Recent innovations in Italian competition law. New rules on merger control, antitrust enforcement and abuse of economic dependence

The Annual Law for Competition and the Market for 2021 (hereinafter the “ACL”), entered into force on August 27, 2022, amends the Italian Competition Law (Law No. 287/90, hereinafter the “ICL”) in many respects. Namely:

• introduces the power by the Italian Competition Authority (hereinafter the “ICA”) to request the notification of below-threshold mergers
• provides some adjustments to the Italian merger control provisions in order to align them to the principles and rules set out in the European Merger Regulation (Regulation (EC) 139/2004, hereinafter the “EUMR”)
• strengthens the rules concerning the abuse of economic dependence (Article 9 of Law 192/1998)
• introduces the possibility of a settlement in ICA proceedings concerning restrictive agreements or abuses of dominant position
• extends the enforcement powers of the ICA.

1. Merger control rules

The most significant development is the introduction of the power by ICA to review below-thresholds mergers.

Under the ordinary regime, Art. 16.1 of ICL provides that a concentration shall be notified to the ICA prior to its implementation, where the following two thresholds (which are adjusted each year to reflect any increase of the GDP deflator index) are cumulatively met:

• the aggregate Italian turnover of the undertakings concerned exceeds € 517 mln, and
• the Italian turnover of each of at least two undertakings concerned exceeds € 31 mln.

The ACL introduced a new provision under Art. 16.1-bis of the ICL that now allows the ICA to review concentrations also when the following conditions are met:

• only one of the two domestic turnover thresholds mentioned above is exceeded or the combined worldwide turnover of all the undertakings concerned exceeds € 5 bn and
• the transaction raises 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
• the closing did not take place more than six months before the request.

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[1].

The purpose of the new rule is to allow the Authority to review transactions that despite not triggering the turnover thresholds may nevertheless be capable of causing anti-competitive effects. The rule is therefore going to address the well-known problem of the “killer acquisitions”, i.e. acquisitions of start-ups (unlikely having a turnover, if at all, above the second threshold of € 31 mln) by large undertakings, that typically occur in innovative sectors such as digital or pharma.

The law mandates the ICA to issue procedural guidelines on the application of this provision. These are not available yet and are expected to reduce the high level of uncertainty resulting from this amendment.

Second, with regard to the substantive analysis of mergers, the ACL has substituted the so-called dominance test (article 6 of the ICL), with the ‘Significant Impediment of Effective Competition’ criterion (SIEC-test), as set in the EUMR. The new test enables the Authority to prohibit or impose conditions to a merger that would not create or strengthen a dominant position but would nonetheless ‘significantly impede effective competition’.

Third, the ACL has deleted the former distinction between concentrative and cooperative joint ventures and has introduced a new article 5.3 of the ICL whereby also cooperative joint ventures can be considered concentrations, provided that they are “full-function”, in line with the EU approach.

Finally, the ACL has replaced the former provision relating to the calculation of turnover for credit and financial institutions with the provision already provided for in the EUMR. Therefore, henceforth, to establish the turnover of credit and other financial institutions, the financial income shall be considered.

2. Settlement procedures (not limited to cartel cases)

The ACL introduces a new provision (Article 14-ter of the ICL) that allows the ICA to initiate settlements in proceedings concerning cartel cases, restrictive agreements and abuses of dominant position.

Through settlement procedures undertakings can obtain a sanction reduction in return for acknowledging their participation in the infringement.

The Authority, during the investigation and until the notification of the statement of objections, may set a deadline within which the companies involved may express their willingness to participate in discussions to reach a settlement agreement. In the event of a positive outcome of the discussion, the ICA may set a time limit within which the undertakings concerned may submit settlement proposals that reflect the results of the discussions held and in which they acknowledge the infringement and their respective liability.

At any time, the Authority has the possibility to cease settlement discussions, even with respect to one or more specific parties, when it considers that this might compromise the effectiveness of the procedure.

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.

3. New powers of the Italian Competition Authority

The ACL strengthens the ICA’s investigative powers, allowing the Authority to request ‘at any moment’ information and documents 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 for the control of concentrations. This significantly broadens the powers by ICA since, under the former framework, the ICA could request information only after the opening of a proceeding.

Article 14(5) of the IAL allows the ICA to issue fines in the case of refusal to provide or delay in providing information. The same applies in the case of incorrect, partial or misleading information being provided. Following the amendment introduced by Legislative Decree No. 185/2021 (implementing Directive (EU) 2019/1), these fines may be up to 1% of the turnover of the undertaking concerned.

4. Abuse of economic dependence

The ACL brings some changes also to the provisions on abuse of economic dependence (Article 9 of Law 192/1998) introducing a rebuttable presumption of economic dependence in the business relations of companies that offer intermediation services on digital platforms that plays a crucial role in reaching end users or suppliers.

In addition, the ACL also updates the list of potentially abusive conduct under Article 9, paragraph 2, of Law 192/1998, providing examples of abusive conducts applicable to digital platforms, such as:

• provision of insufficient information regarding the scope or quality of the service provided
• imposition of unilateral obligations, not justified by the type or content of the activity performed and
• restriction of the ability to use different providers for the same service, including through the application of unilateral conditions or additional costs.

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 Presidency of the Council of Ministers (jointly with the Ministry of Justice and after having consulted the ICA) can issue guidelines in order to facilitate the application of the provisions.

These provisions will enter into force on October 31, 2022.

The content of this article is for information purposes only and is not, and cannot be intended as, professional advice on the matters dealt with. For further information, please contact Luca Toffoletti and  Francesco Mazzocchi.

[1]  The new power of the ICA to review below-threshold transactions does not extend to transactions closed prior to August, 27, 2022. In case of failure to notify, the penalties set in article 19, paragraph 2 of the ICL will be applied to the parties concerned