On 23 March 2021, the Italian Competition Authority ("ICA") sent to the Italian government its proposals for changes to the Italian competition law for inclusion in the "annual law for competition" pursuant to Article 47 of Law 99/2009.
The ICA reform proposals affect a broad variety of industries and are aimed at removing potential legal or administrative burdens to the opening of markets and ensure the development of competition as well as promoting the economic recovery of the country.
The following proposals are particularly noteworthy.
Various proposed amendments to the Italian Competition Law (No. 287/90)
The ICA suggests to:
i) Align Italian merger control rules to EU standards, in particular:
a. replace the current test for substantive review of mergers consisting in the "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. grant the ICA the power to review below-threshold transactions, which may raise potential competition concerns (e.g., alleged "killer acquisitions" of potential future competitors in the digital sector; acquisitions of companies with a significant market position in local markets in traditional industries);
c. update the criteria on the qualification of joint venture as full function;
d.replace 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) Extend the current period of 45 calendar days for Phase II merger investigations to 90 calendar days in order to allow for a more thorough analysis of transactions by the ICA.
iii) Introduce a rebuttable presumption of economic dependence in the business relations with companies, which offer intermediation services based on digital platforms (in order to address potential network effects and/or data availability competition issues).
iv) Entrust the ICA with the power to qualify (by decision) certain digital players as "companies of primary importance for competition in several markets". Such companies would be identified amongst the digital platforms, which are considered playing a crucial role for competition in the digital economy, due to their strategic position and their resources. As a preventive measure, the ICA would be able to prohibit certain types of conduct by these companies unless objectively justified. Such conduct would include e.g., the self-preferencing of a group's own services or impeding third companies from entering the market by processing data relevant for competition.1
v) Introduce the possibility of settlements in ICA proceedings, similar to the procedure provided at EU level by Commission Regulation (EC) No. 622/2008 of 30 June 2008 amending Regulation (EC) No. 773/2004.
vi) Strengthen the ICA's investigative powers outside of formal proceedings into specific conducts (e.g., during sector inquiries or as part of the activities that are propaedeutic to the opening of an investigation), including the ability to impose administrative fines for failure to provide information on time or providing incorrect information.2
vii)Entrust the ICA with the enforcement of the Italian implementing law of Directive 2019/633 on unfair trading practices in business-to-business relationships in the agricultural and food supply chain and remove the existing regulatory obstacles (e.g., price regulations) to effective competition.
viii) Identify instruments to support aggregation of producers in the agriculture sector, aimed at improving supply, better planning and optimization of production costs (e.g., associations of producers).
Investments in digitalization and improvement of the Internet connection in Italy
The ICA considers strong competition in the mobile and communication infrastructure as crucial for the development of the respective networks. The ICA proposes:
i) targeted public investments based on competitive tender procedures in order to support the network infrastructure development in certain areas where market failures occur;
ii) reduction in administrative costs and authorization requirements for investments in digitalization;
iii) alignment with the EU standards on mobile telecommunication and the principles of certainty and stability contained therein;
iv) stimulate the demand for ultra-broadband connections by improving the conditions for consumers to switch operators and by providing financial support for companies and certain categories of consumers.
Simplification of public tender procedures
The ICA considers the modernization and simplification of the public tender procedures within the EU legal framework as crucial for Italy's fast economic recovery. The ICA suggests:
i) the temporary suspension of the Law on Public Tenders specifically and exclusively for projects in relation to the Next Generation EU funds;
ii) the removal from the Law on Public Tenders of standards which go beyond the minimum standard provided by EU legislation. This would include, for example, an increased use of self-certifications and a reduction of the possibilities for challenging in court certain administrative acts;
iii) the digitalization of tender procedures and improved specialization of awarding authorities.
Increasing competition in the pharmaceutical sector
The ICA proposed various measures aimed at fostering competition in very specific contexts, including:
i) remove the prohibition to include different active substances in the same lot of public tender procedures for biosimilar drugs, where the Italian Medicines Agency has determined their therapeutic equivalence;
ii) introduce mechanisms which strengthen the negotiation position of the Italian Medicines Agency in the context of the reimbursement price negotiations by the National Health System (with particular regard to the interim period between the time when a marketing authorization is obtained and the end of the negotiations on the reimbursement price, during which medicines can be supplied and sold at a non-negotiated price set by the company);
iii) relax the obligation on wholesalers to keep certain stocks of medicines;
iv) remove certain limitations on the procedure for registering equivalent medicines before patent expiry (patent linkage).
Some of the above ICA proposals (in particular those regarding the amendments to the Italian Competition Law) are likely to raise significant concerns given that (if approved) their potential impact on the business community would be important (e.g., the rebuttable presumption of economic dependence and the prohibitions for companies deemed to play a strategic role for the digital economy).
The proposed strengthening of the ICA's investigative powers during sector inquiries or as part of the activities that are propaedeutic to the opening of an investigation into specific conducts, would increase the risk of "fishing expeditions" by the ICA by means of requests for information.
Whether any of these proposals will effectively be transformed into legislation remains to be seen.
Aron Senoner (Associate, White & Case, Brussels) contributed to this publication.
1 Other examples of prohibited conducts would be tying and bundling strategies even if put in place by non-dominant companies; artificially raising barriers to entry by means of strategic use of competitive relevant data; restrict interoperability of products and portability of data.
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).
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