Antitrust bites - Newsletter

Horizontal cooperation agreements and health emergency: The ICA’s first positive response to cooperation agreements for the distribution of masks and the moratorium scheme for consumer credit drawn up by Assofin

For the first time, the Italian Competition Authority (ICA) has implemented guidelines laid down in the Communication published on 24 April on horizontal cooperation agreements aimed at dealing with the consequences of the current economic and health emergency.

Following a preliminary discussion with the European Commission, the ICA considered that two cooperation agreements between companies that had been submitted for prior checking did not include any element that would justify a thorough investigation.

In the first case, the ICA assessed the compatibility with national and EU competition law of the cooperation project for the distribution of surgical masks between the Associazione Distributori del Farmaco and Federfarma. In view of the aims of the agreement (management of the effective and homogeneous supply of surgical masks throughout the national territory suitable to ensure the community the easy supply of these essential personal protection devices from pharmacies and parapharmacies) the ICA approved the cooperation. In the compatibility assessment, the limited duration of the agreement in connection with the exceptional situation of the health emergency was emphasised.

Secondly, the ICA examined the agreement reached at an associative level by Assofin aimed at the adoption of a common moratorium scheme for consumer credit by its members, aimed at supporting those categories of subjects that were not affected by government measures in favour of consumers and businesses during the emergency.

The ICA specified that the moratorium should not involve the direct or indirect exchange of sensitive information between companies. In this regard, the ICA invited Assofin to keep track of all exchanges of information that are necessary and proportionate to achieve the aims of the agreement, so in future they could be made available at the ICA’s request.

ICA initiates procedure for review of measures imposed in the Industrial Electronics/DMT merger

By order no. 28242/2020 of 20 May 2020, the Italian Competition Authority (ICA) initiated an ex officio procedure to “assess whether the evolution of the factual, corporate and market context is such as to justify the partial or total withdrawal of the measures prescribed by the Authority's resolution” adopted in December 2011 as a result of the proceeding C11205.

With this resolution, the ICA authorised the acquisition of control of the company Digital Multimedia Technologies S.p.A. (DMT), Italy's largest independent operator in the infrastructure sector for television, radio and telecommunications networks, by Elettronica Industriale S.p.A. (formerly part of the Mediaset Group), by means of a merger by incorporation of the newly incorporated company EI Towers S.p.a. (EI Towers) into DMT.

In view of the possible exclusionary effects that the transaction might have had, the ICA approved the transaction by prescribing a series of measures aimed at ensuring competition in the television infrastructure market, imposing, inter alia, stringent constraints with the aim of guaranteeing all national television operators operating on digital terrestrial frequencies access to the new company's infrastructure on fair, transparent and non-discriminatory terms.

With the procedure initiated by the discussed resolution, the ICA has now proposed that the current market context is assessed in light of the subsequent corporate transactions that have affected the market in recent years, leading to significant changes in the corporate structure of EI Towers, in order to verify whether they may lead to the “total or partial revocation of the measures imposed in the context of the authorisation” of the merger referred to in the proceeding C11205. The proceeding must be concluded by 30 September 2020.

European Commission launches public consultation on possible new competition tool

On 2 June 2020, the European Commission launched an open public consultation inviting anyone interested to submit, by 8 September 2020, their views on the possible new competition tool, which would provide national authorities with new powers and that would allow structural competition problems (deriving from lock-in, lack of multi-homing and network effect) to be addressed in a timely and effective manner, preventing markets losing their “equilibrium.”

In that scenario, the European Commission has informed that, in the course of the implementation of such a tool, four policy options are under scrutiny.

Two options involve the adoption of measures which would allow the Commission to intervene with behavioural and – where appropriate – structural remedies, before a dominant company successfully raises its prices or forecloses the entrance on the market to newcomers. The former would allow the European Commission to implement such measures in any economic sector; the latter only in those sectors in which the risks are most prevalent (e.g. digital markets).

The other options would allow the Commission to intervene not only with reference to companies that are dominant, but, more generally, with behavioural, and where appropriate, structural remedies in order to safeguard the proper functioning of the competitive process. Similarly to the previous options, for one option, the European Commission could adopt such measures in any economic sector; for the other, only in those where the risks of “competitive distortions” are higher.

All options require that the use of the new tool would not lead to finding a potential infringement of the competition rules and would allow neither to impose fines nor generate rights to launch damage claims. It is possible to access the impact assessment and respond to the public consultation at the following link.

Italian Council of State takes a stand on ascertainment of vertical agreements

With the recent rulings no. 3501, 3502 and 3503 of 2020, the Council of State confirmed the legitimacy of the Italian Competition Authority (ICA) decision which ascertained that the exclusivity clauses provided for in agreements which regulate the relationships between the main radio taxi undertakings in Milan and taxi drivers amounted to a network of anticompetitive vertical agreements which infringed Article 101 TFEU.

The rulings provide for several interesting hints on the elements to be assessed while verifying whether an exclusivity clause is able to determine, jointly with similar clauses provided for in parallel agreements concluded by other undertakings, a cumulative anti-competitive effect in breach of Article 101 TFEU, which can hinder the entrance to the market of new companies. According to the Council of State, while carrying out such an assessment the following must be taken into consideration:

• the nature and the importance of the set of similar agreements which can be found in the relevant market, bearing in mind the number of players bound, the duration of the agreements and the amount of the productive capacity which is involved in the exclusivity tie;
• the duration of the agreements, as limited duration agreements, or agreements with a duration which is proportionate to the average length of the similar agreements concluded in the relevant market have a less significant impact;
• the existence of real possibilities for new players to enter the market, taking into consideration both the relevant regulatory framework and the possibility that those subjects which are bound by the exclusivity clauses can actually terminate their contracts (assessing not only such a hypothetical possibility but also the real economic feasibility of such an option); and
• the conditions in which the competition interplay on the market at issue evolve, taking into consideration the number and the dimension of the suppliers active in the market, the level of saturation of the market and the fidelity of consumers to the existing players, assessing in that scope how the demand developed during the time, verifying whether a continuous increase of the service supplied by new players exists.

Italian Competition Authority refers to Parliament and government on certain antitrust concerns related to Decreto Rilancio

On 1 July 2020, the Italian Competition Authority (ICA) referred to the Parliament and the government certain antitrust concerns deriving from the provisions of Decree no. 34/2020 (Decreto Rilancio), which is currently being converted into law, regarding:

• the exemption from the application of the merger control rules in relation to concentrations involving troubled banks within the framework of the COVID-19 supporting measures;
• the extension of the contract between the Ministry of Transports (MIT) and CIN S.p.A.;
• other extensions of service concessions;
• the liability exemption for postal service providers; and
• the use of vouchers instead of a monetary refund as a means to compensate consumers.

As regards the first point, the ICA considers that the exemption from the application of the merger control rules for “relevant general interests of the national economy” lacks proportionality and a necessary balance with competition principles. It thus recommends that the filing obligation and its power to prescribe pro-competitive corrective measures would not be prejudiced by the extension.

The ICA also considers the one-year extension of the contract between MIT and CIN S.p.A. for the provision of national maritime services to be unjustified, as this duration is not proportional to the time strictly necessary for concluding the preliminary activities related to the future tender procedure (activities which would have been slowed by COVID-19).

More generally, the ICA does not look favourably on the extensions provided by the Decreto Rilancio (such as in relation to ports services and public sea concessions), since they are capable of consolidating existing market positions, not always justifiable in the light of the COVID-19 outbreak.

Other concerns derive from the provision that exempts postal service providers from liability arising from their activities during the emergency period, because it could be used in a way inconsistent with the aim of the provision.

Finally, with regard to the use of vouchers instead of a monetary refund, the ICA suggests introducing guarantee mechanisms in the event that consumers are not able to take advantage of the voucher.