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After several delays,1  on November 4, 2021, the Italian Council of Ministers examined and finally approved the draft Annual Law for Competition ("Draft") pursuant to Article 47 of Law No. 99/2009.

The Draft reflects most of the proposals sent to the Italian government by the Italian Competition Authority ("ICA") on March 23, 2021 ("ICA Proposal"), which were described in our previous publication (link).

The Draft 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 enforcement powers.  Companies may have to face more invasive interventions from the ICA without (for now) appropriate safeguards.

The following provisions are particularly significant.

 

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 Draft deals with the strengthening of the ICA’s antitrust enforcement powers. Key provisions concern in particular:

(i)    New merger control rules

In order to align Italian merger control rules to EU standards, the Draft modifies the test for substantive review of mergers, introducing the reference to the "significant impediment to effective competition" (SIEC) test adopted at EU level. The Draft also introduces new criteria on the calculation of the turnover of banks and financial institutions for merger control purposes, as well as on the qualification of joint ventures as full function. 

The Draft even provides the ICA with the power to review certain below-threshold transactions that could raise (no better-specified) potential competition concerns in the national market or in a substantial part of it. The Draft does not indicate the criteria to identify these transactions, but simply states that possible detrimental effects on the development of small enterprises characterized by innovative strategies must be taken into account in this assessment. 

(ii)    The presumption of economic dependence

The Draft introduces a rebuttable presumption of economic dependence in the business relations with companies that offer intermediation services on digital platforms playing a crucial role in reaching end users or suppliers. However, the Draft does not specify criteria to identify the digital platforms holding such position on the market. 

The Draft merely provides some generic examples of potentially abusive conduct, such as refusal to purchase or supply, imposition of unjustifiably harsh contractual conditions (even retroactive), etc.

(iii)    The introduction of the settlement procedure

The Draft also includes the possibility of settlements in ICA proceedings. However, the ICA has not yet defined the procedural rules and the extent of the fine reduction (in the event of successful conclusion of the settlement procedure). According to the Draft, these aspects will be regulated by the ICA through its own internal provisions (to be adopted in the upcoming months). The ICA internal regulation will likely be very similar to the EU rules. 

(iv)    Furthers ICA’s investigative powers

The Draft strengthens the ICA’s investigative powers granting the ICA the possibility to issue requests for information or for documents to any company/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. The Draft includes the power for the ICA to impose fines for refusal to provide information or for provision of incorrect information. However, the Draft does not regulate the context in which the ICA may proceed with these requests for information, which could therefore be entirely arbitrary and discretionary.

 

Other industries affected by the Draft

The Draft has an important impact on various industries. In particular, the Draft 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, in particular alternative procedures for settling disputes between economic operators managing networks, infrastructures and transport services, on one hand, and users or consumers, on the other hand; as well as the amendment to regulation on the investee companies (Section III);
  • New rules on energy and environmental sustainability (e.g., waste management services and procedures for authorizations for 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 the 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/users’ prior consent before activating subscription services offered by third parties (Section VI);
  • The introduction of provisions aimed at simplifying and modernizing the administrative authorization procedures by removing excessive burdens on businesses and ensuring equal treatment between operators (Section VII);
  • The introduction of new procedures for selecting chairman and members of independent administrative authorities (including the ICA) in order to reinforce their independence (Section IX).

As for the next steps, the Draft has to be approved (without changes) by the Italian Parliament. Since the Annual Law for Competition has been included in the PNRR among the urgent measures, this legislative process should not take long. Nevertheless, the timeline for final approval is difficult to predict. 

The amendments to the Italian Competition Law are likely to raise significant concerns for businesses, such as:

  • Increased probability of ICA’s fishing expeditions, by means of requests for information, even in the absence of real evidence of alleged violations;
  • The new Italian rules on merger control will likely be used to catch non-notifiable mergers, thus raising the uncertainty in the risk assessments of potential transactions;
  • 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.

 

1 According to the PNRR’s timeline, the Annual Law for Competition was to be submitted to the Parliament by July 2021.

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