Legislative Decree no. 185/2021 ("Decree"), implementing Directive no. 2019/1/EU ("ECN+ Directive") into Italian law, entered into force on December 14, 2021.
The ECN+ Directive primarily aims at strengthening the powers of National Competition Authorities ("NCAs"), as well as at guaranteeing their independence and a more effective application of EU competition rules.
The Decree introduces significant changes to Law no. 287/1990 ("Italian Antitrust Law"), codifying certain instruments that had already been applied in the Italian Competition Authority ("ICA")'s practice, and attributing new intrusive investigative and fining powers to the ICA.
The ECN+ Directive only concerns Articles 101 and 102 of the Treaty on the Functioning of the European Union. The new provisions of the Decree also apply to Articles 2 and 3 of the Italian Antitrust Law (prohibiting anticompetitive agreements and abuses of dominant position) in order to avoid differences in the procedural and substantive rules applicable in Italy.
The Decree introduces provisions that generate significant risks for the undertakings involved in antitrust investigations. Some of the changes – together with those that will be introduced with the upcoming implementation of the DDL Concorrenza (which were described in our previous publication available at the following link) – need to be carefully considered as they attribute to the ICA very intrusive investigative and sanctioning powers.
1) Enhanced Powers and Investigative Tools
The Decree sets out important instruments that will allow the ICA to carry out investigations that are more intrusive for the undertakings involved and their personnel. In particular:
- The Decree specifies that all types of evidence (i.e., documents, oral statements, electronic messages, recordings, and all other documents containing information), regardless of format or manner of storage, are admissible in antitrust proceedings;
- The ICA may not only send requests for information, but now also summon undertakings, their representatives and/or any individual (who may possess information relevant for the investigation) to hearings, as well as request expert opinions and economic/statistical analyses;
- The Decree crystalizes the possibility to carry out dawn raids at private premises (e.g., homes, grounds and vehicles of personnel). However, the Decree also provides for some guarantees for undertakings. These inspections are subject to the prior authorization of the competent judicial authority and to the existence of reasonable grounds for suspecting that there could be evidence in the private premises;
- The previous legal framework already allowed the ICA to adopt interim measures in urgent cases. The Decree now adds the possibility to extend their duration for a specific period.
2) Strengthened Sanctioning Power Including Fines and Periodic Penalties
The Decree also sets out provisions aimed at compelling undertakings to collaborate with the ICA, including a brand new system of fines for individuals.
Periodic penalties. The new paragraph 2 bis of Article 15 introduces a daily penalty payment of up to 5% of the average daily turnover achieved worldwide, to compel undertakings or associations of undertakings to (i) supply complete and correct information in response to a request for information; (ii) appear at a hearing; (iii) submit to an inspection.
This is another significant change, given that the previous legal framework simply provided for lump sum fines of a small amount in similar cases.
Fines for individuals. Individuals were not previously included in the Italian Antitrust Law. However, the Decree provides for:
- pecuniary fines (up to 25,823 EUR) applicable to individuals that (i) obstruct the inspection, (ii) provide inaccurate, incomplete or misleading information, and (iii) fail to appear at a hearing;
- specific daily penalty payments (up to 500 EUR) to compel individuals to (i) supply complete and correct information in response to a request for information; (ii) appear at a hearing; (iii) submit to an inspection.
More severe sanctioning system for associations of undertakings and their members. Before this reform, antitrust fines imposed on associations of undertakings were rather low, since the ICA used as the base amount for fine calculation purposes the total value of the membership contributions paid by their members. The Decree significantly changes this approach.
In particular, the Decree provides that:
- if an alleged infringement committed by an association of companies concerns the activities of its members, the ICA may impose fines up to 10% of the sum of the global yearly turnover of each member active on the market affected by the alleged infringement, instead of up to 10% of the value of the membership contributions paid by their members, as provided by point 10 of the current ICA fining guidelines (however, the financial liability of each member may not exceed 10% of its global turnover in the previous fiscal year);
- when the ICA uses the turnover of the members as a basis for calculating the fine and the association is insolvent, the ICA can order the association to request its members to provide the funds to pay the fine;
- if these funds are not provided to the association within a set deadline, the ICA can directly request the payment of the fine to any of the companies whose representatives were members of the decision-making bodies of the association; and
- if necessary to ensure the full payment of the fine, the ICA may also require any members of the association active on the market affected to pay the unpaid amount of the fine, unless the member concerned demonstrates that it did not implement the alleged infringing decision of the association or was not aware of such decision or expressly took distance from it before the opening of the investigation by the ICA.
Therefore, the new provisions included in the Decree would appear to increase the level of fines for business associations (however, it is unclear whether the new rules apply to the calculation of the 10% legal maximum only or also to the calculation of the basic amount of the fine).
In addition, the Decree would appear to provide for joint and several liability of the members of the association. Such provisions also raise serious doubts/concerns, as they would appear to allow the ICA to request the payment of the fine from companies whose involvement in the infringement has not been proven by the ICA (as the burden of proof would rest on the member company to demonstrate that it did not implement/was not aware of/distanced itself from the alleged infringement). It is also unclear whether (and how) the ICA might be able to request payment from a member company, if the latter did not participate in the ICA proceeding (and was therefore unable to exercise its rights of defense). If the member companies were notified and participated in the ICA proceeding, the ICA would instead have to avoid fining the company twice for the same alleged infringement.
Statute of limitations. Another change concerns the statute of limitations for the collection of antitrust fines. Pursuant to the previous legal framework, Article 28 of Law no. 689/1981 also applied to antitrust infringements and provided for a 5-year limitation period starting from the day on which the infringement was committed. Now, the Decree introduces Article 31 ter of the Italian Antitrust Law, according to which this period can be interrupted during other NCAs' enforcement proceedings or suspended until the ICA's decision becomes final (i.e., no longer subject to the judicial review of the Italian administrative courts).
In order to formally align the ICA's powers to those of the European Commission, the new Article 15 of the Italian Antitrust Law allows the ICA to impose structural and behavioral remedies which are necessary to bring an infringement to an end.
The decision to make commitments offered by undertakings or associations of undertakings binding (already set out in the previous legal framework) may now be adopted for a specified period of time.
5) Reorganization of Leniency Program Rules
A specific and separate ICA notice already covered the national leniency programs ("ICA notice on leniency programs"). New provisions on leniency applications (i.e., Articles 15 bis to septies) are now included in the Italian Antitrust Law in order to make such programs more effective and, therefore, encourage companies to disclose secret cartels. The new rules mainly reflect those set out in the ICA notice on leniency programs, specifying for instance the conditions for granting immunity or reduction of fines, the fact that leniency statements can be written or oral, etc.
Summary leniency applications and immunity for individuals. Article 15 septies of the Italian Antitrust Law sets out the possibility for undertakings that have already applied to the Commission for leniency to submit summary applications before the ICA in relation to the same alleged secret cartel, provided that they cover more than three EU Member States as affected territories.
In addition, the Decree provides for the extension of the effects of the leniency application to individuals, establishing the conditions under which they are no longer punishable under criminal law (e.g., when they actively cooperate with the ICA and the public prosecutor). This provision finally fills the gap between the leniency programs, on the one hand, and all the penalties (including criminal ones - for instance in the case of bid rigging) that may be imposed on the individuals who committed antitrust infringements, on the other hand.
6) Cooperation with Other NCAs
The Decree introduces a new Chapter II-bis in the Italian Antitrust Law (from Articles 15 octies to duodecies), including new rules aimed at strengthening the cooperation within the ECN, such as:
The possibility for the ICA to carry out an inspection or interview on behalf of and for the account of other NCAs. In this scenario, officials of other NCAs will be allowed to attend and assist the ICA's officials in these activities;
- The possibility for other NCAs to request the ICA to notify (within the Italian territory) preliminary objections and other documents;
- The possibility for other NCAs to request the ICA to enforce (within the Italian territory) the decisions imposing fines or periodic penalty payments, provided that the applicant NCA has ascertained that the undertaking concerned does not have sufficient assets in its Member State to enable recovery of the amount.
7) Strengthening the Independence of the ICA
Even if the previous national legal framework was already in line with the standards set out in the ECN+ Directive, the Decree has crystalized the following additional guarantees:
Prohibition of dismissal of ICA officials for reasons related to the proper performance of their duties;
- Prohibition for ICA officials to solicit/accept instructions from any external (public and private) party;
- Obligation to adopt an ICA Code of Conduct;
- Prohibition for former officials, for three years following the termination of their duties, to be involved in cases with which they were dealing during their employment;
- Independence in the spending of the ICA's allocated budget for carrying out its duties;
- Reinforcement of the principle of discretionary action.
In summary, the changes brought by the Decree significantly expand the ICA's powers and should raise the alert level of companies (and particularly of associations of companies) involved in antitrust proceedings in Italy.
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