Entry into force of Italy’s Annual Law for Competition (Legge annuale per il mercato e la concorrenza 2021) Brings Far-Reaching Changes to the Italian Competition Law and Economic Dependence Law | White & Case LLP

Entry into force of Italy’s Annual Law for Competition (Legge annuale per il mercato e la concorrenza 2021) Brings Far-Reaching Changes to the Italian Competition Law and Economic Dependence Law | White & Case LLP

On 27 August 2022, the 2021 Annual Law for Competition (Law No. 118 of 5 August 2022) will enter into force.

The final law reflects the key provisions of the draft law issued by the Government on 4 November 2021(discussed here) and the proposals sent to the Italian Government by the Italian Competition Authority (“ICA”) on 23 March 2021 (“ICA Proposal“) (discussed here).

The law brings far-reaching changes to the Italian Competition Law (No. 287/90) and the Economic Dependence Law (Article 9 of Law No. 192/1998). In particular, the law includes some welcome changes to align Italian merger control rules to EU standards, but at the same time dangerously extends the scope of the ICA’s enforcement powers. Companies may face more invasive intervention from the ICA without (for now) appropriate safeguards. 

In addition, the law includes several provisions concerning a broad variety of industries, aimed at removing potential legal or administrative burdens to the opening of markets and ensuring the development of competition, as well as promoting the economic recovery of the country.

Amendments to the Italian Competition Law (No. 287/90) and to the Economic Dependence Law (Article 9 of Law No. 192/1998) 

Section VIII of the law deals with strengthening the ICA’s antitrust enforcement powers. Key provisions concern, in particular:

(i) New merger control rules

The law grants the ICA the power to review below-threshold transactions, if the following cumulative conditions are met: 

  • a) one of the two cumulative turnover thresholds provided for in Law No. 287/1990 is exceeded (i.e., EUR517 million for the combined turnover in Italy of all the undertakings concerned and EUR31 million for the individual turnover in Italy of each of at least two of the undertakings concerned by the transaction) or the combined worldwide turnover of all the undertakings concerned exceeds EUR5 billion; and
  • b) the transaction could raise potential competition concerns in the national market or in a substantial part thereof, taking into account the possible detrimental effects on the development of small enterprises characterized by innovative strategies; and
  • c) the closing of the transaction did not take place more than 6 months before1.

If the above conditions are met, the ICA has the power to request the parties to notify the transaction within 30 calendar days of such request. 

The ICA will issue procedural guidelines on the application of these provisions concerning the review of below-threshold transactions. Such guidance will hopefully reduce uncertainty in the merger control risk assessments of potential transactions, resulting from this new power granted to the ICA. 

In addition, in order to align Italian merger control rules to EU standards, the law: 

  • a) replaces the current test for substantive review of mergers (i.e., “creation or strengthening of a dominant position on the national market”) with the “significant impediment to effective competition” (SIEC) test, adopted at EU level;
  • b) updates the criteria on the qualification of joint venture as “full function”;
  • c) replaces the 1/10 of total assets rule for the calculation of turnover of banks and financial institutions for merger control purposes with the criteria adopted at EU level (i.e., financial income).

(ii) The presumption of economic dependence in business relations with digital platforms

The law introduces a rebuttable presumption of economic dependence in the business relations of companies that offer intermediation services on digital platforms playing a crucial role in reaching end users or suppliers. 

The law also updates the list of potentially abusive conduct, adding specific examples applicable to digital platforms such as (i) provision of insufficient information regarding the scope or quality of the service provided; (ii) imposition of unilateral obligations, not justified by the type or content of the activity performed; and (iii) restriction of the ability to use different providers for the same service, including through the application of unilateral conditions or additional costs. 

The list of potentially abusive conduct provided in the law does not include, however, the following conduct by digital platforms, which had been included in the March 2021 ICA Proposal, but were not included in the final law: 

  • restrict of interoperability or data portability; 
  • tying and bundling strategies consisting of making the conclusion or performance of contracts and the continuity and regularity of business relations conditional upon to the performance of unrelated services, including in relation to the use of the data.

The above provisions amending the Italian rules on abuse of economic dependence will enter into force on 31 October 2022 (i.e., later than the rest of the law). 

Civil actions provided for by Article 9 of Law 192/1998 shall be brought before the specialized business sections referred to in Article 1 of Legislative Decree No. 168/2003.

The Prime Minister (jointly with the Ministry of Justice) is permitted to issue guidelines to facilitate the application of the above provisions, after having consulted the ICA. 

(iii) The introduction of the ICA settlement procedure

The law also includes the possibility of settlements in ICA proceedings concerning alleged restrictive agreements or abuse of dominant position. The ICA will issue an internal regulation setting out the procedural rules and the extent of the fine reduction (in the event of successful conclusion of the settlement procedure). 

The introduction of the settlement procedure should be coordinated with the private enforcement regulation (Legislative Decree no. 3/2017). It is not clear what value national courts should attribute to settlement decisions. Potential claimants may exploit settlement decisions, in which the parties acknowledged their participation in the infringement, to easily obtain damages compensation (for example, in relation to the mitigation of the burden of proof on the existence of the infringement and its effects). Therefore, risks relating to antitrust damages actions should not be underestimated.

(iv) Further ICA’s investigative powers

The law strengthens the ICA’s investigative powers, granting the ICA the power to issue requests for information or documentation to any company or legal entity in order to ascertain the existence of anticompetitive agreements or of an abuse of dominant position, as well as to assess a notified transaction. However, the law does not regulate the context in which the ICA may proceed with these requests for information, which therefore grants absolute discretion to the ICA in its use of this power. 

In particular, the law strengthens the ICA’s investigative powers outside of formal proceedings (e.g., during sector inquiries or as part of preliminary activities prior to opening an investigation), including the ability to impose administrative fines for failure to provide information on time or providing incorrect information.2 This significantly increases concern regarding so-called “fishing expeditions”, in which ICA could request information, even in the absence of real evidence of alleged violations.3

Other affected industries 

The law includes several additional provisions impacting various industries. In particular, the law focuses on:

  • The removal of barriers to market entry, with specific reference to the concessionary regimes for public assets, port areas, the distribution of natural gas and large hydroelectric derivations (Section II);
  • New provisions concerning local public services and transport, including alternative dispute resolution procedures between economic operators managing networks, infrastructure and transport services, on one hand, and users or consumers, on the other hand; as well as amendment to regulation on companies in which the State has invested (Section III);
  • New rules on energy and environmental sustainability (e.g., waste management services and procedures for the authorization of waste disposal plants) (Section IV);
  • increasing competition in relation to health protection and the pharmaceutical sector, to enhance the quality of the services offered and the methods of selection of medical management, to remove the obstacles to the entry of generic drugs on the market and to introduce stricter rules on the price of reimbursement of drugs (Section V);
  • The improvement of competition in the areas of digital infrastructure and communication services. For instance, telephone operators are now required to obtain proof of consumers’ prior consent before activating subscription services offered by third parties (Section VI);
  • The introduction of provisions aimed at simplifying and modernizing administrative authorization procedures by removing excessive burdens on businesses and ensuring equal treatment between operators (Section VII);

1 The new power of the ICA to review below-threshold transactions does not extend to transactions closed prior to 27 August 2022. 
2 Under the current rules of procedures, ICA can issue requests for information following the notification of the decision to initiate a proceeding (art. 8(1) DPR no. 217/98). It can also issue requests for information during sector inquiries, but it cannot impose fines for failure to respond (art. 17(3) DPR no. 217/98).
3 Legislative Decree no. 185 of 8 November 2021, which implemented the ECN+ Directive (EU) 2019/1, increased up to 1% of the global group turnover in the previous financial year, the level of the maximum fine, which may be imposed by ICA (pursuant to Article 14(5) of Law no. 287/90) in case of failure to provide information on time or provision of incorrect information.

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