Telecommunications Cartel (MEO/Nowo)
Case status:
Ongoing
On October 30-31, 2023, Ius Omnibus filed before the Portuguese Competition Court – Competition, Regulation, and Supervision Court of Santarém (TCRS) – two popular actions that aims to defend consumers living in Portugal who have been harmed by MEO and Nowo’s anti-competitive practices, identified by the Portuguese Competition Authority in in its decision of December 2, 2020, and already confirmed by the Lisbon Court of Appeal of February 20, 2023.
At issue is the fact that MEO and Nowo agreed that Nowo would not offer mobile communications services outside the geographical areas where it already provided fixed services, including not competing with MEO in Lisbon and Oporto areas and also implementing price increases and quality reductions in its packages of fixed services and mobile service offers (packages), as well as restricting its competitive aggressiveness in terms of pricing policy.
The effects of this agreement, namely the reduction of competitive pressure and the increase in prices paid by consumers, occurred between November 20, 2017, and December 31, 2019, harming those who acquired, during this period, mobile telecommunications services (stand-alone basis) or packages of mobile and fixed telecommunications services and those who acquired these services, before or after this period, from Portuguese companies that contracted the same telecommunications services in Portugal during the relevant period.
Ius intends to change this situation and ensure that consumers are compensated.
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Case Details
What is the object of this action?
They are popular actions, brought by Ius Omnibus under the Popular Action Law (Law no. 83/95) and Article 19 of the Private Enforcement Law (Law no. 23/2018), to defend the diffuse and/or collective and individual homogeneous interests of the consumers represented.
These actions are aimed at compensating the represented consumers for damages caused by Nowo and MEO’s anti-competitive practice (participation in a cartel), which violates Article 101 of the Treaty on the Functioning of the European Union and Article 9 of the Portuguese Competition Act.
What was the unlawful behaviour of Nowo and MEO?
These are private enforcement claims, brought under competition law, entirely follow-on from the infringement declared in the Competition Authority’s Decision of 20 December 2019 (PRC/2018/5). Under the terms of the aforementioned condemnatory Decision, on 3 January 2018 Nowo and MEO entered into a horizontal agreement restricting competition (cartel), which ended on 28 November 2018, under which:
a) Nowo undertook not to offer mobile communications services outside the geographical areas where it already provided fixed services, including not competing with MEO in the Lisbon and Porto areas, and also to implement price increases and quality reductions in its joint fixed and mobile service offers (packages), as well as to restrict its competitive aggressiveness in terms of pricing policy; and
b) MEO undertook to improve the contractual conditions of the MVNO wholesale contract signed with Nowo, agreeing, namely, to reduce the wholesale prices practised, to conclude an agreement for the payment of Nowo’s debt and to resolve operational problems within the scope of the execution of that contract.
Who is represented in this action?
Represented in these actions are all consumers resident in Portugal who contracted stand-alone mobile telecommunications services in Portugal, or packages of mobile and fixed telecommunications services, between 20 November 2017 and 31 December 2019 and/or who purchased, during or after the relevant period, goods or services from Portuguese companies that contracted the same telecommunications services in Portugal during the relevant period.
Consumers do not have to do anything to be represented and to be entitled to compensation if the action is successful.
Any consumer who does not wish to be represented in this action may exercise the right to opt-out, communicating this intention to the Court. Consumers may also decide to intervene in the process in support of Ius Omnibus.
How were the consumers harmed by Nowo and MEO´s unlawful practice?
The anti-competitive practice in question caused damage to the consumers represented as follows:
(i) causing harm to competition and consumer protection in the relevant markets in Portugal, with multiple consequences in terms of the quality, variety and innovation of products and services in these markets, and
(ii) causing damage to consumers and illegitimately enriching Nowo and MEO at the expense of the unjustified impoverishment of the represented consumers.
The damage that consumers have suffered as a result of the practice in question corresponds to the overpricing that the practice has caused, during the period of the effects of the infringement, in the offer of these telecommunications services in the national territory, not only by the Defendant and NOWO, but also by the other telecommunications operators (umbrella effects), with regard to direct and indirect damage (passing-on of costs), updated to take account of inflation and plus interest.
Ius Omnibus estimates that Nowo and MEO’s illicit agreement caused an overpricing of 11% and, with regard to the effects produced between 20 November 2017 and 31 December 2018, damages corresponding to an overall compensation of 201.1 million euros (plus default interest and monetary restatement), broken down into 151.05 million euros in direct damages to consumers and 50.02 million euros in indirect damages to consumers due to the passing on of the overpricing in the sales of these services to companies.
With regard to the effects of the agreement between 20 November 2017 and 31 December 2019, Ius Omnibus estimates damages of 383 million euros (plus interest and monetary restatement).
What is being asked in this action?
Ius is asking the Court to:
a) declare Nowo and MEO’s infringement of the above-mentioned rules, harmful to the diffuse/collective interests in question and to consumer rights (including publications in the national media);
b) order Nowo and MEO to pay compensation to all affected consumers living in Portugal who have suffered damages, in accordance with the law.
How does the popular action and consumers compensation work?
The mass consumer compensation mechanism used here, provided for in the Portuguese rules of class action, has never been tested in practice until the very last step. However, according to the law, the following will happen if the court finds in favor of Ius Omnibus:
1) the Court will set the overall amount of damages to be paid by Nowo and MEO to consumers, to be deposited in a compensation fund;
2) the Court will designate an entity responsible for managing the compensation fund, including the receipt, management and payment of compensation to injured consumers;
3) the Court will set a deadline for consumers to claim their share of the compensation and this information will be publicized in various ways;
4) consumers will have to contact the entity that manages the compensation fund, as well as submit the court-decided evidence and the respective payment instructions, in order to receive their share of the compensation;
5) at the end of the legally established period, if a part remains of the global compensation that was not requested by consumers:
i) that amount will be used to pay the expenses incurred by Ius Omnibus as a result of the action; and
ii) what is left will be handed over to the Ministry of Justice, to be used to support access to law and justice, including the promotion of popular actions.
Do consumers need to contact the Court or Ius Omnibus?
Consumers do not have to contact the Court or Ius Omnibus, nonetheless it may be in their interest to do so.
If they do not wish to be represented, they must exercise their right to opt-out.
If they want to be represented, they do not need to do anything else for now to be entitled to compensation if Ius Omnibus wins this claim.
At the end of the case, if successful, they will have to contact the entity appointed by the Court to request compensation. However, if they wish to intervene in the action in support of Ius Omnibus they may do so, within the time limit established by the Court.
All consumers represented in this action are invited to contact Ius Omnibus at once (by registering on this page), so that their data be registered and they be informed by Ius of all developments in this case, guaranteeing that they don’t miss the deadline to claim compensation, when that moment arrives.
How is this case funded?
Consumers will never be asked to pay anything, to take on any cost or to give up any part of the compensation they are entitled to. Ius does not ask consumers to pay membership fees or any other charges, nor that they purchase products or services.
This case is funded by an entity specializing in funding litigation, the Augusta group. The funding agreement is presented to the Court so that it may be controlled. The funder cannot interfere and does not have the power to decide the management of the case by Ius. The funder takes on all the risk and costs. If Ius loses the case, the funder is not entitled to receive anything. If Ius wins the case, the funder will receive the amount that the Court decides is adequate and fair.
The funder will only receive this amount if a part is left of the global compensation paid by Nowo and MEO, after the deadline has elapsed for consumers to ask for their individual compensation. The amount remaining is then surrendered to the State to support access to Justice.
Resources
Press Release
Press clippings
Jornal Económico (09/11/2023)
Jornal de Negócios (09/11/2023)
There are no public documents available pertaining to this case
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