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28 April 202314 minute read

Antitrust Bites - Newsletter

April 2023
The Market and Competition Draft Law for 2022 has been approved: measures concerning ICA powers, proceedings and decisions

On 20 April 2023 the Council of Ministers approved the annual Market and Competition Draft Law for 2022.

According to the available information, the approved draft (or “Draft Law”) contains provisions concerning the powers of the ICA and related proceedings; these are Articles 9, 10 and 11 of the Draft Law (Chapter IV).

Article 9 of the Draft Law amends Article 7 of Legislative Decree 3/2017, implementing the directive on antitrust damages which, by introducing the principle of the binding effect of the decisions of the Antitrust Authority that have become final, has specified the object and scope of the administrative court’s review of the ICA’s measures.

The legislative intervention removes, from the provision, the specification that the administrative judge’s review, as regards technical profiles, is limited to those “that do not present an objective margin of appreciation.” This modification would not appear to likely have a concrete impact, also in light of the case law developed on the subject.

Instead, a provision certainly having an impact is that (Article 10 of the Draft Law) establishing the doubling of the deadline within which the Authority must communicate its conclusions in case of investigations initiated after the notification of concentration operations provided for by Article 16, para. 8 of Law 287/1990 (the so-called “phase 2”) which therefore increases from the current 45 to 90 days.

Finally, Article 11, which closes Chapter IV and the entire Draft Law, contains measures for the implementation of Regulation 2022/1925/EU, the Digital Markets Act or DMA. That is to say, the regulation which, with the aim of contributing to the proper functioning of the internal market, establishes harmonised rules to ensure, for all companies, that the markets in the digital sector, in which gatekeepers are present, are fair and contestable throughout the Union, to the benefit of business and end users (see Article 1 of Reg. 2022/1925/EU).

ICA is identified as the competent authority for the enforcement of Reg. 2022/1925/EU. The Authority will be able to use the investigative powers granted to it by the Italian competition legislation (Articles 12 et seq. of Law No 287/1990) to ascertain agreements restricting competition and abuses of dominant position and will be able to apply the sanctions and penalties provided for in Article 14 of the said Law. The results of the investigations carried out by the ICA pursuant to Reg. 2022/1925/EU can be used by the Authority to exercise its powers in the digital markets, and in matters pertaining to agreements restricting competition, abuse of dominant position, abuse of economic dependence and concentrations.

Amendments to the Italian Consumer Code by Legislative Decree 26/2023, transposing the ‘Omnibus’ Directive

On 2 April 2023, Legislative Decree No. 26 of 7 March 2023 entered into force. The Decree implements Directive (EU) 2019/2161, introducing amendments to the Consumer Code aimed at broadening and strengthening consumer protection.

The main novelties introduced by Legislative Decree No. 26/2023 relate to the provisions of the Consumer Code on unfair commercial practices, untruthful commercial communications, right of withdrawal and information requirements on the part of the professional. Other novelties are expected with regard to the penalty regime applicable in the event of unfair commercial practices and unfair terms.

The scope of misleading commercial practices has been broadened to include “any marketing activity" aimed to promote goods in one EU Member State as identical to goods marketed in other Member States, although significantly different in composition or characteristics (so called “dual use”).

The list of commercial practices considered misleading (black list) is integrated to include those consisting in: (i) failing to clearly disclose any paid advertisements or specific payment for achieving higher ranking of products within the search results provided in response to a consumer’s online search; (ii) reselling event tickets to consumers if the trader acquired them using automated means to circumvent limits on the number of tickets that a person can buy or any other rules applicable to purchasing tickets; (iii) stating that product reviews are submitted by consumers who have actually used or purchased the product without taking reasonable and proportionate steps to check they originate from the consumers; (iv) submitting or commissioning another legal or natural person to submit false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, to promote products.

The list of information which, if omitted, will lead to a misleading omission, relevant as an unfair commercial practice, has been expanded, including: (i) for products offered on online marketplaces, the information as to whether the third party offering the products on the online marketplace is a trader or not; (ii) if the consumers can search for products using a query in the form of keyword, phrase or other input, the information on the main parameters determining the ranking of products presented to the consumer as a result of the search query and the relative importance of those parameters, as opposed to other parameters (the definition of “ranking” is introduced, meaning the “relative prominence given to products, as presented, organised or communicated by the trader, irrespective of the technological means used for such presentation, organization or communication”); (iii) where the trader provides access to consumer reviews of products, the information about whether and how the trader ensures that the published reviews originate from consumers who have actually used or purchased the product.

Traders are now obligated to provide information on the lowest price of a product in the previous 30 days when announcing a price reduction.

The period for consumers to withdraw from a distance or off-premises contract has been extended to 30 days for contracts concluded during unsolicited visits by a trader to the consumer’s home or excursions organized by a trader with the aim or effect of promoting or selling products to consumers. The trader must provide the consumer, in a clear and comprehensible manner, specific information, which is additional to that provided for any distance contracts.

The maximum fine the Italian Competition Authority (ICA) can apply for unfair commercial practice has been increased from EUR5 million to EUR10 million. The maximum fine the ICA can apply for non-compliance with interim measures ordering the suspension of unfair commercial practices and with those prohibiting or removing the effects of such practices has also been raised from EUR5 million to EUR10 million. Moreover a fine from EUR5,000 to EUR10 million is provided when the ICA ascertains the insertion of unfair terms in contracts between traders and consumers concluded by adhering to general terms and conditions or by signing forms or templates.

It is also provided that, in case of fines applied pursuant to Article 21 of Regulation (EU) 2017/2394 for unfair commercial practices or for the use of unfair terms affecting several EU States, on the basis of coordinated actions with the competent authorities of such States, the maximum applicable fine is 4% of the operator’s annual turnover in Italy or in the EU Member States affected by the violation. As concerns the sanctions for unfair commercial practices, it is specifically provided that in case information on turnover is not available, the maximum amount of the fine is equal to EUR2 million.

Advocate General Campos Sánchez-Bordona delivers opinion on the criminal nature of AGCM sanctions and infringement of ne bis in idem

On 30 March 2023 Advocate General Campos Sánchez-Bordona delivered his opinion in Case C-27/22, relating to the reference for a preliminary ruling made by the Italian Council of State in the context of a proceedings concerning a sanction for unfair commercial practices.

The subject of the preliminary ruling concerns the infringement of the ne bis in idem principle that the appellants alleged to have been violated by the ICA through the application of a sanction for the same conduct which had already been the subject of an order of the public prosecutor's office in Braunschweig (Germany). Although adopted after the ICA’s decision, the public prosecutors’ order had become final during the proceedings against the Authority’s decision.

The Council of State has asked the Court of Justice of the EU: (i) whether the administrative penalties imposed by the ICA for unfair commercial practices can be classified as criminal administrative penalties; (ii) if EU law (and, in particular, Article 50 of the EU Charter of Fundamental Rights) must be interpreted as precluding a national provision which allows a criminal administrative penalty against a legal person for unfair commercial practices for which a final criminal conviction has been handed down against that person in the meantime in a different Member State to be uphold in court proceedings and thus rendered final; (iii) whether the Unfair Commercial Practices Directive (2005/29) justifies a derogation from the principle of ne bis in idem.

With reference to the first question, the AG decided that the fine applicable to unfair commercial practices pursuant to Article 27(9) of the Italian Consumer Code is of a criminal nature because of its “present purpose” that is not compensatory but punitive. In the AG’s view, the maximum amount provided for by the provision is an indication of the severity of the sanction, such as to give it an “essentially criminal nature”.

In any case, it should be noted that this conclusion is based on the wording of Article 27(9) of the Consumer Code prior to the implementation of the so-called “Omnibus” Directive by Legislative Decree 26/2023, which, by doubling the original upper limit of the provision, now allows the ICA to impose penalties of up to EUR 10 million in the event of unfair commercial practices.

To the second question referred for a preliminary ruling, the AG responded that an administrative pecuniary sanction of an essentially criminal nature, imposed on a legal person that has engaged in unfair commercial practices, in principle infringes EU law and namely Article 50 of the Fundamental Charter if the legal person has already received a final criminal conviction in another EU Member State with respect to identical facts.

Finally, the AG concluded that no derogation from the ne bis in idem principle is permissible where the concurrent duplication of proceedings conducted and penalties (the “bis”) imposed by national authorities of two or more Member States, with competence in different fields, has taken place without sufficient coordination.

Merger control: Commission adopts package of measures

On 20 April 2023, the European Commission adopted a package of measures to simplify merger control procedures. The measures include a new Regulation implementing Reg. 139/2004, a Notice on Simplified Procedure and a Communication on the transmission of documents, which will enter into force on 1 September 2023.

With the adoption of this package of measures, the Commission intended to simplify and streamline both the ordinary merger control procedure and the “simplified” procedure, applicable in cases that do not present issues.

The main novelties of the intervention are (i) the broadening and definition of the cases that can benefit from simplified treatment; (ii) the streamlining of the procedure for examining simplified and non-simplified cases; and (iii) the optimization of the transmission of documents to the Commission.

The text of the new Notice provides for two new merger cases that can benefit from the simplified treatment, namely cases where (i) the parties of the concentration own a share below 30% in the upstream market and their combined purchasing share is below 30%; or (ii) the parties have a share of less than 50% in the upstream market, the market concentration ratio is less than 150, and the company with the lowest market share is the same in the upstream and downstream markets.

The Notice also provides that, at the request of the notifying parties, the Commission may apply the simplified procedure to certain cases that don’t fall under any of the default categories for simplified treatment. This can be done:

  • for horizontal overlaps where the combined market shares of the parties to the concentration are below 25%;
  • for vertical relationships where the individual or combined upstream and downstream market shares of the parties to the concentration are less than 35 %, or where those shares do not exceed 50% in one market and, in the other vertically related market, the individual or combined shares of the parties to the concentration are less than 10 %;
  • for joint ventures with a turnover of less than EUR150 million in the European Economic Area and a value of assets transferred to the joint venture of less than EUR150 million.

Among the main novelties for merger notification procedures is the introduction of a new notification form for cases where the simplified procedure applies, based on a tick-the-box system.

As indicated in the new communication, some cases can benefit from a “super-simplified” treatment, allowing the communication to be notified directly to the Commission, without the need for previous contacts.

The changes don’t only concern simplified procedures; for instance, the Implementing Regulation reduces and clarifies the information requirements in the notification form for transactions to which the ordinary procedure applies.

Italian Antitrust Authority opens investigation into an alleged abuse of economic dependence by Meta towards the Italian Society of Authors and Publishers and adopts interim measures to resume contractual negotiations

With a decision of 4 April 2023, the Italian Competition Authority (AGCM) opened an investigation into an alleged abuse of economic dependence by Meta group (formerly Facebook) towards the Italian Society of Authors and Publishers (SIAE), in relation to the negotiations for a new licence agreement for the use of musical works on the digital platforms owned by Meta and protected by SIAE. At the same time, the AGCM decided to open a proceeding to impose interim measures. By order of 20 April 2023, the Authority imposed the requested precautionary measures against Meta to reactivate the interrupted negotiations of the agreement.

The proceedings originate from a complaint submitted by SIAE to the Authority concerning the interruption by Meta of the negotiations for the conclusion of a new agreement concerning the use on the platforms owned by Meta of musical works protected by SIAE under authors’ mandate. The previous agreement between the parties, that has expired, provided for the availability on Meta’s social platforms of the works of the authors represented by SIAE, under remuneration, first collected by SIAE and then distributed to the owners of the copyrights, net of the fee destined to SIAE for its intermediation activity.

During the negotiations of the new agreement, Meta would have asked to introduce a new multi-component remuneration model, for the evaluation of which SIAE would have requested several economic data, which Meta refused to share. SIAE would also have submitted a proposal to negotiate with Meta, that the latter would have rejected. In addition to refusing to provide the requested data and accept SIAE’s counterproposal, Meta would have threatened to remove protected content from the platforms if SIAE didn’t accept Meta's last proposal.

According to the Authority’s preliminary hypothesis, the described conducts could constitute an abuse of economic dependence prohibited by Article 9 of Law no. 92/1998. The Authority assumes that Meta abused its negotiating power by violating its duties of fairness, good faith and transparency during the negotiations by (i) failing to provide SIAE with all the information necessary to carry out the negotiations in full compliance with the principle of transparency and fairness, and (ii) abruptly interrupting the negotiations and threatening to remove the content protected by SIAE from its social platforms.

Following the opening of the proceedings, it emerged that Meta, after interrupting the negotiations, put SIAE before the situation of having to accept the last offer, without being able to assess its economic suitability. And, if SIAE refused, it would be immediately denied the availability of the protected music content. According to AGCM, the alleged abusive practice produces an immediate detriment on competitive dynamics, with direct and indirect consequences for all the subjects involved in the markets of intermediary services of copyrights.

With the precautionary decision, AGCM ordered that Meta (a) immediately resume negotiations, maintaining a conduct inspired by the principles of good faith and fairness; (b) provide all the information necessary to allow SIAE to re-establish a balance in the entire commercial relationship with Meta; (c) with SIAE’s prior authorization, promptly restore, in full, the availability of the protected music content on Meta's social platforms, for the entire period necessary for the conclusion of the negotiations; and (d) if the parties disagree about the quantity and quality of the provided information under letter (b), appoint an independent intermediary.