On 9th April 2014, the Italian Competition Authority (ICA) opened an in-depth investigation into two Italian companies operating in the school management software market for infringements of Article 101 TFEU, the prohibition against anticompetitive agreements.

The companies are Argo Software S.r.l. (Argo) and Axios Italia Service S.r.l. (Axios) manufacture management software for schools which is used in the vast majority of Italian schools.

This software normally interoperates with other software for the so-called “electronic school register” which allows schools to communicate information about students to their families via email or electronic devices.

As of the academic year 2012-13, all Italian schools must adopt the “electronic school register” and as a result, many different software of such a kind have been created by several software companies.

In this scenario, the ICA alleged that Argo and Axios agreed to make it difficult for electronic school register software created by other companies to interoperate with their management software. In particular, only the “electronic school register” software created by Argo and Axios could access the school management software database.

In essence, the ICA held that Argo and Axios were trying to foreclose competition on the market of electronic school register software (downstream market) by exploiting their strong economic position in the upstream market of school management software. This alleged strategy would aim at reaching a strong economic position also in the new market of electronic school register software.

Argo and Axios argued as defence that the access to the databases was limited to protect their intellectual property rights (copyright) on the management software.

In our view, the decision at issue resembles the Microsoft case (Case T-201/04 Microsoft v Commission [2007] ECR II-3601). In that case, Microsoft enjoyed a dominant position in operating systems and refused to render adequate interface information (protected by copyright) that would have allowed its competitors on the work group server operating market to offer alternative work group server operating systems.

The European Commission and the Court of First Instance applied the principles set out in the precedent case-law and found that the refusal to grant a licence to use the interface information impeded competing companies to interoperate with the Window PC operating system so as to hinder the development of competing products on the subordinate market.

Microsoft, by leveraging its dominant position in the upstream market (operating systems), would have gained the same dominance in the downstream market too. Thus, Microsoft was obliged to license its competitors.

In light of these cases, companies should be warned that the use of intellectual property rights (as copyright on software) cannot go beyond certain limits which European Union and national antitrust authorities have been constantly monitoring in recent years. Indeed, one of the mentioned limits is “software interoperability” if it is indispensable to foster products innovation on other and necessary linked markets.

Therefore, undertakings should assess very carefully whether “software interoperability” can be considered as an “essential facility” to develop new connected products in downstream market before denying that.