Portugal Fines Telecom Operators €13.35 Million Over Coordinated Pay-TV Advertising Scheme

Key Takeaways

• Competition Can Be Harmed Without Raising Prices: The Portuguese Competition Authority's case focuses on the alleged coordination of service conditions and advertising practices rather than direct price-fixing, highlighting how competition can be reduced when rivals move in lockstep on customer experience.
• Consumer Choice Was Central to the Regulator's Theory: According to the AdC, subscribers dissatisfied with the introduction of advertising into recorded television services had little practical ability to switch providers because the largest operators adopted the same approach.
• Advertising Markets Were Also Affected: Investigators concluded that the operators aligned pricing, discounts, and other commercial terms governing the sale of advertising inventory, eliminating competition for advertisers and media agencies.
• A Constitutional Challenge Nearly Reset the Investigation: The case returned to the investigation stage after courts ruled certain seized email communications inadmissible, forcing regulators to rebuild the matter and issue a new Statement of Objections.

Deep Dive

For nearly six years, subscribers of Portugal's largest pay-TV providers who wanted to watch recorded television content encountered the same reality. Advertising appeared in those recordings regardless of which major operator they used. According to Portugal's Competition Authority, that was not a coincidence.

The regulator announced Friday that it has imposed €13.351 million in fines on three telecommunications operators and a consulting company after concluding they coordinated the introduction of advertising in recorded television services and aligned the commercial terms governing the sale of that advertising inventory. The decision closes a case that began with media reports in 2020 and later survived a constitutional challenge that forced investigators back to the drawing board. The companies did not merely adopt similar business models. They agreed on them.

According to the AdC, the three operators, supported by the technological and operational services of a consulting company, pursued a common strategy under which advertising would become a condition for access to recorded television content. The arrangement meant that subscribers unhappy with the change had little practical ability to switch providers in search of a different experience.

Competition is supposed to make those choices matter. One company introduces a change, customers dislike it, rivals seize the opportunity, and the market sorts out the rest. The AdC concluded that did not happen here. Instead, the regulator found that the coordinated approach allowed the operators to impose a deterioration in service conditions without exposing themselves to the normal risks that competition creates. Consumers dissatisfied with the introduction of advertising were, in practical terms, presented with the same proposition across the market. The authority believes the effects extended well beyond subscribers.

Advertising inventory attached to recorded television content became a market of its own, and one in which the regulator says competition was effectively removed. Investigators found that the companies aligned the conditions under which the advertising inventory would be sold, including pricing, discounts, and other commercial terms relevant to advertisers and media agencies.

The agreement also reached television broadcasters. According to the AdC, the parties adopted a concerted approach toward broadcasters when determining the conditions under which advertising could be associated with recorded content. The arrangement reduced competition on both sides of the market: among providers competing for subscribers and among providers competing for advertising revenue.

The conduct remained in place for years. According to the authority's findings, the agreement was in force from at least August 1, 2019, until May 1, 2025, when sales of the advertising inventory in question were suspended. That timeline helps explain why the investigation became one of the more complicated competition cases in Portugal in recent years. The AdC first issued a Statement of Objections in December 2021. The case appeared to be progressing normally until a separate legal battle emerged over evidence gathered during the investigation.

Email communications seized during dawn raids were ultimately deemed inadmissible after courts ruled on the constitutionality of a provision in Portuguese competition law. The provision had allowed the authority, with authorization from the Public Prosecutor's Office but without prior judicial authorization, to search and seize email communications in antitrust investigations.

When that provision was declared unconstitutional, the case effectively reset. The proceedings returned to the investigation stage in January 2024. Investigators rebuilt the case and issued a new Statement of Objections in December of that year before reaching the infringement decision announced this week.

The largest fine, €5.17 million, was imposed on a company that chose to settle the case and waive its right to contest the facts. Two other operators were fined €4.06 million and €3.876 million respectively. The consulting company received a fine of €245,000. One of the companies settled with the authority, waiving its right to contest the facts and voluntarily paying the fine. The settlement resulted in a reduction of the penalty that would otherwise have been imposed.

The AdC said differences in the fines largely reflect the respective turnover of the companies involved. Under Portuguese competition law, penalties cannot exceed 10% of an undertaking's turnover in the financial year preceding the decision. Notably, the regulator declined to identify the companies publicly.

The decision was not made to protect the companies, according to the authority. Instead, it reflects an ongoing legal dispute over whether companies subject to infringement decisions can prevent regulators from naming them in public announcements before appeals are exhausted.

The AdC said administrative courts have issued injunctions in other cases preventing such disclosures and that appeals remain pending before higher courts. While disagreeing with that interpretation, the authority chose not to identify the companies in this press release while continuing to publish its final decisions in accordance with its legal obligations.

There is a tendency to think of competition cases as disputes over prices. This one was something different. The regulator's concern was not that consumers paid more to watch recorded television. It was that they lost the ability to respond when they disliked what they were being offered. When the largest competitors in a market move together, dissatisfaction stops being a commercial threat. For a competition authority, that is often where the real problem begins.

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