Newsletter Antitrust Bites – February 2021

Private copying rights: Italian Competition Authority opens investigation to ascertain possible anticompetitive agreement

With its decision of 2 February 2021, the Italian Competition Authority opened an investigation against the main undertakings and associations active in the management of private copying levy relating to the video sector to ascertain the existence of a possible infringement of Article 101 TFEU.

The investigation is based on the assumption that these undertakings and associations, by means of several agreements, would prevent competitors (and in particular collecting) from entering the market for the management of private copying levy relating to the video sector and the freedom of right holders to choose the body entrusted with the management of the video private copying levy and the methods of management thereof.

The investigation was opened on the basis of complaints submitted by a collecting society and a TV audiovisual production company and must be concluded by 31 March 2022.

Stakeholders may voluntarily participate in the investigation by submitting a reasoned request within 30 days from the date of publication of the decision (24 March 2021).

Italian Competition Authority fines Facebook EUR7 million for non-compliance with 2018 warning for unfair commercial practices

With a decision published on 17 February 2021, the Italian Competition Authority closed the IP330 investigation imposing a fine of EUR7 million on Facebook Ireland Ltd. and Facebook Inc. for not having complied with the measures imposed by the Authority in November 2018.

In particular, in 2018 the ICA fined the companies for (i) having misled users into registering on the Facebook platform while not adequately and immediately informing them – during the creation of the account – of the commercial and lucrative scope of the data collection activity, but instead emphasizing that the service was free; and (ii) having carried out a practice deemed by the Authority as aggressive, since Facebook had exerted an undue influence on registered consumers because of the transmission without their prior consent of their data to third parties for commercial purposes. According to the ICA, Facebook had put in place a system of preselection of the broadest consent to data sharing such that whenever users decided to limit their consent they would face significant restrictions on their use of the social network so they would be induced to maintain their pre-selected choices. In such circumstances, not only did the ICA fine the companies EUR5 million, but it also required the publication of a corrective statement on the homepage of the social network’s Italian website, on the Facebook App and on every Italian user’s personal account.

During the investigation, the ICA found, on one hand, that Facebook Ireland Ltd. and Facebook Inc. did not publish any corrective statement on their channels and that, on the other hand, the two companies did not implement any measure to properly and immediately inform the consumer of the commercial use of its personal data, even though they had removed the claim that the service was free from the registration page.

The Authority consequently imposed a fine of EUR7 million on Facebook Ireland Ltd. and Facebook Inc.: EUR5 million for not having ceased the unfair commercial practices and EUR2 million for not having published the corrective statement.

European Commission publishes Working Paper on Dual Role Agents

On 5 February 2021, within the context of the review of European Commission Regulation (EU) No 330/2010, the Commission published a Working Paper on the application of art. 101(1) TFEU to agreements between suppliers and the so-called “dual role” agents, those distributors operating at the same time as sales agents for the same supplier.

According to the Working Paper, it is fundamental to identify which activities are covered by the agency contract and which the associated risks, to establish whether or not the agency agreement is to be included within the scope of art. 101(1) TFEU in those cases where the agent plays a dual role within the same product market. In particular, the Commission clarified that the agency agreements between suppliers and dual role agents do not fall within the scope of art. 101(1) TFEU provided that: (i) the agency contract has been concluded by an agent acting in full autonomy (i.e. without any kind of constraint by the supplier, such as the threat of terminating or worsening the terms of the independent distribution relationship) and (ii) all relevant risks linked to the sale of goods covered by the agency agreement are borne by the supplier.

The Commission specified that the supplier shall cover all the agency-related costs, so the agent will not bear any financial or commercial risk. Concerning reimbursements by way of a lump sum or fixed percentage, the Commission invites the suppliers to adapt the lump sums or the fixed percentages to any cost variation that may exist between agents who operate in different Member States or under different business models. Moreover, the Commission urges suppliers to consider that agents may bear relevant costs even where they make no sales for a certain period of time: suppliers shall therefore calculate and reimburse such costs.

European Commission concludes investigation into online video game market: Publishers fined for geo-blocking practices

In January 2021, at the end of an investigations launched in 2017, the European Commission imposed a fine of EUR 7.8 million on Valve (the owner of the Steam platform) and five other undertakings for violation of EU antitrust rules and, in particular, for having implemented so-called "geo-blocking" practices.

The Commission's investigation revealed various practices by Valve and the five publishers aimed at restricting cross-border sales of various types of PC games on the basis of the geographical location of users within the European Economic Area (EEA). In particular, the Commission found the following:

• the conclusion of bilateral agreements and/or concerted practices between the undertakings aimed at preventing the activation of certain PC video games outside a limited number of countries (Czech Republic, Poland, Hungary, Romania, Slovakia, Estonia, Latvia and Lithuania) in response to so-called “passive sales”, (i.e. unsolicited purchase requests from consumers);
• the implementation of geo-blocking practices through licensing and distribution agreements concluded bilaterally between four of the five PC game publishers and some of their respective distributors of PC games in the EEA (other than Valve) which contained clauses aimed at restricting passive cross-border sales of video games within the EEA.

The Commission concluded that the abovementioned practices denied players the benefits of the European Digital Single Market, in breach of the rules of EU Regulation 2018/302 which ensures the right of consumers to shop around between different Member States to find the most advantageous offer.

Unfair commercial practices in the digital marketplace: Online screening reveals widespread “greenwashing” by undertakings

On February 1, 2021, the results of the annual survey carried out by the European Commission through the Consumer Protection Cooperation (CPC) network, aimed at identifying possible breaches of EU consumer law in digital markets, were published.

The survey found an increase in unfair "greenwashing" practices by undertakings, i.e. the dissemination of false or misleading information, declaring a greater commitment to environmental protection to that actually carried out.

The survey carried out by the Commission, together with the competent National Authorities, simultaneously targeted several websites in various economic sectors, such as clothing, cosmetics and household appliances.

The Commission examined around 350 apparently unreliable claims, which then revealed some important shortcomings. In particular:

• the trader had not given the consumer sufficient information to assess the truthfulness of its claim;
• in 37% of cases, the claims contained general or imprecise information, such as "sustainable" or "environmentally friendly", leading the consumer to believe that the product had zero impact on the environment; and
• in 59% of cases, the information provided by the trader was not easily accessible.

The results of the survey will be used for the impact assessment that will be prepared for the new legislative proposal to empower consumers for the green transition, announced in the new Consumer Agenda.

In the light of the findings, the competent National Authorities will be able to verify whether these may constitute unfair commercial practices under the Unfair Commercial Practices Directive and the relevant National legislation.

At the Italian level, the fight against “greenwashing” practices constitutes an important enforcement area of by the Italian Competition Authority, which in the past has conducted investigations, among others, into claims relating to consumer products, notably in the food and beverage, personal care, fuel, and car sectors.