Press release 13/2023October 26, 2023

The Court of Justice of the European Union (CJEU) has upheld the approach taken by the Competition Authority (AdC) in the case involving EDP and Sonae's non-competition agreement. In a judgment issued today, the CJEU supported the AdC's stance, which had sanctioned EDP and Sonae for their non-compete pact.The CJEU replied to a request for a preliminary ruling by the Lisbon Court of Appeal, which addressed several questions concerning the application of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) in the legal dispute between EDP, Sonae, and the AdC.In its judgement, the CJEU determined that a non-competition clause within a commercial partnership agreement, which prohibits one party from entering the electricity market during its liberalization, particularly when the other party is a major player, can indeed be considered an agreement designed to prevent, restrict, or distort competition.Furthermore, the CJEU pointed out that the potential benefits for consumers arising from the partnership agreement do not refute the conclusion that the non-compete clause's objective was to hinder, limit, or distort competition. The CJEU's stance aligns with the AdC's position.In 2017, the AdC had imposed sanctions on several companies, including EDP - Energias de Portugal, S.A., EDP Comercial - Comercialização de Energia, S.A., Sonae Investimentos, SGPS, S.A., Sonae MC - Modelo Continente SGPS, S.A., and Modelo Continente Hipermercados, S.A., for their involvement in a non-competition pact as part of a commercial campaign partnership. Under this agreement, EDP and Sonae committed to refraining from entering each other's respective markets, with Sonae specifically agreeing not to compete in the electricity supply market in mainland Portugal for a two-year period.The CJEU's clarification emphasized that a company managing a network of fast-moving consumer goods (FMCG) retailers could be regarded as a potential competitor in the electricity market, even if it was not actively participating in that market at the time of entering into a partnership agreement containing a non-compete clause. Following the CJEU's guidelines and considering the evidence presented by the Competition, Regulation, and Supervision Court (TCRS), it will be the responsibility of the Lisbon Court of Appeal (TRL) to determine whether, in light of the specific circumstances, the contested agreement constituted an infringement of competition law.In a ruling from September 2020, the TCRS sustained the infringement sanctioned by the AdC but reduced the fines imposed, bringing the total down from 38.3 million euros to 34.4 million euros.

CJEU upholds AdC's approach in EDP and Sonae non-competition agreement case

The CJEU has upheld the AdC's approach in the case involving EDP and Sonae's non-competition agreement. The CJEU determined that a non-competition clause within a commercial partnership agreement can be considered an agreement designed to prevent, restrict, or distort competition. The ruling clarifies that a company managing a network of FMCG retailers can be regarded as a potential competitor in the electricity market. The case will now be reviewed by the Lisbon Court of Appeal to determine if the agreement constituted an infringement of competition law.

The Court of Justice of the European Union (CJEU) has upheld the approach taken by the AdC in the case involving EDP and Sonae's non-competition agreement
The Court of Justice of the European Union (CJEU) has upheld the approach taken by the AdC in the case involving EDP and Sonae's non-competition agreement

CJEU upholds AdC's approach in EDP and Sonae non-competition agreement case

The CJEU has supported the Competition Authority's (AdC) decision to sanction EDP and Sonae for their non-compete pact, stating that such agreements can be considered anti-competitive.