PORTUGAL Law and Practice Contributed by: Duarte Schmidt Lino, Raquel Azevedo, Alexander Ehlert and Leonor Melo Bento, PLMJ
7.4 National Security Review/Export Control There are no foreign capital entry restrictions or export control regulations in this jurisdiction, and Portuguese law does not allow any discrimina- tion between investments based on nationality. In fact, the Portuguese legal framework is in line with the EU guidelines (except for Russian investment restrictions as sanctions following the war in Ukraine), which point to non-discrim- ination of investment on the grounds of nation- ality. Therefore, the Portuguese legal framework encourages foreign investments. In line with this openness to foreign investment, Portugal also maintains specific security stand- ards for sensitive sectors, particularly in elec- tronic communications. Resolution No 1/2023 of the Portuguese Commission for Security Assessment (CAS) outlines criteria for assessing security risks related to 5G technology in publicly available electronic communications networks. This measure, which was adopted in line with Article 62(3) of the Electronic Communications Law (Law No 16/2022, enacted on 16 August), provides a framework for identifying and miti- gating security threats related to 5G equipment and services, ensuring safe technological growth within an open investment environment. Resolution No 1/2023 introduces several essen- tial considerations that may be relevant for M&A transactions in Portugal involving electronic communications operators, while respecting the country’s non-discriminatory stance towards for- eign investment. • Companies wishing to acquire electronic communications operators are required to carry out thorough due diligence, particularly regarding the target company’s security pos- ture, in line with the 5G security criteria.
• Following an acquisition, operators will be required to meet the security standards set by the due diligence. This may require acquir- ing companies to invest in infrastructure upgrades or adjust operational practices to ensure compliance with national security guidelines. This CAS Resolution is facing legal challenges, as Huawei Portugal filed an administrative action aiming to safeguard its legal rights. This com- pany contends that the CAS Resolution violates its rights and has a significant negative impact on its operations and partners. According to publicly available information, this administra- tive proceeding is still pending. The outcome of this case could have implica- tions for future M&A activities in Portugal’s elec- tronic communications sector, particularly con- cerning the involvement of non-EU, non-NATO or non-OECD-based companies. 7.5 Antitrust Regulations Takeover offers are reportable to the Portuguese Competition Authority when they determine a change of control in the target company and meet one of the following criteria: • the transaction creates or reinforces a market share in excess of 50%; • the transaction creates or reinforces a mar- ket share in excess of 30%, and each of the parties achieves a turnover of at least EUR5 million in Portugal; and/or • the parties to the transaction achieve a com- bined turnover of at least EUR100 million in Portugal, and each of the parties achieves a turnover of at least EUR5 million in the country.
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