Antitrust Bites – Newsletter

Italian Competition Authority launches public consultation on the draft regulation concerning forms of collaboration and cooperation for implementing the Digital Markets Act

The Italian Competition Authority (ICA) has launched a public consultation on the draft regulation concerning forms of collaboration and cooperation for the implementation of Regulation (EU) No. 2022/1925, so-called Digital Markets Act (DMA).

The regulation under consultation aims to implement Article 18 of Law No. 214/2023 (Annual Market and Competition Law 2022), which mandates the ICA to adopt specific regulations governing the exercise of its investigative powers in the event of potential violations of the obligations stipulated by Articles 5, 6, and 7 of DMA by “gatekeepers.”

The draft regulation primarily grants the ICA the authority to issue requests for information and document production in the face of possible violations of the obligations under Articles 5, 6, and 7 DMA, with the consequent applicability of the sanctions and penalties provided for by Article 12, paragraph 2-ter of Law No. 289/1990 in cases of refusal, failure to respond, or falsification of the information or documents provided.

As also provided by Article 38(7) DMA, the ICA can initiate investigations regarding potential non-compliance with the obligations only after notifying the Commission, which remains the “sole enforcer” of the DMA. This means that the initiation of a similar proceeding by the Commission results in the conclusion of the investigation initiated by the ICA (or deprives the ICA of the ability to initiate it if it hasn’t already initiated one).

The investigative powers that the ICA can exercise in investigations related to potential non-compliance by gatekeepers are the same as those provided for by Article 14, paragraphs 2 to 2-quinquies of Law No. 287/1990, which include the power to:

1. request information and documents from companies;
2. summon representatives of companies and individuals who may have relevant information for the investigation;
3. arrange for expert reports and conduct economic and statistical analyses, as well as consult experts; and
4. conduct inspections.

When the ICA believes that the investigation is sufficiently advanced, it notifies the companies of the deadline for closing the evidence-gathering phase and reports the results of the investigation to the Commission.

The ICA retains the authority to initiate investigations under Article 14 of Law No. 287/1990 if, during the investigation of potential DMA violations, evidence of competition law violations or abuse of economic dependence emerges.

Interested parties can submit their comments on the draft regulation by 3 July 2024.

ECJ rules on late payment interest due from the EU Commission to companies following the redetermination or cancellation of a fine

The Court of Justice of the EU, in Grand Chamber, issued a definitive ruling on 11 June 2024, in case C-221/22 regarding the obligation of the European Commission to pay late payment interest on amounts unduly collected and paid by companies sanctioned for violating antitrust regulations, following the redetermination or cancellation of the fine.

The ruling originates from an appeal filed before the EU General Court by a company that had been fined by the Commission for abusing of its dominant position infringing Article 102 TFEU. The General Court, upholding the appeal, had reduced the provisionally paid fine and ordered the Commission to refund the unduly collected amount. But when the company asked the Commission to also pay late payment interest for the period between the payment of the fine and the refund, the Commission refused. The EU General Court subsequently ruled on the appeal against the Commission’s decision filed by the company. It partially upheld the appeal, considering that the Commission’s refusal to pay interest constituted a sufficiently serious breach of Article 266, first paragraph, TFEU, which requires EU institutions to take all necessary measures to execute a judgment of an EU court that annuls or reforms one of their acts. The General Court condemned the Commission to compensate the company for the damage suffered due to the refusal to pay late payment interest on the unduly collected fine amount.

The ECJ, called to rule on the matter, fully rejected the Commission’s appeal, reaching different conclusions than those presented in November 2023 by Advocate General Collins (see Antitrust Bites – November 2023).

According to the ECJ, Article 266, first paragraph, TFEU requires that the institution (in this case, the Commission) whose act has been annulled has to take the necessary measures to implement the judgment that declared the act void with retroactive effect. And that, in case of annulment of a sanction, the institution must refund all or part of the fine paid provisionally, plus interest for the period between the provisional payment of the fine and the date of the refund. The rationale of this provision, according to the Court, is to restore the company to the position it would have been in if it had not been deprived, for the entire period, of the amount corresponding to the unduly collected sum.

European Commission issues first sanction for deleting WhatsApp messages in the context of an antitrust inspection

The European Commission recently gave a fine of approximately EUR 16 million to an undertaking since, during an inspection in March 2023, it found that an employee of the company had deleted WhatsApp messages concerning business information, exchanged with a competitor.

This is the first time the Commission has given a fine for deleting messages exchanged on a mobile device using social media apps. The Commission has exercised its power, provided by Regulation No 1/2003, to apply fines up to 1% of the total turnover of the undertakings hindering antitrust investigations.

The Commission deemed the conduct to be very serious, particularly because the employee deleted the WhatsApp messages concerning business information only after being informed about the inspections at the company. Moreover, the Commission was not informed about the messages being deleted. It only found out after detecting the employee’s mobile device.

The Commission – which formerly issued a sanction of 0.3% of the undertaking’s turnover – was positive about how the company collaborated during and after the inspections, including in recovering the deleted WhatsApp chats, and therefore decided to reduce the fine by 50% to EUR 15.9 million (0.15% of the undertaking’s turnover).

Council of State rules on ICA’s power to take precautionary measures in proceedings under Article 8, paragraph 2-quater, of Law 287/1990

In Order No. 1881, published on 20 May 2024, the Council of State ruled on the ICA's power to take precautionary measures in relation to cases regulated by Article 8, paragraph 2-quater, of Law 287/1990 – which requires companies operating services of general economic interest or operating under a monopoly to make goods or services made available to their subsidiaries or affiliates accessible to directly competing companies under equivalent conditions.

The Council of State ruled on a precautionary appeal brought by a company that was the recipient of a measure imposing precautionary measures adopted by ICA as part of a proceeding under Article 8, paragraph 2-quater, Law 287/1990. The Council observed that paragraph 2-quinquies of Art. 8 under review, by providing that in the case referred to in paragraph 2-quater, “the Authority shall exercise the powers referred to in Article 14,” extends the scope of the investigative powers referred to in Article 14 of Law 287/90 (which refers to cases of restrictive agreements of competition and abuse of dominant position), also to cases of violations of the provision referred to in paragraph 2-quater. The same express reference is not, however, provided for Article 14-bis of the Law, which governs, instead, the ICA’s precautionary powers. This, in the opinion of the Council of State, raises doubts about the existence of an adequate legal basis for the Authority’s power to impose precautionary measures in cases of alleged violations of Article 8, paragraph 2-quater, of Law No. 287/1990.

In light of this, and because the measures imposed by the ICA as a precautionary measure involved interventions of doubtful reversibility and were likely to result in impactful effects on the appellant company’s organisation, the Council of State upheld the appeal by suspending the effects of the precautionary measure taken by the ICA.

ICA closes the proceedings for an alleged cartel, initiated following a leniency programme application, without ascertaining any infringement

With a decision adopted on 21 May 2024, the ICA closed the investigation into an alleged collusive conduct during tenders for the supply of radiopharmaceuticals to public and private facilities, without finding any infringement. The Authority concluded that there was insufficient evidence of collusion, despite the fact that the proceedings were initiated following the application, by one of the parties to the alleged cartel, to the leniency programme.

The conduct alleged by the leniency applicant involved an anticompetitive agreement between undertakings active in the market for the production and sale of radiopharmaceuticals, also implemented, allegedly, through the Italian Association of Nuclear Medicine and Molecular Imaging. This agreement allegedly took place during national tenders for supplying pharmaceuticals to public hospitals and private clinics. The alleged purpose of the collusion was to eliminate competition when participating in tenders by creating excessive temporary joint ventures or through allocating orders, as well as through a distorted use of the back-up service for supplying products.

The ICA, however, deemed that the elements gathered during the investigation did not corroborate the alleged infringement outlined by the leniency applicant. In fact, the ICA noted the specific nature of the market in question, which requires a degree of cooperation between competing undertakings to guarantee the supply of radiopharmaceuticals on a continuous basis. The pharmaceuticals are highly perishable and require an expensive production infrastructure, which is present only to a limited extent in Italy. This situation implies a certain degree of cooperation between competitors, to ensure a continuous supply, also through back-up mechanisms. So, the Authority stated that the agreements between the undertakings didn’t exceed the limit of the cooperation required by the specific nature of the market. The ICA also held that it wasn’t possible to state that the undertakings involved could participate individually in the tenders and, therefore, that the temporary joint ventures could be considered excessive. In addition, it ruled out that the use of the back-up mechanisms could be qualified as “distorted” and in violation of the prohibition of anticompetitive agreements.