The Italian Competition Authority (ICA) has recently clarified the scope and modalities of enforcement actions in respect of its new monitoring power concerning the food supply chain.

As outlined in our previous legal update on this matter, the ICA monitors compliance by contractual parties to agreements for the transfer of agricultural and food products (except for agreements with final customers and those between agricultural entrepreneurs), with the mandatory requirements and provisions laid down by Article 62 of the “Growing-Italy” Decree[1]. The ICA has the power to impose substantial fines for failure to comply with the requirements and provisions set out by Article 62. In particular, it may impose fines up to €20,000 in cases of failure to comply with requirements regarding mandatory elements of a contract (i.e. written form, duration, quantities and features of goods, price, terms for delivery and payment); and up to €500,000 on contracting parties which do not comply with the mandatory payment terms (i.e. 30 days for perishable goods and 60 days for non-perishable goods).

Validity of an agreement under Italian civil law is not affected in cases of failure to comply with the requirements regarding the mandatory elements of the contract (i.e. written form, duration, quantities and features of sold goods, price, terms for delivery and payment). The provision set out in Article 62 which deem such an agreement as null and void was repealed by the “Second Development-Decree”[2]. The interests of an enterprise are, therefore, protected by the enforcement powers granted to the ICA.

However, the ICA Regulation establishes that Article 62 provisions will apply to contractual relationships in which there is a substantial imbalance between the parties’ economic strength. Therefore, the ICA is likely to only use its monitoring power to protect the weaker party in a contractual relationship (e.g. a contract with a wholesale retail chain). More importantly, the ICA might, in principle, tend to consider it appropriate to act only in cases of infringements which clearly result in a distortion of competition in the relevant market.

How the new powers of the ICA pursuant to Article 62 of the “Growing-Italy” Decree will be implemented has been outlined in the recently published ICA Regulation, a draft of which has been submitted to a public consultation. The main aspects are summarised below.

Scope: application of the ICA Regulation is confined to commercial relationships in which there is a substantial imbalance of the respective commercial/economic strength of the contracting parties.

Requirements for the complaint/request for ICA intervention: the ICA may act on its own initiative or upon request for intervention by a third party (i.e. any subject, association or organisation which has an interest in filing the request). Information about a company infringing the provisions, the company affected by the unlawful conduct, and the applicant filing the request must be provided. Failure to provide such data will result in the request being admissible. However, the ICA may start its proceedings upon request filed by a relevant trade associations or other interested third party.

Termination of the pre-investigation phase by a decision not to act: the ICA may decide to dismiss requests for intervention when it considers that such requests concern conduct outside its enforcement priorities agenda – usually for reasons of efficiency and cost. In this respect, the ICA will issue a specific policy notice aimed at clarifying the priorities of its enforcement action. However, if proceedings do not commence within 180 days from the receipt of the request it is to be considered dismissed.

Deadline for termination of possible proceeding: proceedings started in accordance with Article 62 will be completed within 120 days (extended to 180 days when a contractual party is not based in Italy), except for specific needs that may arise in relation to the objects and/or the subjects of the proceedings.

The ICA Regulation has raised a number of concerns and negative reactions among several Italian food and drinks market players insofar as it is widely argued that the modalities and limits of application embodied in the same, namely in terms of possible ICA’s intervention, tend to make weak and hardly effective such a potentially powerful tool at the disposal of the ICA.