Antitrust bites - Newsletter

Joint Sections of the Supreme Court affirm the partial nullity of guarantees concluded following an anticompetitive agreement

With Decision No. 41994 of 30 December 2021, the Joint Sections of the Supreme Court expressed their view on a controversial question, which has been broadly discussed over the years in both case-law and literature. It concerns the applicable regime to the guarantees drawn up according to the ABI model and contains the clauses that the Bank of Italy, in 2005, ascertained to be the result of an anticompetitive agreement (namely, clauses No. 2, 6 and 8 of the ABI model).

In particular, the long-awaited decision of the Joint Sections, after defining the framework created by the case-law and literature on the matter, agreed with the thesis that affirms the “derived” partial nullity of the contract in relation to those clauses that reproduce the contractual conditions that were the object of the anticompetitive agreement.

The Court reached its conclusion by deeming that – in contrast to what was stated by part of case-law and literature – the action for damages, disjunct by the action of nullity, is not sufficient to ensure the realization of the objectives pursued by antitrust regulation, neither does it guarantee the respect of all the interests involved.

Starting from the premise that the antitrust regulation intends to avoid an “economic result,” comprising the alteration of competition, in favour of all the subjects of the market and irrespective of the “form” of the anticompetitive agreement, the Supreme Court affirmed that where the contracts are a result of an anticompetitive agreement, they must be deemed anticompetitive and null, in the same way that happens for the anticompetitive agreement pursuant to Art. 2, para. 3, of Law No. 287/90. Such situation takes place, as stated by the Court, where between the upstream anticompetitive agreement and the downstream contract there is a “functional” connection that produces an anticompetitive effect, which occurs where the downstream contract totally or partially reproduces the anticompetitive agreements or the content of the preceding anticompetitive act.

The nullity that affects the downstream contracts is therefore “derived.” The principle of conservation of acts, according to the Court, implies that the favourable solution is that of the partial nullity of the contracts limited to the clauses which reproduce the anticompetitive agreement or its content, without prejudice to the case in which it is proved the essential nature of the null part of the contract, which would make the whole contract null pursuant to Article 1419 of the Italian Civil Code.

On such basis, the Court has put an end to the saga of the guarantees drawn up under the ABI model, by affirming the nullity of the only clauses which reproduce the clauses No. 2, 6 and 8 of the ABI model, which was ascertained as having an anticompetitive nature.

European Commission launches public consultation concerning revision of EU State aid rules for agriculture, forestry and fishery sectors

With a Press Release published on 11 January 2022, the European Commission announced the launch of a public consultation concerning the revision of EU State aid rules for the agriculture, forestry and fishery sectors.

In particular, the public consultation concerns the revision of:

• the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020
• Regulation (EU) No. 702/2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market (ABER)
• Guidelines for the examination of State aid to the fishery and aquaculture sector
• Regulation No. 1388/2014 declaring certain categories of aid to undertakings active in the production, processing and marketing of fishery and aquaculture products compatible with the internal market (FIBER)
• Regulation (EU) No. 717/2014 on the application of Articles 107 and 108 TFEU to de minimis aid in the fishery and aquaculture sector

The revision of these provisions reflects the current strategic priorities of the EU, in particular the Common Agricultural Policy, the Common Fisheries Policy and the European Green Deal.

The evaluation conducted by the Commission revealed that the rules under scrutiny are broadly fit for purpose, as they contribute to the achievement of EU objectives pertaining to environmental protection and public health. They also meet the needs of the sectors concerned. However, the Commission has also considered that certain targeted revisions are needed to clarify some concepts and to provide further simplification and adjustments to reflect market and technological developments and the EU’s current strategic priorities.

According to the Commission, the current provisions need to be reviewed to enable Member States to make effective the objectives set by the Common Agricultural Policy and by the Regulation (EU) 2021/1139 establishing the European Maritime, Fisheries and Aquaculture Fund.

Member States and other interested parties can respond to the public consultation until 13 March 2022. The adoption of the revised rules is planned for the end of 2022.

Ne bis in idem principle: Council of State requires clarification to Court of Justice of the European Union

With Ordinance no. 68 of 7 January 2022, the Council of State has requested a preliminary ruling to the EU Court of Justice (CJEU) to clarify whether the principle of ne bis in idem precludes the judicial confirmation (ie during appeal proceedings) of an administrative fine of substantially criminal nature for conducts which, in the meantime, have been sanctioned in another Member State with a measure that has become res judicata.

On the basis of this principle – guaranteed by Article 50 of the Charter of Fundamental Rights of the European Union and Article 54 of the Schengen Convention – the same undertaking cannot be subjected to two proceedings for the imposition of substantially criminal sanctions for the same conduct.

The judgment was started after the rejection – by the Lazio Regional Administrative Court – of the objections raised by an undertaking sanctioned by the Italian Competition Authority (ICA) for unfair commercial practices; this undertaking, in requesting the annulment of the contested measure, claimed that it was unlawful due to the imposition of a sanction for the same facts on the basis of the German provisions on the "administrative responsibility" of legal persons, imposed by the German Public Prosecutor's Office in Braunschweig, and which had become final before the ICA's ruling was upheld by a Court.

The decision of the court of first instance, which considered not applicable in the present case the principle of ne bis in idem, because the different sanctions concern "the protection of different interests in relation to the same conduct constituting the infringement", has been challenged before the Council of State, which recognized the "analogy, if not identity" between the facts subject of disputes and admitted the relevance and appropriateness of the reference, formulating three questions, asking:

• Can the sanctions for unfair commercial practices set out in the national legislation implementing Directive 2005/29/EC, be considered as “administrative sanctions of criminal nature”?
• If yes, does the application of the principle of ne bis in idem preclude the imposition of an administrative sanction of criminal nature for unfair commercial practices upon an undertaking which, medio tempore, has been condemned for definitive criminal sanction in another Member State – for the same acts – with a decision ruled at the end of a proceeding initiated after the imposition of the administrative fine?
• Can the rules established by the Directive 2005/29/EC justify a derogation to the prohibition of ne bis in idem of Article 50 of the Charter of Fundamental Rights of the European Union and Article 54 of the Schengen Convention?

Assessment of paramount significance for competition across several markets: First decision of the Bundeskartellamt (the "Google" case)

With its decision of 30 December 2021, the Bundeskartellamt determined that the Google Group’s undertakings, Alphabet Inc. and its subsidiaries, are among the undertakings with “paramount significance” for competition in various markets (Unternehmen mit überragender marktübergreifender Bedeutung für den Wettbewerb), pursuant to the new Section 19a of the German Competition Act (GWB), which entered into force in January 2021.

The main purpose of the provision is to enable the Bundeskartellamt to identify positions of particular market power and their possible negative effects on competition in the area of “digital ecosystems” in which individual companies may have a “gatekeeper” function. In particular, the aforementioned Section 19(a) of the GWB allows the Bundeskartellamt to prevent such companies from the implementation of specifically identified conducts deemed to be anticompetitive (except the possibility for the company to demonstrate their objective justification).

The Bundeskartellamt determined that Google offers a wide range of services and products that are highly sought after and widely used that allow the undertaking to benefit from economies of scope and set rules of conduct for other businesses actives in the various markets concerned.

In its decision, the Bundeskartellamt, first of all, determined that Google holds a dominant position at least in the German market for general search services, has a high level of vertical integration and a large number of its services are interconnected and complementary. In addition, Google offers extremely important and wide-ranging advertising services, through which it generates a significant turnover. It is precisely in the context of such advertising services that Google is able to set rules of conduct for its potential users as well as potential advertising customers in many parts of its digital ecosystem.

The Bundeskartellamt also pointed out that the services offered by Google in its own "ecosystem" can be qualified as "infrastructure," since a large number of the services of other third-party operators can only be offered through the use of Google services. Google’s presence in various markets not only allows it to benefit of economies of scope, but also allows it to cross-promote its services – especially through agreements with original equipment manufacturers regarding preinstallations and default settings – to steer people who use one of its services to other services offered by the company.

The Bundeskartellamt also highlighted that the nature of the services offered allows Google to access a large amount of data (among which the most significant is that of users), suitable for providing competitive advantages and which can be exploited and reused in several markets.

The validity of Bundeskartellamt’s decision is limited to five years from the date on which it became final (ie until 4 January 2027) following Google's decision not to appeal it.

The European Commission publishes the Final Report on consumer Internet of Things sector inquiry

On 20 January 2022, the European Commission has published the Final Report on the consumer Internet of Things (“IOT”) sector inquiry, taking into account the inputs of the participants to the public consultation on the preliminary Report of such inquiry published in June 2021.

The main findings of the inquiry concern (i) the characteristics of consumer IoT products and services; (ii) the competition features in the markets of such products and services; (iii) the potential concerns related to the consumer IoT market and future perspectives.

As for the characteristics of the IoT products and services under inquiry, the Commission represents that the number of services and smart devices, including smart speakers and smart home devices, is progressively growing and therefore enabling the users to access a wider range of interconnected devices and services in and outside their homes. The Commission also underlines that, despite the growing popularity of voice assistants, smart mobile applications or companion apps remain the most popular user interfaces to access smart devices and consumer IoT services.

As for the competition features in the markets of such products and services, as noted by the participants to the public consultation on the inquiry’s preliminary Report of June 2021, the main barriers to market entry are the cost of the technology investment and the difficulty in competing with certain vertically integrated undertakings.

The Commission lastly outlined various potential competition issues in relation to the IoT sector, including:

• the existence of exclusivity and tying practices limiting the possibility to use competing services on the same device; in particular, the findings of the inquiry have revealed the existence of practices regarding pre-installation, default-setting and prominent placement of certain IoT services on smart devices or in relation to voice assistants, as well as the attempt by leading voice assistant providers to secure exclusivity of their services on certain smart devices or to prevent the concurrent use of voice assistants;
• the peculiar position of providers of voice assistants and smart device operating systems as intermediaries between users and smart devices or IoT services (which are indeed accessible through the voice assistant/operating system). This position of “control of the user’s experience”, jointly with the key role of such providers in the generation and collection of data, would put such providers in a position of advantage that they could also use in adjacent markets. Indeed, the findings revealed also that access to a wide range of data enables the providers to improve their position on the market and leverage more easily into adjacent markets;
• the existence of obstacles to interoperability, mainly due to the prevalence of proprietary technology, the fragmented technology landscape and the lack of common standards. In particular, the technology integration processes are governed by the leading providers of voice assistants and IoT-related operative systems, which are capable of establishing in an independent way interoperability requirements and, in such a way, imposing technical limitations to the use of competing products and services.

The Commission outlined that the outcome of the inquiry will contribute to the legislative debate on the scope of the Digital Markets Act and on the obligations provided by it.