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28 February 202210 minute read

Antitrust bites - Newsletter

2021 in numbers: An overview on fines imposed by the Italian Competition Authority in Italy

In 2021, the Italian Competition Authority (ICA) imposed fines of over EUR1.4 billion on undertakings for antitrust infringements. The total amount of fines was significantly affected (four-fifths of the total) by the fine of approximately EUR1.1 billion issued by the ICA in a case concerning an abuse of dominant position, which is currently the highest fine ever imposed by the ICA.

Two investigations were concluded resulting in a finding of an anticompetitive agreement, which determined the application of fines for a total of EUR175 million; in 2020, three investigations led to the finding of anticompetitive agreements, with the application of fines for approximately EUR228 million.

Three investigations were concluded with the finding of violations of the prohibition of abuse of dominant position, with fines for a total of approximately EUR1.2 billion (of which, as already noticed, approximately EUR1.1 billion was imposed in a single case). In 2020, there were three investigations that ended with the finding of abuses of dominant position, with the application of fines of approximately EUR154 million.

As regards consumer protection, 50 of the 95 proceedings concluded by the ICA in 2021 led to the detection of violations of consumer regulations, of which 35 were for unfair commercial practices (42 in 2020); 1 was for infringement of consumer rights and unfair commercial practices (in 2020 3 proceedings led to the detection of both of the infringements and 1 led to the detection of an infringement of consumer rights); 10 were for failure to comply with previous decisions of the Authority (9 in 2020); 4 were for unfair terms (11 in 2020); and 8 were for unfair practices concerning the sale of agricultural and agri-food products (none in 2020). The ICA imposed fines of about EUR88 million in total, of which approximately EUR72 million was only for unfair commercial practices and violation of consumer rights (in 2020 the fines were of approximately EUR84 million), 16 million for non-compliance with precedent decisions (EUR4.5 million in 2020) and EUR27.000 for unfair practices in the agri-food sector.

Cars financing: Council of State confirms the annulment of ICA's decision

With its decisions adopted between the end of January and the first few days of February 2022, the Council of State confirmed the annulment of the ICA’s decision adopted at conclusion of proceeding no. I811. The decision found the existence of an anticompetitive agreement involving the exchange of commercially sensitive information between the captive banks of the leading automotive groups operating in Italy, including through two trade associations. The ICA imposed fines of over EUR678 million.

In particular, the Council of State confirmed the illegitimacy of the ICA’s decision due to the delay in initiating the investigation, since it was opened after more than three years from the receipt of the leniency application originating the proceeding.

The Council of State rejected the argument sustained by ICA, according to which, since the leniency applicant had submitted a simplified leniency application to ICA and a full leniency application to the Commission in 2014, the ICA could intervene only if and when the Commission had decided not to proceed. Therefore, since the Commission decided not to proceed in December 2016, the opening of the ICA investigation in April 2017 would have been timely.

According to the Council of State, at least at the time of the facts, there was no rule preventing the ICA from taking action before the Commission had decided not to proceed with the case. As stated by the Council of State, this rule would now be provided for by Art. 22 of Directive 2019/1 (ECN+). This, however, not only was ratione temporis inapplicable in the case under analysis, but it also seems to request that the Commission’s decision not to proceed with the case must be communicated within a reasonable time. The single national authority may also put effort in acquiring or requesting such information, in such a way as to define as soon as possible which authority is competent for investigating the case.

According to the Council of State, ICA’s decision is illegitimate since the proceedings started after more than three years from the receipt of the application for leniency and there had not beena formal coordination between the Commission and ICA within such period. This is both if the direct applicability of the limitation period provided for by Art. 14 of Law no. 689/1981 in antitrust proceedings is assumed, and also by virtue of the general principles provided for by Articles 6 ECHR and 41 of Charter of Nice imposing the Authority to take action within a reasonable time.

Exercise of powers concerning FDI: Commission finds an infringement of Article 21 EUMR

With Press Release of 21 February 2022, the European Commission announced that it has found an infringement of Article 21 of EC Regulation no. 139 of 2004 (EUMR) by the Hungarian government in relation to the veto imposed over an acquisition of certain Hungarian undertakings by an Austrian insurance group, by exercising its powers concerning “foreign direct investment” (FDI).

In particular, the Hungarian government, by exercising the powers conferred by an emergency legislation on FDI introduced in the context of the COVID-19 pandemic, vetoed the operation since it was considered harmful for the national legitimate interests. In August 2021, the European Commission authorized a wider concentration that included the acquisition vetoed by the Hungarian government.

At the conclusion of the investigation opened in relation to the infringement of Article 21 EUMR, the European Commission expressed doubts concerning the actual correlation between the veto imposed by the government and the need for safeguarding the national legitimate interests and therefore the actual possibility for the government to adopt such decision pursuant to Art. 21.4 EUMR. Art. 21.4 enables the Member States to take appropriate measures to protect legitimate interests other than those taken into consideration by EUMR, as long as they are compatible with the general principles and other provisions of EU law. The Commission has therefore concluded that the Hungarian authorities should have communicated their intended veto before its implementation and that the absence of such communication amounts to an infringement of Art. 21 EUMR.

Rejection of antitrust complaints for lack of EU interest and alleged lack of independence of the national competition authority: EU General Court rules on the Commission's motivational burden

With judgment published on 9 February 2022 in the case T-791/19, the General Court of the EU upheld the appeal brought by an operator against the decision of the European Commission rejecting its complaint regarding an alleged abuse of a dominant position committed by the incumbent undertaking in the market for rail freight services in Poland.

The Commission rejected the complaint – presented following the alleged refusal of the dominant undertaking to conclude a multi-year cooperation agreement with the applicant on market terms – for lack of EU interest, considering, in short, that the Polish competition authority was better placed to examine it.

The rejection was challenged before the General Court of the EU, in summary, on the basis of the following grounds of appeal:

i. violation of the complainant's right to have the case dealt within a reasonable time;

ii. failure to take into account the Union's interest in assessing the complaint; and

iii. violation of the principle of the rule of law in Poland.

Grounds (i) and (ii) were dismissed by the General Court because:

  • the complainant had not put forward any evidence to show that the allegedly excessive duration of the proceedings affected the exercise of its rights of defence; and
  • no evidence had been provided of any hypothetical transnational effects of the conduct complained of.

Ground (iii) was upheld. The General Court reminded that, before rejecting a complaint for lack of EU interest, the Commission is required to ensure that the national authorities are in a position to satisfactorily safeguard the rights of the complainant. The Commission should assess, in concrete terms and in the light of the specific allegations made, the existence of serious and substantiated grounds such as to give rise to a real risk of infringement of the complainant's rights should the case be assessed by the national competition authority. The Court referred inter alia to the following elements which had been put forward by the complainant before the Commission:

  • the alleged dependence of the President of the Antitrust Authority on the executive power, which appoints and possibly revokes him without the law specifying either the duration of the presidential mandate or the grounds for a possible revocation;
  • the public control over the company that allegedly committed the antitrust infringement; and
  • an opposition filed by the pro tempore Public Prosecutor General against an earlier decision establishing an abuse of a dominant position of the same incumbent undertaking by the Polish Authority.

The latter circumstance allegedly denoted a weak position on the part of the Authority compared to that of the Prosecutor.

By upholding the latter ground, the General Court has therefore annulled the contested decision since the Commission would not have assessed whether, in the circumstances of the case, there were serious and substantiated grounds for believing that the applicant incurred in a real risk that his rights would be infringed if the case were to be examined by the national authorities.

Italian Competition Authority fines the main undertakings active in the supply of water meters for over EUR10 million

With its decision of 1 February 2021, ICA has fined various suppliers of subjects involved in the management of the “Integrated Water Service” active in Italy, for having allegedly conditioned – through an anticompetitive agreement – tenders held between 2011 and 2019 for the procurement of water meters for the legal measurement of water consumption for domestic or industrial use. On the basis of the investigations, it was noted that the main operators in the sector, parties of the proceeding, were awarded more than 90% of the lots surveyed during the period in question. The fine was also imposed jointly and severally on the respective wholly-controlling parent companies, in application of the so-called "parental liability presumption," and on a parent company with 60% of control on its subsidiary. The parental liability presumption could not apply for the latter company, but it was found to effectively exercise a decisive influence on its subsidiary such as to influence its activities and strategic choices.

According to the Authority, from the evidence acquired it would have emerged that the parties, also through informal meetings, would have defined for each tender – before the expiry of the term for submitting the offers – the undertaking which was to be awarded the supply as well as the participatory conduct which the other undertakings were to adopt to achieve this result. In some cases, indications were given of minimum prices or maximum discounts to be respected, to guarantee that the designated winner would always present the best offer. In other cases, the indications were to abstain from participating in the tender, defining in a concerted manner even the reasons to be presented to the contracting authority.

In the light of the above, the Authority considered that the parties had put in place a secret, single, complex and continuous agreement, restrictive by object, in order to condition – following a common distribution plan at least from December 2011 to September 2019 – public procurement procedures for the supply of cold water meters, in breach of Article 101 TFEU.

Fines imposed on the parties to the proceedings correspond to an amount approximately equal to one-fifth of the turnover generated by the tenders which the ICA considered to have been altered.