Law Decree No 104/2023 “asset decree” converted into law

On 10 October 2023 Law No 136/2023 (published in the Official Journal on 9 October 2023) came into force. It converted Law Decree of 10 August 2023, No 104 (Asset Decree) into law. The Asset Decree concerns urgent provisions to protect users, regarding economic and financial activities and strategic investments.         

The Asset Decree includes:

• urgent measures to protect users (chapter I), which include provisions concerning the air transport sector (Articles 1 and 2);
• urgent measures regarding economic activities (chapter II), concerning inter alia amendments to the legislation on golden powers (Article 7) and provisions aimed at strengthening the contrast against the delocalization of large companies receiving State aid (Article 8);
• provisions on investments (chapter III), including provisions relating to foreign investment programs of national strategic interest (Article 13); and
• financial provisions (chapter IV).

 

Air transport sector

Some of the main changes introduced by the Asset Decree, as amended by conversion law, concern anticompetitive infringements and unfair commercial practices in the air transport sector.

The content of the new measures was redefined by the conversion law compared to the original text of the Asset Decree, which established stricter limits than those actually approved.

Pursuant to Article 1, para 1, of Asset Decree, the national legislation that prohibits agreements restricting competition and the abuse of dominant position (respectively Articles 2 and 3 of Law No 287/1990) also applies if the Italian Competition Authority (AGCM) ascertains that:

• the algorithmic coordination of the fares charged by companies in the airline sector facilitates, implements or monitors an agreement restricting competition, even a pre-existing one; or that
• the level of prices set through a revenue management system constitutes an abuse of a dominant position.

To initiate proceedings, the AGCM may consider the fact that the conduct:

• is operated on national routes to islands;
• happens during a peak in seasonal demand or during a national state of emergency;
• leads to the price of the ticket or ancillary services, in the last week before the flight, being higher than the average flight fare by more than 200% (art. 1, para 2, Asset Decree).

The previous text of the Asset Decree provided for an explicit prohibition of “dynamic fixing of fares by airlines, modulated in relation to the time of the booking” where the conditions mentioned above were cumulatively met.

Another novelty is that companies in the airline sector using automated procedures to determine fares based on user profiling is considered an unfair commercial practice when certain conditions are met, prohibited pursuant to the Consumer Code (Legislative Decree of 6 September 2005, No 206).

The Asset Decree prohibits the use of automated procedures based on profiling users’ web activities or on the type of electronic devices they use to book flights. This applies when the procedures cause economic harm to the user and are used to set prices (i) for flights to islands, or (ii) during a national state of emergency or if road or rail transports within the national territory are, totally or partially, prevented by exceptional events declared by public authorities; or (iii) during a peak in demand linked to seasonality. The rules on unfair commercial practices will be considered applicable (Articles 18-27 of the Consumer Code).

Article 1, under paragraph 5, introduces an important change. The AGCM, after conducting surveys pursuant to Art. 12, para 2 of Law No 287/1990, can impose structural or behavioural measures on concerned undertakings, in compliance with EU rules and after a market consultation. These measures will deal with competitive problems that hinder or distort the functioning of the market that harm consumers.

With specific reference to the markets of air transport of passengers, it is provided a (non-exhaustive) list of elements that the AGCM can consider when imposing measures. The list includes:

• the structure of the market;
• the methods of defining prices, including the use of revenue management systems and algorithms;
• the risks for the competitive process and for consumers deriving from the use of algorithms based on AI or user profiling;
• the competitive and price dynamics linked to seasonal demand;
• the needs of territories that are difficult to reach by means of transport other than planes;
• the need to protect particularly vulnerable consumers.

The conversion law has also established (paragraphs 5 and 6 of Art. 1) that, in the context of the surveys:

• Interested companies can present commitments which the AGCM can make binding after assessing their suitability for removing competitive problems, after consulting the market.
• The AGCM can exercise investigative powers provided by Art. 14, paragraphs 2 to 2 quater and 2 septies of Law No 287/1990 (ie to carry out inspections, request information, summon subjects that may be in possession of relevant information, arrange for reports and economic and statistical analyses, consulting experts).
• The AGCM can apply monetary sanctions and penalty payments provided by Art. 14, paragraphs 5 and 6 of L. 287/1990. The monetary sanctions can be up to 1% of the total turnover achieved at a global level by concerned undertakings, for hindering the exercise of the AGCM’s investigative powers. And penalty payments can be up to 5% of the average global daily turnover for each day of delay starting from the date set in the request or in the decision, to force undertakings to provide requested information, to appear at the hearings and to undergo inspections.
• If undertakings don’t comply with the structural or behavioural measures imposed after a survey pursuant to Art. 1, para 5 of the Asset Decree, the AGCM can apply administrative monetary sanctions of up to 10% of turnover, and penalty payments of up to 5% of the average global daily turnover for each day of delay starting from the date set in the decision.
• The AGCM can recommend, following the survey, the legislative or regulatory initiatives deemed appropriate to improve the functioning of the concerned markets.

The AGCM will now have to publish, on its website, a document on users’ rights in relation to the transparency of the price conditions applicable to airlines. Airlines will have to insert a hypertext reference to this document on the web page displayed at the time of booking. This provision is a novelty brought by the conversion law.

Article 1, para 7 – introduced by the conversion law – amended article 13 of Law Decree of 23 December 2013, No 145. The amended article provides that to “ensure the widest transparency and accessibility to incentive mechanisms,” managers of airports that provide contributions, subsidies or any other form of emolument to air carriers have to give adequate publicity, including on their website, to the criteria for granting incentives and the requirements for related access.

The Asset Decree also includes provisions on the maximum fares applicable by air carriers subject to the public service obligations referred to in Art. 16 of Regulation (EC) No 1008/2008. Member States can impose these obligations in relation to scheduled air services between an EU airport and an airport that serves a peripheral or developing region in its territory or a thin route to any airport on its territory where the route is considered vital for the economic and social development of the region served by the airport. Before imposing the obligations, the Member State should consult other Member States concerned and inform the Commission, the airports concerned and the air carriers operating on the route.

Article 2 of the Asset Decree provides that, if the public service obligations are imposed pursuant to Article 16 of Regulation (EC) No 1008/2008, the competent administration, in evaluating the measures that can be required from air carriers receiving public service obligations, will set the maximum fares airlines can charge where there’s a risk that fares could increase significantly because of seasonal factors or local or national extraordinary events.

Article 2 of the Asset Decree also specifies that the maximum fare must be indicated in the public tender. This applies to cases regulated by Art. 16, paragraph 9 of Reg. (EC) No 1008/2008. These situations occur when a Member State limits access to air services on a route to only one air carrier (normally for a period of up to four years) and no EU air carrier has commenced or can demonstrate that it is about to commence sustainable scheduled air services on a route in accordance with the public service obligation on that route. In cases like this, the air carrier must be chosen through a public tender, and the administration will consider the maximum fare level in evaluating the air carrier’s offer.

 

Golden Power

Article 7 of the Asset Decree makes some changes to golden power legislation set forth by Law Decree of 15 March, No 21 (L.D. 21/12). The changes relate to intragroup acts, operations and resolutions concerning assets considered to be particularly relevant for the use of critical technologies.

Art. 7 of the Asset Decree integrates the legislation on the government’s “special powers” of Art. 2 of L.D. 21/12, relating to the sectors of energy, transport and communications and other sectors identified by Decree of the President of the Council of ministers No 179/2020 – d.P.C.M. 179/2020. The amended legislation now establishes that “in any case” where the acts, operations and resolutions concern assets covered by intellectual property rights and they concern one or more subjects outside the EU, the special powers provided by Art. 2 L.D. 21/12 also apply within the same group. This is the case where the intellectual property rights relate to:

• AI
• machinery for the production of semiconductors
• cybersecurity
• aerospace technologies and technologies for storing nuclear and quantum energy
• food production technologies

This doesn’t affect the verification by the government of the existence of the conditions for exercising golden powers.

The scope of the novelty introduced by Art. 7 of the Asset Decree is especially important if it is considered that:

• d.P.C.M. 179/2020 (and, for what concerns the sectors of energy, transports and communications, d.P.C.M. 180/2020), without prejudice to the notification obligation, provides that the exercise of special powers concerning strategic assets in the sectors of energy, transport and communications does not apply to certain types of intragroup acts or operations.
• In particular, Art. 14 of d.P.C.M. 179/2020 states that exercising the special powers referred to in Art. 2 does not apply to intragroup acts and operations concerning mergers, demergers, incorporations or transfers, including transfers of shares, when the related resolutions of the assembly do not determine certain consequences (transfer of the registered office to a country not belonging to the EU, change of corporate purpose, dissolution of the company or modification of statutory clauses, or establishment or transfer of rights in rem or use relating to tangible or intangible assets or assumption of constraints that condition their use, also due to the subjection of the company to insolvency proceedings) and when there is no information regarding the threat of serious damage to public interests relating to the safety and functioning of networks and plants and the continuity of supplies or of a danger to the security and public order. This is without prejudice to the notification obligation referred to in Art. 2, paras 2 bis and 5 of L.D. 21/12.
• Paragraphs 2 bis and 5 of Art. 2 L.D. 21/12 provide for the obligation to notify (i) resolutions, acts or operations adopted by a company that holds strategic assets identified by d.P.C.M. 179/2020 which have the effect of changing the ownership, control or availability of the assets in favour of a non-EU entity (para 2 bis, first period); or (ii) in favour of an EU entity (including those established or resident in Italy), if the assets are inherent to the communications, energy, transport, health, agri-food and financial, including credit and insurance, sectors (para 2 bis, second period) or (iii) for the acquisition of shares with certain characteristics in companies that hold strategic assets in the sectors of energy, transport, communications and other sectors referred to in d.P.C.M. 179/2020.

Exercising the golden powers set forth by Art. 2 can now apply also to those intragroup acts and operations which would, in principle, usually be excluded for the application of the special powers pursuant to Art. 14 d.P.C.M. 179/2020 (and/or pursuant to Art. 4 d.P.C.M. 180/2020 for the sectors of energy, transports and communications). But, thanks to the new provision, they can be subject to the special powers if the conditions provided by the related rules are met, when (i) the assets are covered by intellectual property rights relating to the sectors identified by Art. 7 of the Asset Decree and (ii) involve one or more non-EU subjects, as set out in Art. 7 of the Asset Decree.

Art. 7 also states that d.P.C.M. 179/2020 and d.P.C.M. 180/2020 will be adjusted consistently with the introduction of the new rules.

The conversion law (Art. 7 para 2 bis Asset Decree) has repealed Art. 3 of Law Decree 21 September 2019, No 105 (ie law decree, converted with amendments into law No 133/2019, concerning “Urgent provisions regarding the perimeter of national cyber security and the regulation of special powers in sectors of strategic relevance”). The repealed provision established that subjects intending to acquire goods, services, and components for 5G networks (referred to in Art. 1 bis of L.D. 21/12 and therefore relevant also pursuant to golden power legislation) had to inform the National Evaluation and Certification Center of the National Cybersecurity Agency so it could perform security checks (referred to in Art. 1, para 6, lett. a of L.D. 105/2019). This obligation, formerly provided by Art. 3 para 1 of L.D. 105/2019, has been repealed by Art. 7 para 2 bis Asset Decree.

 

Delocalization of large companies

As a result of the changes introduced by Art. 8 of the Asset Decree, the period during which large undertakings that have received state aid to implement productive investments cannot move their activity to a non-EU country has been increased from five to ten years. If they did move, they could lose the financial aid and face an administrative monetary sanction varying from two up to four times the amount of the aid (Art. 5 of Law Decree 12 July 2018, No 87, converted with amendments into Law 9 August 2018 No 96).

 

Foreign investments programs of national strategic interest

The Asset Decree gives the Council of ministers the power, based on proposal from the Minister of Enterprises and Made in Italy, to label certain foreign direct investments programs in Italy as of “preeminent national strategic interest.” This applies to investments of no less than EUR1 billion that need coordinated administrative procedures of local authorities, regions, autonomous provinces, state administrations and other public bodies or entities (Art. 13).

The provisions also establish that:

• An extraordinary government commissioner should be appointed to ensure the coordination and administrative action necessary for the timely and effective implementation of the foreign investment program declared of national strategic interest. The extraordinary commissioner, where necessary, can act, with ordinance and after consulting the competent administrations, also in derogation of any provision of law other than criminal law and without prejudice to the compliance with the provisions of the Code of Anti-Mafia Laws and Prevention Measures, of the legislation on golden powers under L.D. 21/12 and of the mandatory restrictions deriving from membership of the EU.
• The extraordinary commissioner will issue a single authorization that includes all the administrative acts (of concession, authorization, consent, agreement, opinion and clearance however denominated) necessary for the implementation of the investment program declared to be of preeminent strategic interest.

As explicitly provided by the Asset Decree, this doesn’t affect the golden power legislation.