Antitrust Bites - Newsletter

Annual Law for Market and Competition 2022: New provisions on ICA’s powers and proceedings

On 31 December 2023, the Annual Law for Market and Competition 2022 (Law No 214/2023) came into force. The Law includes provisions concerning the ICA’s powers and proceedings.

The Law amends Article 16 of Law No 287/1990, doubling the deadline – from 45 to 90 days – for the ICA to conclude investigations related to concentrations. This amendment is without prejudice to the possibility, already provided by Law No 287/1990, to extend the deadline for a maximum of 30 additional days when the companies don’t provide the information and data requested that are available to them.

The Law also includes provisions for the implementation of the Digital Markets Act (Reg. (EU) 2022/1925, DMA). Article 18 provides for the designation of the ICA as the authority in charge of executing the DMA and gives the ICA powers to implement it. The Law also provides for specific collaboration and cooperation obligations for the ICA. Moreover, the provision establishes that the ICA can exercise the same investigative powers it holds in relation to anticompetitive agreements and abuses of dominant position. ICA can adopt its own regulations to regulate the various forms of collaboration and cooperation set forth by the DMA as well as the exercise of its investigative powers in the context of cooperation and coordination with other national authorities.

When exercising the powers described above, the ICA can also impose the fines and late payments penalties provided by Article 14 of Law No 287/1990 if its inspective activity is hindered. And it can also make use of the collaboration of the Finance Police and other State bodies.

The ICA can then use the results of the investigations carried out in applying the DMA not only to exercise its powers in the digital markets provided for by Reg. 2022/1925 (DMA), but also in relation to anticompetitive agreements, cases of abuse of a dominant position or economic dependence and concentrations.

The Annual Law does not contain the provision included in the original draft law that provided for the amendment of Art. 7 of Legislative Decree 3/2017 (implementing the directive on antitrust damages). The amendment removed the clarification according to which the administrative judge's review of ICA decisions that have become final (usually binding) is limited to technical profiles "that do not present an objective margin of opinion".

European Commission launches consultation on competition in the metaverse and generative AI sector

On 9 January 2024, the European Commission launched two calls for contributions on competition in the metaverse (or “virtual worlds”) and in the generative AI sector (ie the application of AI aimed at generating content without human interaction). The Commission sent requests for information to several large digital operators.

The call for contributions concerning the metaverse includes ten questions and the one concerning generative AI contains 12 questions. The operators who received the request have been asked to respond by 11 March 2024. The questions mainly concern topics like barriers to entry in the relevant markets; the main players in the sector and the related market power; new entrants in these sectors; the development of new business models; potential competitive concerns; the role of data; the interoperability of systems and components related to AI; the potential vertical integration of undertakings active in the sector.

The Commission’s aim is to gather information on participants’ experiences and get feedback on competition regarding virtual worlds and the generative AI sector. Participants are also invited to share their observations and proposals on how competition law can help ensure these sectors remain competitive.

As indicated in a press release, the launch of the calls for contributions comes alongside the Commission’s efforts to assess the impact on market dynamics of agreements between large digital market players and generative AI developers and providers.

Any subject interested in participating to the consultation can submit its input within 11 March 2024.

Sales of policies in conjunction with loans: Recent rulings of the Lazio Regional Administrative Court

With judgments Nos. 229, 230, 231 and 232 of 5 January 2024, the Lazio Regional Administrative Court (TAR Lazio) has ruled on the decisions by which the Italian Competition Authority (ICA) had ascertained that some credit institutions had carried out aggressive commercial practices in marketing real estate loan contracts or real estate loans with subrogation. The practices consisted in unduly conditioning consumers to purchase, in conjunction with the stipulation of a loan or subrogation, insurance policies marketed by them.

In its rulings, the TAR Lazio , recalling the sector regulations, said that marketing policies in conjunction with the disbursement or subrogation of the loan is permitted if the provisions protecting the consumer’s freedom of negotiation are respected. In particular, intermediaries can offer insurance products in conjunction with loan agreements, if (i) they accept, without varying the conditions proposed for the disbursement of the loan, even a different policy that the customer can present or independently find on the market; and (ii) they adopt a series of special precautions to ensure the customer is properly informed of the insurance products offered.

Rejecting the complaints by which the parties disputed the ICA’s lack of competence to investigate the conduct, TAR Lazio upheld the appeals brought by three sanctioned credit institutions. The TAR Lazio consequently annulled the three contested measures, holding that:

1. The ICA allegedly failed to take into account the multiple safeguards (such as the provision of pre-contractual information to customers and the implementation of organisational and internal control procedures aimed at preventing miss-selling risks) adopted by the credit institutions in compliance with the sector legislation to protect consumers when selling combined loans/policies, although the safeguards had also been positively assessed by the Bank of Italy during the inspections.
2. The finding was based on individual factual circumstances lacking unequivocal circumstantial value and incapable of demonstrating the undue coercion of consumers which characterises aggressive practices within the meaning of Articles 24 and 25 of the Consumer Code. In particular, in the view of the TAR, the high percentage of the loan/policy combination registered – one of the elements on which the ICA based its finding of the aggressive nature of the practice – would be justified for policies for fire and bursting events. Signing such contracts is a necessary condition for the conclusion of the financing contract, given that they have an objective connection with the granting/discharge of the loan and a practical utility for the consumer, because they reduce the risk of unforeseeable events.

TAR Lazio decided to uphold one of the sanctioning measures. It found that in such case the undue pressure on consumers to force them to buy insurance policies in conjunction with mortgages or subrogation of mortgages was proven by:

1. consumer complaints and internal reports of pressure being exerted on the retail channel to encourage the mass sale of loans in conjunction with policies and of the adoption of policies for the disbursement of loans with differentiated conditions in the event that the policies distributed by the bank were not combined with the loans, and documents attesting to the delivery to customers of forms pre-filled with the item relating to policies and lacking information on the customer’s right to choose whether to take out a policy placed by the bank or another policy, as well as an indication of the relevant minimum requirements. These elements made it possible to infer the aggressive nature of the policies adopted by the bank;
2. a ratio of matching loans and policies, the purchase of which is optional, above the alarm threshold rate identified by the regulatory authorities.

European Court of Justice should confirm the fine imposed on Google for abuse of a dominant position: AG Kokott’s opinion

In an opinion delivered on 11 January 2024 in Case C-48/22, Advocate General Kokott proposed that the European Court of Justice should confirm the judgment of the General Court of the European Union, which had largely upheld the decision of the European Commission of 27 June 2017. In that decision, the Commission had imposed a fine of EUR2,424,495,000 on Google (for which Alphabet, as Google’s sole shareholder, is jointly and severally liable for EUR523,518,000), for abusing its dominant position on the markets for online general searches and for specialized product searches, using it as leverage to favour its own comparison shopping service through a preferential display of its results.

By judgment of 10 November 2021, the General Court of the European Union subsequently annulled the contested decision in so far as the Commission had also found an abuse of Google’s dominant position in the markets for online general searches, while confirming the abuse in the markets for specialized product searches.

AG Kokott deems that the Court of Justice should dismiss the appeal brought by Google and Alphabet against the General Court’s decision and confirm the fine imposed on Google for favouring its own comparison shopping service.

Contrary to Google’s and Alphabet’s arguments, AG Kokott considers that the application of Bronner criteria, i.e., the criteria developed by the Court to examine whether a dominant undertaking’s refusal to grant its competitors (non-discriminatory) access to or supply of an essential resource constitutes an abuse, should be limited to the originally recognised cases of refusal to supply or to grant access. Therefore, if there is not such type of refusal and, as in this case, there are only unfair/discriminatory conditions for the supply or access, such criteria should not apply.

According to AG Kokott, the abuse of self-preferencing configures “independent form of abuse through the application of unreasonable conditions of access to competing comparison shopping services,” since – as correctly stated by the General Court – Google’s business model is based on “offering a fundamentally open infrastructure designed to attract a maximum number of internet users, and to generate a maximum volume of data traffic, in order to achieve the positive network effects necessary to its economic success.”

Therefore, the self-preferencing that Google is accused of, according to AG Kokott, constitutes an independent form of abuse by applying unreasonable conditions of access to competing comparison shopping services in as long as it produces at least potential anticompetitive effects which, in the present case, according to the Commission’s findings, would consist in exclusionary effects on the market for specialized product searches.

Council of State rules on the cases in which it is necessary to involve the Italian Data Protection Authority in ICA’s investigations into unfair commercial practices

The Council of State, with its judgment dated 15 January 2024, has annulled the decision through which the ICA had identified an unfair commercial practice where a group of companies providing mobility services provided misleading and insufficient information on the collection and processing of users’ data when they requested a quote for insurance services offered by the companies. This led to data collection without adequate consumer information.

Considering the contested conduct harmful to consumers and the issue of personal data processing of existing clients as closely related, the Council of State held that the ICA should have involved the Italian Data Protection Authority in the investigation, according to the judgment of the Court of Justice in the Meta platforms ruling (C-252/21).

In such decision, based on a Commission ruling that established an abuse of a dominant position, the Court of Justice held that when a national competition authority deems it necessary to rule, in the context of a decision on an antitrust violation, on the compliance or non-compliance with the General Data Protection Regulation (GDPR), such authority and the competent supervisory authority under the GDPR must cooperate with each other to ensure a consistent application of the GDPR.

This obligation to cooperate, aimed at avoiding differences in the interpretation of the GDPR, would imply that:

• in cases where there is a decision by the supervisory authority or the Court of Justice concerning compliance with the GDPR of an identical or similar conduct, the national competition authority cannot deviate from it, without prejudice to the possibility to make its own assessments regarding the application of competition law;
• if there are remaining doubts as to the scope of the evaluation, or if the Authorities’ evaluation is ongoing, or still, in the absence of an investigation by the Authorities, and the national competition authority deems a certain conduct non-compliant with the GDPR, it must consult these authorities and seek their cooperation, to dispel its doubts or to determine whether it should wait for a decision to be made by the supervisory authority before beginning its own evaluation.

The Council of State clarified that, though the cited case law pertained to an abuse of dominant position and thus competition law and not consumer protection as in the present case, this does not prevent the application of the same principles to cases of unfair commercial practices in the presence of strong profiles of contiguity and proximity between the Antitrust Authority’s investigation and the personal data protection sector within the competence of the Data Protection Authority. On these grounds, as the Data Protection Authority wasn’t involved in the ICA’s investigation which led to the sanction, the Council of State annulled it.