Antitrust bites - Newsletter

Update of the turnover thresholds for the prior notification of concentrations

The Italian Competition Authority (ICA) has updated the turnover thresholds which, if exceeded, starting from 21 March 2022, trigger the obligation of prior notification of concentrations.

On the basis of the update, the obligation to notify the concentration to the ICA is triggered when both of the following cumulative conditions are met:

• The total turnover in Italy of all the undertakings involved is above EUR517 million (previously EUR511 million);
• The total individual turnover of at least two of the undertakings involved is above EUR31 million (the amount remained unaltered).

The notification obligations towards ICA established by the “Energy Decree”

Law Decree of 21 March 2022, no. 21 (the Energy Decree) has provided for specific notification obligations towards Italian Competition Authority (ICA) for several categories of undertakings active in the energy sector.

In particular, such disclosure obligations must be followed by the undertakings active in the production and resale of electric energy, methane gas and natural gas, extraction of natural gas, as well as  undertakings that exercise activities of production, distribution and sale of petroleum products, and those that import electric energy, natural gas, methane gas and petroleum products in Italy.

Such undertakings, starting from 1 April until 31 December 2022, must communicate on a monthly basis – in a way established by ICA – the average prices for the purchase, production and sale of the products involved in the activities carried out by the undertakings in the preceding month. This will enable the ICA to verify whether the requirements for the adoption of any measures within its competence are met.

Fuel prices: National Competition Authorities take the field

With a press release of 18 March 2022, the Italian Competition Authority (ICA) has announced that it has sent several requests for information to the major oil companies to examine in depth the reasons behind the significant increases in the prices of gasoline and diesel oil which have recently occurred and to verify whether there is space to ascertain potential infringements of antitrust law.

The ICA is not the only antitrust authority that has shone a light on the extraordinary increase in oil prices: the German Competition Authority, the Bundeskartellamt, has recently announced it is monitoring oil prices and will conduct analysis over the reasons behind the increases (press release of 16 March 2022).

It is not the first time the ICA has requested information about extraordinary increases in the prices of goods that have occurred in the context of a crisis, to evaluate the opportunity to act.

In the first few months of the COVID-19 pandemic, the ICA sent requests for information to operators active in the e-commerce sector to investigate the reasons behind increases in prices of the products for the prevention of COVID-19. This was a follow-up to reports from consumers and associations denouncing, inter alia, significant increases in the prices of masks and sanitizing products.

It is noted that the recent “Energy Decree” (Law Decree no. 21/2022) has provided that, by exercising its monitoring activity over the development of gasoline and diesel prices used as oil, the Italian “Finance Guard” Corps (Guardia di finanza) may report to the ICA any elements which are symptomatic of anticompetitive conducts or unfair commercial practices by the undertakings active in the distribution chain of such products.

Revision of Horizontal Block Exemption Regulations and Horizontal Guidelines: European Commission opens a public consultation

On 1 March 2022 the European Commission opened a public consultation concerning the projects of revision of the Horizontal Block Exemption Regulations and Horizontal Guidelines.

The proposed changes aim to remedy the various issues that emerged after the process of revision and evaluation of the HBER and the Guidelines, which include the latter’s unsuitability to reflect the economic and societal developments that occurred over the last ten years. They also address the excessive rigidity and complexity of several provisions, and also aim at facilitating cooperation between undertakings, ensuring legal certainty and simplifying administrative controls.

Among the most relevant changes under consultation, is the provision, both for R&D and Specialisation agreements, of a new market shares’ calculation method. The calculation method is based on the average market shares detained by the undertakings within the three preceding years, in addition to the usual method based on the market share of the preceding year.

As for R&D agreements, an exemption is provided for agreements concerning entirely new products, technologies and processes and R&D activities mainly directed towards a specific objective, only if there are at least three R&D competing initiatives comparable to those of the parties of the R&D agreement.

Moreover, among the changes concerning Specialisation agreements, there is a proposal for the extension of the Regulation’s scope to include agreements concluded between more than two parties (the current Regulation includes only bilateral agreements).

As for the Guidelines, it is noted that a new chapter has been introduced entirely dedicated to “sustainability agreements,” intended as agreements between competing operators pursuing one or more sustainability objectives, as well as the introduction of guidelines concerning “network sharing” agreements.

Court of Justice provides clarifications on the right to intervene in judgments for the annulment of decisions regarding concentrations

By order of 22 February 2022, in case C-649/2021, the Court of Justice ruled on an order by which the EU General Court had denied a third party undertaking’s right to intervene in support in a judgment brought for the annulment of a Commission decision which had authorized, with conditions, a concentration.

In summary, the EU General Court dismissed the application for leave to intervene firstly, because the third party undertaking was not among the addressees of the contested decision. Furthermore, it has not demonstrated the existence of contractual relationships, even only potential ones, with the parties of the concentration. Finally, it did not even demonstrate that the "conditions" and "obligations" to which the approval of the concentration was subject had effects on its market position other than or additional to those already produced by the agreements it had in place with other operators.

The Court of Justice highlighted that in principle an undertaking active in one or more markets potentially affected by the anti-competitive effects of a concentration has a direct interest in the outcome of the appeal of the decision authorizing the concentration. To this end, the fact that the undertaking uses services provided by undertakings other than the parties of the concentration should not be sufficient to exclude its right to intervene in the appeal judgment.

The Court of Justice added that an undertaking active in one or more markets potentially affected by the effects of a concentration cannot be required to demonstrate that the conditions and obligations imposed on the parties – and to which the authorization was subject – produce different effects with respect to its market position than those already resulting from contractual relationships with other operators. In fact, it cannot be expected that the intervening undertaking will demonstrate, at the time of the intervention and in a preliminary stage of the judgment, the insufficiency of the conditions and obligations to prevent the potential anticompetitive effects of the concentration.

In light of the above, the Court of Justice found that the third party undertaking had the right to intervene in the appeal judgement before the EU General Court. For the purposes of this right, it was in fact sufficient that this undertaking was active in the markets potentially affected by the effects of the concentration, without having to demonstrate more precisely the reasons why the concentration would have likely influenced its specific market position.

Russian-Ukrainian conflict emergency: European Commission publishes "REPowerEU" Communication and a new Temporary Crisis Framework for State Aid

On 23 March 2022, the European Commission adopted a temporary framework for state aid to support the economy in light of the Ukraine conflict.

The temporary framework follows the Communication COM (2022) 108 final – REPowerEU, published on 8 March 2022 with which the Commission proposed the adoption of measures to respond to the increase in energy prices, to diversify the sources of gas supply and to accelerate the deployment of renewable energy. The Commission also identified in the state aid rules a source of near-term support for those affected by price increases.

The temporary framework is based on Article 107, para. 3, letter b), TFEU which allows the granting of aid to remedy a serious disturbance in the economy and provides for three types of aid (which could potentially be supplemented by measures granted under Article 107, paragraph 2, letter b, TFEU, ie aid granted to compensate for damage caused by exceptional events):

• Schemes to grant up to EUR35,000 for undertakings affected by the crisis operating in the agricultural, fisheries and aquaculture sector and up to EUR400,000 for undertakings operating in other sectors, without the need for this aid to be linked to an increase in energy prices. This support can be granted in any form.
• Subsidized state guarantees to allow banks to provide loans to undertakings affected by the crisis and public and private loans at subsidized rates (limits on the maximum amount of loans are envisaged).
• Aid to compensate for the additional costs resulting from exceptional increases in energy prices, in particular for intensive energy users. Such support can be granted in any form but must be contained within the limits specified by the temporary framework

The temporary crisis framework will be in place until 31 December 2022, subject to the assessment of the need of an extension before its deadline.

In the REPowerEU Communication, to encourage the accumulation of gas stocks for next winter, the Commission also suggests the possibility of granting State aid to suppliers, pursuant to Article 107 (3) (c) TFEU (ie aid intended to facilitate the development of certain economic activities).

From the antitrust perspective, in the REPower EU Communication, the Commission declared its will to pursue – as a matter of priority – its investigations in the gas market, to verify the existence of potential anticompetitive behaviours.

Lastly, the REPower EU Communication provides guidelines on application of Article 5 of the Electricity Directive (EU Directive 2019/944) to support Member States in developing mechanisms for regulating retail prices in the current emergency contingency (Annex 1 to the REPower EU Communication).