Antitrust Bites – Newsletter

New turnover thresholds and a new form for notifying concentrations to ICA

With a communication of 11 March 2024, the ICA has updated the turnover thresholds that, if exceeded, trigger the obligation of prior notification for concentrations to the ICA.

According to the updated thresholds, the obligation to notify the ICA of a concentration transaction is triggered when the following two conditions are cumulatively met:

• the total turnover generated in Italy by all the undertakings involved is more than EUR567 million (previously it was EUR532 million);
• the turnover generated individually in Italy by each of at least two of the undertakings concerned is more than EUR35 million (previously it was EUR32 million).

ICA has also adopted a new “Communication on the modalities for the communication of a concentration” and thus a new version of the form for the notification of concentrations, which will come into force on 1 May 2024, for the purposes of adapting such communication to the legislative novelties brought by the annual laws for market and competition for 2021 (Law No 118/2022) and for 2022 (Law No 214/2023) and to the provisions set forth in the Commission consolidated jurisdictional notice on the control of concentrations.

Undertakings intending to notify a concentration to the ICA from 1 May 2024 will have to use the new form. The previous version of the form will be valid until 30 April.

 

European Commission opens first in-depth investigation under the Foreign Subsidies Regulation

In its press release of 16 February 2024, the European Commission announced it had opened the first in-depth investigation in a public procurement procedure under Regulation (EU) 2022/2560 on foreign subsidies distorting the internal market.

The Regulation, which started to apply on 12 July 2023, was introduced by the European legislator to counter distortions of competition as a result of non-EU States granting financial contributions to companies operating in the European single market. These contributions could unduly benefit the companies that receive them to the detriment of their competitors, distorting the competitive dynamics.

The Regulation is inspired by the same rationale as the European State aid framework, which aims to prevent distortions of competition resulting from Member States granting aid to companies active in the single market. The Regulation is intended to close the circle by targeting subsidies granted by non-EU States, which have remained outside the scope of the State aid framework.

The Regulation provides for prior notification to the Commission of:

1. concentrations where certain turnover thresholds are exceeded, where the companies involved have received financial contributions from non-EU States exceeding a certain threshold in the previous three years;
2. in the context of public procurement procedures in the EU whose value exceeds EUR250 million, tenders submitted by companies that have received financial contributions from non-EU States in excess of EUR4 million in the previous three years.

The investigation opened by the Commission follows the notification submitted by the subsidiary of a Chinese state-owned company, active in the production of rolling stock. The notification relates to a public procurement procedure initiated by the Bulgarian Ministry of Transport and Communications and concerns the supply of 20 electric “push-pull” trains, as well as related maintenance and staff training services, worth approximately EUR610 million.

Upon preliminary examination of the notification, the Commission considered that there were sufficient indications to believe the company had been granted a foreign subsidy potentially allowing it to make an unduly advantageous tender, distorting competition in the single market. The Commission decided to open an in-depth investigation to obtain the necessary information to confirm or deny the preliminary assessment. The investigation must be concluded within 110 days from the notification. In its final decision, the Commission can:

• accept commitments offered by the company, if they fully and effectively remedy the market distortion;
• prohibit the award of the contract, if it finds that the subsidy distorts the market;
• adopt a decision not to raise objections, if it finds that the preliminary assessment in the decision to initiate the in-depth investigation is not confirmed.

During the investigation, all stages of the procurement procedure can continue, with the exception of the adjudication.

 

ICA adopts new version of the Communication on concentrations below the merger control thresholds

On 27 February 2024 the ICA adopted a new version of the “Communication on the application of Article 16, paragraph 1-bis of Law No. 287 of 10 October 1990,” which replaces the previous one, published in December 2022.

The new Communication:

• eliminates, from the section detailing the conditions at the occurrence of which the rule applies, the reference to the possibility of basing the activation of the power on “prima facie evidence of the existence” of risks to competition. This would seem to anchor the activation of the power to more robust analyses which demonstrate the existence of concrete risks, as required by the rule;

• makes it easier to grant extensions of the time limit (30 days) within which the parties must notify, if requested to do so by the ICA. This is done by eliminating the reference to “exceptional cases” that justify the concession of the extension and by eliminating the provision that sets a maximum extension period, which was previously 30 days, allowing the grant of longer extensions;

• establishes that voluntary disclosures “should happen before the transaction is finalized.” However, the possibility of notifying after the completion of the transaction remains and, in this case, the ICA establishes that the notification must be received by the Authority no later than two months after the finalization of the transaction;

• provides that, in case of voluntary communications, companies must outline the reasons why the transaction might have “an effect on competition,” whereas the previous Communication referred to “concrete risks for competition.” It also recalls the elements that are relevant to such assessment;

• specifies that the 60-day period within which the Authority informs whether it intends to request a notification in case of a voluntary disclosure starts upon receipt of complete information from the companies.

 

Application of Article 22 EUMR to concentrations below national and EU merger control thresholds: the Opinion of AG Emiliou

On 21 March 2024, Advocate General Emiliou delivered his opinion in relation to a well-known judicial case originating from a referral made pursuant to Article 22 of EU Regulation No 139/2004 by the French Autoritè de la concurrence, who requested the European Commission to review a concentration below the thresholds set forth by EU and national merger control legislations.

The referral made by the Autoritè and accepted by the Commission resulted in the applicability of EUMR to the concentration, prohibiting the parties from implementing the concentration before the Commission’s decision (standstill obligation).

The parties to the transaction then appealed before the EU General Court the decisions by which the Commission accepted the referral and the requests to join by several Member States, challenging, inter alia, the French Authority’s power to make a referral under Article 22(1) EUMR, since it had no competence to review the concentration below merger control thresholds.

The General Court did not uphold the parties’ submissions on that point. In rejecting the appeal, the General Court held that under a “literal, historical, contextual and teleological” interpretation of Article 22(1) EUMR, Member States’ authorities can ask the Commission to examine a concentration which does not have a Community dimension, even when they have no competence to review such a concentration under national law.

AG Emiliou’s conclusions are diametrically opposite.

The AG, having examined Article 22(1) EUMR under the same profiles analysed by the General Court, concluded that EU Member States lacking competence to review a concentration cannot refer its examination to the Commission under Article 22(1) EUMR. Otherwise, if the broad interpretation provided by the General Court were to be followed, in the AG’s view, the scope of Reg. 139/2004 would be excessively broadened and would end up granting the Commission the power to review almost any concentration, occurring anywhere in the world, regardless of the undertakings’ turnover and presence in the EU markets, of the value of the transaction and at any moment in time.

In conclusion, AG Emiliou proposed that the EU Court of Justice should set aside the General Court decision and annul the challenged decisions.

We’re now waiting for the decision of the EU Court of Justice, which, as AG Emiliou pointed out, is being called upon for the first time to rule on the scope of Article 22 EUMR.

 

Digital Markets Act compliance now due for designated gatekeepers

As of 7 March 2024, the so-called gatekeepers – i.e. six large companies providing core platform services with considerable economic power designated by the European Commission – must ensure compliance with the obligations imposed to them by the Digital Markets Act (Regulation (EU) No. 2022/1925 – DMA).

Such obligations, set forth in Articles 5, 6 and 7 of the DMA, require gatekeepers, inter alia, to:

• allow business users to promote their products and services also outside the core platform used;
• allow end users to uninstall pre-installed applications or change default settings on the operating system, virtual assistant and web browser of the gatekeeper that direct or steer end users to products or services provided by the gatekeeper concerned;
• ensure that users can easily unsubscribe from core platform services;
• ensure the interoperability of the core platform with third party systems and services and allow end users to install such third-party systems and applications on their own devices;
• allow commercial users who advertise and offer their products and services via the platform to access data on the use of the platform and services by end users in order to independently verify the advertisements inventory.

In order to enable the Commission to verify the compliance of the gatekeepers with the obligations under the DMA, these companies had to provide a report describing the measures implemented to comply with the obligations under the DMA, as well as information on the consumer profiling techniques applied.

As a result of these verifications, on 25 March the Commission opened proceedings – that the Commission intends to conclude within the next 12 months – in order to evaluate the adequacy of the measures undertaken by three gatekeepers.