo Junqueiro of Cuatrecasas-Gonçalves, Pereira.
