Antitrust Bites – Newsletter

Implementation of ECN+ Directive in Italy: the amendments to Law No. 287/1990

On 14 December 2021, the Legislative Decree of 8 November 2021, No. 185, entered into force. It transposes Directive (EU) 1/2019 (the ECN+ Directive), and introduces significant changes to the national competition law with the aim of strengthening and harmonizing at EU level the investigation and sanctioning powers of the Italian Competition Authority (ICA).

The main changes introduced by Legislative Decree 185/2021 concern:

• the ICA’s independence guarantees;
• the ICA’s powers of investigation and inquiry, which are strengthened through, inter alia, the provision of the ICA’s power to:

– carry out inspections not only on the premises, land, means of transport of undertakings or associations of undertakings, but also on any other premises, land or means of transport in which the ICA has reason to believe that documents related to the undertaking and the subject matter of the investigation are located, including the homes of directors, managers, and other members of staff of undertakings or associations of undertakings, with the prior authorization by the judicial authority;

– seal premises, books and business records;

– summon any representative of an undertaking or association of undertakings and other legal persons and natural persons who may possess relevant information, with an obligation to attend the hearing;

• the adoption of interim measures and the commitment procedure;
• the strengthening of the ICA’s sanctioning powers, through:

– the provision of the ICA’s power to impose administrative fines of up to 1% of the worldwide turnover against companies and associations of companies in the event that they intentionally or negligently obstruct inspections, break the seals affixed, provide inaccurate, incomplete or misleading information or fail to provide the requested information within the prescribed time limit or fail to appear at hearings convened by the ICA;

– the introduction of the ICA’s power to impose a pecuniary administrative fine ranging from EUR150 to EUR25,823 on natural persons who, intentionally or negligently, obstruct inspections, fail to appear at the hearings convened, provide inaccurate, incomplete or misleading information or fail to provide the information requested within the prescribed time limit;

– the introduction of the ICA’s power to impose periodic penalty payments on undertakings, associations of undertakings and natural persons for each day of delay in responding to requests for information, showing up at a summoned hearing and submitting to inspections; the periodic penalty payment may amount to up to 5% of the average daily turnover achieved worldwide in respect of undertakings and associations of undertakings and ranges from EUR150 to EUR500 for natural persons;

– the introduction of the ICA’s power to impose periodic penalty payments on undertakings and associations of undertakings of up to 5% of the average daily turnover achieved worldwide for each day of delay from the date set in the decision to compel them to comply with the warning, to comply with precautionary measures, to comply with the commitments;

– the tightening of the sanctions provided for in case of infringement committed by an association of undertakings affecting the activity of its members, with important consequences also for the undertakings participating in the association. Whereas previously the penalty for business associations was calculated on the basis of the total value of the membership fees paid by the members of the association, the legislation now provides that the penalty for the association can be up to 10% of the sum of the total worldwide turnover achieved by each member of the association operating in the relevant market. Furthermore, where the association of undertakings is not solvent, it will be obliged to call for contributions from its members up to the amount of the fine and, where the contributions are not paid within the prescribed period, the ICA may require payment of the fine directly from any undertaking whose representatives were members of the decision-making bodies of the association when the decision infringing competition was taken, or, if necessary, from other undertakings that are members of the association and were active in the market in which the infringement took place, with the exception of those who prove they did not implement the decision of the association which constituted the infringement and which either were not aware of its existence or dissociated themselves before the investigation was launched;

• the regulation of the leniency procedure and the provision of certain cases in which punishability is excluded for the directors, managers and other members of the companies’ personnel who are guilty of criminal offences related to the participation in a secret cartel for which they have applied for leniency;
• the investigative cooperation between the competition authorities of the various Member States; and
• the interruption and suspension of the limitation period for the application of sanctions or penalties for late payment by the ICA.

Abuse of dominant position in exclusionary practices – AG Rantos’ opinion in case C-377/20

On 9 December 2021, Advocate General Rantos (AG) delivered his opinion in case C-377/20 Servizio Elettrico Nazionale. The case concerns several requests for preliminary rulings raised by the Italian Council of State in the context of an appeal brought against a decision of the Italian Competition Authority finding an exclusionary abuse in the electricity distribution market in breach of Article 102 TFUE.

In dealing with the questions raised by the referring court, the AG provided several interpretative approaches to Article 102 TFEU.

First of all, the AG noted that the concept of “abuse” is based on an objective assessment of the capacity of particular conduct to restrict competition, and that the legal classification of that conduct under other branches of law is not decisive. This being so, the mere fact that a given conduct may produce a foreclosure effect (ie may have the capacity to exclude a competitor) does not necessarily affect competition. Only “anti-competitive foreclosures”, ie conduct capable of producing restrictive effects by means other than those forming part of “normal” competition (ie based on the merits), are in breach of Article 102 TFEU. The anticompetitive nature of foreclosure, according to the AG, does not require a finding of a quid pluris of unlawfulness with respect to the anticompetitive foreclosure effect, which must be examined in the light of the factual, legal and economic context of the practice, through an assessment to be carried out on a case-by-case basis. After recalling that conduct that has no other justification than to harm competitors does not fall under competition on the merits, the AG then held that an exclusionary practice that can be replicated by competitors in an economically profitable manner is not conduct that can give rise to anti-competitive foreclosure and is therefore covered by competition on the merits.

Furthermore, the AG held that safeguarding the competitive structure of the market is not an independent objective from protecting consumer welfare, which is always the ultimate aim of Article 102 TFEU. Consequently, to prove an exclusionary abuse, it is not sufficient to demonstrate only harm to the structure of the market, but it is also necessary to prove that the conduct is capable of causing actual or potential harm to consumers (even if of an “indirect” nature, precisely because of its impact on the structure of the market).

On the evidentiary level, the AG then argued that, to demonstrate that conduct by a dominant undertaking has the capacity to restrict competition, the competition authorities must also take into account, where appropriate, the evidence relied on by the undertaking that the conduct at issue would not have produced foreclosure effects. In any event, the AG recalled that the absence of effects should be taken into account when assessing the gravity of the infringement.

Finally, the AG recalled that the abuse of a dominant position is an objective concept, which is independent of the intention of the parties. Therefore, it is not necessary to prove a subjective exclusionary intent and, if proven, is not sufficient on its own to prove the existence of abuse. However, such intent may be taken into account in conjunction with other elements to provide evidence of abuse.

Collective agreements regarding working conditions of solo self-employed people and prohibition of anticompetitive agreements: Commission’s draft guidelines specify scope of exemption

With a press release of 9 December 2021, the European Commission announced the launch of a public consultation on the draft guidelines on the application of EU antitrust law to collective agreements regarding the working conditions of certain categories of self-employed people.

The Guidelines are part of a broader package, including a proposal for a Directive on improving working conditions in digital platforms work and a Communication on digitalization issues in labor markets (including the use of algorithms in management of work activities).

Pursuant to the well-established principles at EU level, self-employed people generally fall within the notion of "undertaking" according to antitrust law and their activity is subject to the prohibition of anticompetitive agreements under Article 101 TFEU.

However, as already recognized by the EU Court of Justice, certain categories of self-employed people are in a condition substantially comparable to that of employed workers; this aspect has become more common in the digital economy, where workers usually are in a weak bargaining position.

Hence the need for the Commission (regardless of the possible re-qualification of the employment relationship by national authorities) to clarify that collective bargaining and agreements between such workers and their respective counterparts (with respect to remuneration, working time, health, safety and social security) fall outside the scope of antitrust rules.

In this regard, the draft guidelines identify three categories of solo self-employed people that are “comparable to workers” and therefore can benefit from collectives negotiation:

• “economically dependent solo self-employed persons”, who provide their services exclusively or predominantly to one counterparty;
• solo self-employed persons working "side by side" with others working for the same counterparty, not bearing the entrepreneurial risk and not performing the activity independently;
• solo self-employed persons providing their services to or through digital platforms.

The guidelines also clarify that, in terms of enforcement priorities, the Commission will not investigate collective agreements, even if self-employed persons involved are not in a situation comparable to that of employees, in cases where there is a clear imbalance in bargaining power.

Interested parties can submit their comments until 24 February 2022.

EU-US launch Joint Technology Competition Policy Dialogue on competition policy in technology sector

With a press release of 7 December 2021, the European Commission announced the launch of a joint dialogue with the US, aimed at coordinating and making more efficient the initiatives undertaken against anti-competitive practices in digital markets.

As reminded by Margrethe Vestager, European Commission Executive Vice-President in charge of competition policy, the initiative reinforces a longstanding tradition of cooperation in competition policy between the US and European antitrust Authorities.

The tradition of close cooperation in the application of antitrust rules and policies led, among other initiatives, to the adoption in 2011 of joint best practices on merger control, reaffirming a relationship that began with the 1998 agreement on the application of US and EU competition law.

As underlined in the inaugural joint statement, the scope of the cooperation is developing common approaches in strengthening and promoting fair, vigorous and effective competition in the technology sector, to overcome common difficulties faced in digital investigations by the European Commission and the US authorities, including “network effects, the role of massive amounts of data, interoperability, and other characteristics typically found in new technology and digital markets.”

The inaugural declaration clarifies that the cooperation initiative is of a non-binding nature and without prejudice to the autonomy of the authorities involved and the application of the relevant competition law, as well as the respective domestic legal frameworks.

The joint dialogue will include “high-level meetings as well as regular staff discussion” between the US Federal Trade Commission, the Antitrust Division of the US Department of Justice, and the European Commission, “focused on joint enforcement in competition law and policy issues arising in technology markets”.

Commission approves Italy’s map for granting regional aid from 1 January  2022, to 31 December 2027

With a press release of 2 December 2021, the European Commission announced that it has approved Italy’s map for granting regional aid from January 1, 2022, to 31 December 2027, in the framework of the revised Regional aid Guidelines (RAG).

The revised RAG, adopted by the Commission in April 2021, will enter into force on 1 January 2022, and enable Member States to support the least favored European regions by reducing disparities in terms of economic well-being, income and unemployment. They also provide increased possibilities for Member States to support regions facing transition or structural challenges such as depopulation, to contribute fully to the green and digital transitions.

Italy’s regional aid map defines the Italian regions the regions of the Italian territory for which the necessary conditions – as identified by the RAG – are met to be eligible for the relevant state aid. The map also establishes the maximum aid intensities in the eligible regions.

 

According to the revised RAG, regions covering 41.99% of the population of Italy will be eligible for regional investment aid.

In particular, the Italian regions – identified by the RAG and the map – which meet the conditions for receiving regional aid are Molise, Campania, Puglia, Basilicata, Sicily and Sardinia. These regions – defined as “A Areas” – cover 32% of the Italian population. Italy has the possibility to designate further regions, defined as “non-predefined C Areas”, up to the above population coverage limit, ie a further 9.99%. The identification of “C Areas” can take place in the future and would result in one or more amendments to the approved reg