RUCELLAI & RAFFAELLI
Studio Legale
Question A: Should a competition authority enjoy an unfettered discretionary power in the context of the investigation of competition law infringements, or should its margin of discretion be subject to certain limits?
Preliminary Remark – The scope of this questionnaire is limited to infringements of Articles 81-82 EC and equivalent national law provision s. It thus does not cover (i) State Aid rules; (ii) infringements of procedural rules; (iii) infringements of merger control rules; and (iv) other competition-law related infringements.
- General Questions
1.1Please state your name and the country to which your report refers.
Caterina Gastaldi
Rucellai & Raffaelli
Studio Legale
Via Monte Napoleone, 18
20121 - Milan (Italy).
Our Report refers to ITALY.
1.2How many competition authorities in your country are entrusted with the task of investigating infringements of competition law? Please indicate the names of these authorities and describe their functions and the types of competition law infringements they can investigate. Please describe the institutional structure of these authorities and provide figures regarding their human and financial resources.In Italy, there is one competition authority named as “Autorità Garante della Concorrenza e del Mercato” (hereinafter referred to as the “Italian Competition Authority” or - briefly - as the “ICA”), which is established in Rome.
The Italian Competition Authority is an independent administrative authority, which has been instituted by the Italian Law No. 287 of October, 10th, 1990 (“The Competition and Fair Trading Act” (hereinafter referred to as the “Law No. 287/90”).
- The Italian Competition Authority’s functions
- The Italian Competition Authority has been instituted, by the abovementioned Law No. 287/90, with the main function to protect and promote the competition on the market, also in the interest of the consumers. The ICA is thus responsible for enforcing the antitrust provisions contained in the Law No. 287/90.
In order to perform this main function, the Law No. 287/90 empowered the ICA to investigate (Sections 12 and 14 of the Law No. 287/90), prohibit (Section 15 of the Law No. 287/90) the anticompetitive practices carried out by the undertakings (associations of undertakings / consortia) in breach of the antitrust provisions set forth by the same Law No. 287/90, and to fine them (Section 15 of the Law No. 287/90 ([1])).
As of 2006, the ICA has been empowered also to: i) adopt interim measures (“in urgent cases where there is a risk of serious, irreparable damage to competition” (Section 14-bis of the Law No. 287/90), ii) accept commitments, offered by the undertaking(s) which would correct the anticompetitive conduct subject of the investigation, making them binding for these undertakings and terminating the proceeding without the ascertainment of the antitrust infringement towards them (Section 14-ter of the Law No. 287/90), and iii) to grant “leniency programs” with the power not to impose any fine or to reduce the fine which the ICA would have applied to the undertaking(s) for the antitrust infringement (Section 15 of the Law No. 287/90) ([2]).
Within its main activity of control and protection of the competition on the market, the Italian Competition Authority has the power to solicit, at the Legislative and Regulatory levels, an appropriate consideration of the market conditions and of the competition needs and requirements, by means of notification and consultative activities. In particular, the ICA:
- “shall notify Parliament and the Prime Minister of any distortions arising as a result of legislative measures, and shall notify the Prime Minister, other relevant ministers, and the relevant local authorities of distortions arising in other cases” (Section 21 of the Law No. 287/90), and it
- “may express opinions on draft legislation or regulations and on problems relating to competition and the market whenever it deems this appropriate or whenever requested to do so by the government departments and agencies concerned” (Section 22 of the Law No. 287/90).
- All these powers, which allow the ICA to perform its main function (control and protection of the competition on the market) can be exercised by the ICA within all the economic sectors, included: i) the banking sector, ii) the insurance sector and iii) the broadcasting and publishing sector, which are subjected to the supervisory and controlling powers of - respectively: the Bank of Italy, the Regulatory Body for Insurance Companies (Istituto per la Vigilanza sulle Assicurazioni Private e di Interesse Collettivo - ISVAP) and the Regulatory Body for the Communication (Autorità per le Garanzie nelle Comunicazioni - AGCOM).
- Besides its main “antitrust function”, the Italian Competition Authority is also responsible to rule on misleading advertising ([3]) and to rule on conflict of interests ([4]).
As of 2007, the Italian Competition Authority has also been empowered to protect consumers against unfair commercial practices of traders, pursuant to the Legislative Decree No. 146 of August 2nd 2007 which has implemented the Directive 2005/29/EC “concerning unfair business-to-consumer commercial practices in the internal market”. From the coming into force of this Legislative Decree, the ICA has intervened in a number of cases, prohibiting (and fining) unfair commercial practices (especially, in the mobile telephony sector and in the tour operators sector), thus enhancing consumers’ rights against unfair commercial practices.
Recently, the ICA’s General Secretary (Mr. Luigi Fiorentino) presented his speech on “Consumers protection and competition protection on financial markets”, pointing out the problems and difficulties which the consumers have to face in order to obtain all the specific and necessary information regarding banking products.
- The competition law infringements that the Italian Competition Authority can investigate
As above mentioned, the ICA is responsible for enforcing the Law No. 287/90 (following the procedural rules contained in the relevant Procedural Decree No. 217/98), and hence for controlling (investigate / prohibit / fine):
- agreements between undertakings (as well as decisions of associations of undertakings / consortia) that impede competition within the domestic market or in a substantial part of it (Section 2 of the Law No. 287/90), and
- abuses of dominant position within the domestic market or in a substantial part of it (Section 3 of the Law No. 287/90),
Given that the abovementioned Sections 2 and 3 of the Law No. 287/90 closely follow -respectively - Article 81 and Article 82 of the EC Treaty, the Italian Competition Authority applies, in any case, Article 81 and Article 82 of the EC Treaty if an agreement / abuse of dominant position is able “to affect trade between Member States”, and thus in force of the principle, set forth by the same Law No. 287/90, according to which the Italian antitrust provisions “apply only to agreements / abuse of a dominant position which fall outside the scope of Article 81and Article 82 of the EC Treaty” (Section 1.1 of the Law No. 287/90). In any case, by applying Sections 2 and 3 of the Law No. 287/90, the ICA always takes into consideration the relevant EU principles ([5]).
The Italian Competition Authority has also been empowered for the preliminary control of mergers and acquisitions, in order to avoid that “concentrations” could create or strengthen a dominant position with the effect of eliminating or restricting, “appreciably and on a lasting basis”, competition within the domestic market (Sections 5 and following of the Law No. 287/90). In order to evaluate the impact of a concentration on the market, the ICA takes into consideration the criteria set forth by the European Commission, and its “Consolidate Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings”.
- The institutional structure of the Italian Competition Authority
As above mentioned, the Italian Competition Authority is an independent administrative authority (“Autorità Amministrativa Indipendente”) which acts and adopts decisions with total autonomy and independence from the Italian Government, and from any other administrative – public entity.
The autonomy and independence of the ICA are ensured (as we will see herein below) by: i) the procedure for appointing its members; ii) the procedure for organizing its internal structure and iii) the procedure for managing the expenditure related to its activities.
This nature of “autonomous and independent authority” does not mean that the ICA’s action lies outside any “control”. Indeed, pursuant to the Law No. 287/90, each year, the ICA shall submit to the Italian Parliament a report on its activities performed during the preceding year (Section 23 of the Law No. 287/90). Furthermore, the ICA’s decisions are subject to the jurisdictional control of the Italian administrative courts: Italian Administrative Court of First Instance (“Tribunale Amministrativo Regionale del Lazio”) and the Council of State for the appeal (“Consiglio di Stato”) which are both established in Rome (Section 33 of the Law No. 287/90).
- The Italian Competition Authority is a Collegiate Body, composed of a Chairman (which avails himself of a Cabinet) and four Members ([6]). The Chairman and the four Members are appointed jointly by the Presidents of the Italian Senate and the Italian Chamber of Deputies (and not by the Italian Government), they cannot be re-appointed after their seven-year term, and they “may not exercise any professional or consultancy activities, or acquire directorships or be employees of public or private entities, or hold public office of any kind whatever” (Section 10 of the Law No. 287/90).
The Collegiate Body is responsible for deciding and defining the ICA’s position and for controlling its administrative activities and, at this purpose, the Collegiate Body take their decisions by majority vote.
A General Secretary (at the time being, Mr. Luigi Fiorentino) is appointed by the Ministry of the Economic Development acting on the Chairman’s proposal, with the function to enforce the ICA’s position, and to oversee its organisation and structure. The General Secretary shall report to the Chairman (Section 11 of the Law No. 287/90).
- The ICA is responsible for governing its own organization and structure, in full and complete autonomy and independence. In particular, the Italian Competition Authority is organised into two Divisions (“Competition Protection Division” and “Consumer Protection Division”), which are divided into Directorates, depending on the specific subject - matter ([7]).
- Human resources of the Italian Competition Authority
The Italian Competition Authority currently employs n. 227 people, both on permanent staff and under fixed term contracts.
The employees are generally recruited by public competitive examination, but the Law No. 287/90 allows the ICA to directly recruit a maximum of 50 employees (Section 11 of the Law No. 287/90).
Pursuant to Section 11 of the Law No. 287/90, the ICA’s employees “are forbidden to take any other employment or duties, and to exercise any professional, commercial or industrial activities” (this strengthens the independence of the ICA).
The ICA is responsible also for establishing all the terms and conditions of employment on its own (autonomy), even if in accordance with the criteria laid down in the “collective labour contract for the staff of the Bank of Italy” (Section 11 of the Law No. 287/90).
- Financial resources of the Italian Competition Authority
The Italian Competition Authority is mainly funded by the Italian State through an annual budgetary allocation (which is entered under a single heading in the budget of the Ministry of the Economic Development).
Further financial resources come from the amounts of the fines applied by the ICA. At this purpose, and with particular respect to the fines applied in case of misleading advertising and unfair commercial practices, the recent Legislative Decree No. 207/2008 (so-called “Decreto Mille Proroghe”, turned into the Law No. 14/2009) introduced an important provision on the ICA’s financial resources, providing that - for each fine - the amount up to 50,000 Euros must be paid to the Italian Competition Authority, while the exceeding amount must be devolved to the Italian State.
Finally, the ICA disposes of an “internal” financial resource represented by the filing fees for the concentrations. Pursuant to Section 10, par. 7 bis of the Law No. 287/90, the undertakings required to notify mergers and acquisitions must pay “a fee towards covering the costs incurred by the Authority in performing its merger and acquisition control activities”. The criteria for calculating the filing fees are fixed (every year) by the ICA “taking account of the economic magnitude of the operation based on the value of the transaction” ([8]).
Within the limits of these funds, the Authority is responsible for managing its own operating expenses.
The Italian Competition Authority has investigative powers towards antitrust infringements, and it is also competent to take decisions, terminating and sanctioning infringements (Section 15 of the Law No. 287/90).
1.4Do competition authorities start investigations at the request of a complainant, ex officio or both? Could you estimate the respective shares of investigations upon request and of ex officio investigations?The Italian Competition Authority can start investigations both upon complaints and ex officio, under Section 12 of the Law No. 287/90.
In particular, the complaints may be filed with the ICA by “public authorities or by any other interested party”. Thus, for instance, Financial Police, competitors, associations of undertakings / consortia as well as consumers’ associations, which consider that one or more undertaking(s), by performing particular conducts on the market, are suspected to infringe antitrust provisions, may solicit (by filing the complaint) the ICA’s intervention directed to the ascertainment of the anticompetitive practice (Section 12, par. 1).
Investigations can be started by the ICA on its own, within the framework of general fact-finding investigations which the ICA can open ex officio or upon referral by the Ministry of the Economic Development “in areas of business in which the development of trade, the evolution of prices or other circumstances suggest that competition may be impeded, restricted or distorted” (Section 12, par. 2).
- Having regard to the recently years (2008 - 2009) and considering a total number of eighteen cases before the ICA, the most of the investigations (thirteen) has been started by the ICA upon complaints filed by competitors, associations of undertakings / consortia and by consumers’ associations.
Among these complaints, two complaints have been filed by consumers’ associations: the case “Price List for Pasta” (case I-694 / 2009) and the case “Aqueduct in Apulia Region” (A-395 / 2008).
The remaining (five) investigations has been opened by the ICA ex officio.
At the time being, it is pending before the ICA the “case COBAT” concerning the recycling of unloaded batteries (case I-697/2008) which has been started by the ICA upon complaints filed both by undertakings and by an association of undertakings (ANIE - which represents - inter alia - the producers of batteries) towards a consortium instituted by law (COBAT - which represents - inter alia - the smelters of unloaded batteries).
1.5.If your country operates a leniency program for hardcore cartel infringements: has the backlog of pending cartels cases increased since the introduction of the leniency program? To what extent has the leniency program reduced the number of ex officio investigations started by the competition authority?The Leniency Program has been adopted in Italy as of 2007.
As abovementioned, the so-called “Decreto Bersani” introduced into the Law No. 287/90 a specific provision according to which: “the Italian Competition Authority, in conformity with EU law, will use a general provision of its own to define the cases in which, based on assistance by companies under investigation in ascertaining infringements of competition rules, the fine may either not be levied or may be reduced in cases foreseen by EU law” (Section 15, par. 2 bis).
The Italian Competition Authority enforced this provision, by adopting and publishing, on February 15th, 2007, the “Notice on the non-imposition and reduction of fines” (hereinafter referred to as the “Notice”), which specifies the conditions under which the same ICA:
- shall not impose fines to undertakings, for hardcore cartel infringements ([9]);
- shall reduce fines to undertakings, for hardcore cartel infringements ([10]).
As of the operativeness of the Leniency Program, the ICA applied its Notice once.
This was the case “Producers of Chipboard Panels Cartel”, opened by the ICA upon the application for leniency program submitted to the same ICA by a competitor (Trombini Group) involved in this cartel ([11]).
Therefore, the operativeness of the Leniency Program has not particularly reduced (in Italy, and until now) the number of investigations started ex officio by Italian Competition Authority.
1.6 Can you list the various methods of referral to the authority of your country and, where applicable, provide details of the most common referral methods (third party complaints, applications for immunity by parties to an agreement, notification of a cooperation agreement by the parties, bounties for corporate individuals, referral by an executive body (Minister, etc..), referral by another authority (authority of a third country - ECN or other - or sectoral regulator)?Pursuant to the Law No. 287/90, the methods of referral to the Italian Competition Authority can be listed as follows:
- “complaint”: pursuant to Section 12, par. 1 of the Law No. 287/90, “any interested party” which considers that one or more undertaking(s) is (are) performing an anticompetitive practice on the market, may submit to the ICA a complaint requiring its intervention. The complaint must contain the description of the alleged anticompetitive practice carried out by one or more undertakings, and the indication of the antitrust provision(s) alleged to be infringed by that undertaking(s). In case of submission of a complaint, the ICA - if it considers that there are evidences of an alleged antitrust infringement(s) - starts the formal investigation under Section 14 of the Law No. 287/90, by serving the “notice of commencement of the investigation” on the interested undertaking(s), and on the complainant;
- “referral by Ministry”: pursuant to Section 12, par. 2 of the Law No. 287/90, the Italian Ministry of the Economic Development may ask the ICA for a general fact-finding inquiry “in areas of business in which the development of trade, the evolution of prices or other circumstances suggest that competition may be impeded, restricted or distorted”. In case of submission of such request, the ICA starts the “general fact-finding inquiry”, and if this inquiry produces evidence indicating that one more antitrust provision(s) have been infringed by one or more undertakings, the ICA shall resolve to start the formal investigations under Section 14 of the Law No. 287/90, by serving the “notice of commencement of the investigation” on the interested undertaking(s), and on the referent;