Legislation and jurisdiction

Relevant legislation and regulators

What is the relevant legislation and who enforces it?

Law No. 287 of 10 October 1990 (the Law) (in particular, articles 5 to 7 and 16 to 19) contains the rules on antitrust control of concentrations and joint ventures. Presidential Decree No. 217 of 30 April 1998 (the Regulation) contains procedural and enforcement rules. The Law is enforced by an independent body, the Italian Antitrust Authority (IAA) in Rome. For utilities and other sectors subject to specific merger control regimes, see question 8.

Scope of legislation

What kinds of mergers are caught?

The Law applies to concentrations. A concentration occurs where:

  • two or more undertakings merge;
  • an undertaking or a person already controlling an undertaking acquires sole or joint control over the whole or parts of another undertaking; or
  • two or more undertakings form a concentrative joint venture through the establishment of a new company (see question 3).

What types of joint ventures are caught?

The wording of the Law does not contain a clear definition of ‘concentrative’ and ‘cooperative’ joint ventures.

Generally speaking, the incorporation of a jointly controlled undertaking or the acquisition of joint control over a previously existing undertaking will give rise to a ‘concentrative joint venture’ (caught by the Italian merger control regime) provided that:

  • the joint venture is a full-function joint venture; and
  • the joint venture’s main object or effect is not the coordination of the competitive behaviour of the parent companies.

This second part of the test is what differentiates the assessment of joint ventures in Italy with respect to the current EU merger law (as it remains consistent with the previous definition of concentration included in the pre-March 1998 EU law). This difference from the current EU merger control regime has been increasingly believed to be just theoretical, but recent cases have shown that this is not the case (see question 20).

To assess whether a joint venture is concentrative or cooperative, the 1994 European Commission Notice on the distinction between cooperative and concentrative joint ventures must be kept under consideration. Accordingly, full-function joint ventures are treated as ‘cooperative’ and appraised under the rules on agreements between undertakings (and not under the merger control rules) if, after the transaction, both parents will remain actual or potential competitors in the same geographical and product market as the joint venture, or in a market that is upstream or downstream or neighbouring with respect to that of the joint venture, if certain conditions are met. Full-function joint ventures that are not ‘cooperative’ (concentrative joint ventures) will be treated as concentrations.

Concentrative joint ventures must therefore be notified to the IAA for appraisal under the merger rules and procedures described in this chapter.

‘Cooperative joint ventures’, in turn, are subject to the rules on restrictive practices. Article 2 of the Law, like article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements and concerted practices between undertakings that have as their object or effect a substantial restriction of competition in the national market or in a substantial part thereof. Under the Law, such agreements may be individually authorised, for a limited period of time, on grounds similar to those provided for under article 101(3) of the TFEU. Articles 4 and 13 allow undertakings to notify an agreement to the IAA for negative clearance or individual exemption. Following the entry into force of EU Regulation 1/2003, which mandates national competition authorities to apply articles 101 and 102 of the TFEU whenever the national competition laws are applied to cases where there is an ‘interstate trade effect’, the IAA has indicated that it will no longer accept filings for negative clearances or individual exemptions, even in the case of cooperative joint ventures, if they may affect interstate trade.

To obtain a negative clearance or an individual exemption for purely ‘Italian’ cooperative joint ventures (ie, where there is no interstate trade effect), the parties must file a request using a special form. Within 120 days of notification, the IAA must either declare that the cooperative joint venture does not infringe article 2 (negative clearance) or decide to initiate proceedings. The IAA, when initiating these types of proceedings, normally indicates a non-mandatory deadline of 120 days within which it will make a final decision.

At the end of proceedings, the IAA will issue a decision stating whether the joint venture infringes article 2 and if so, rule on the request for an individual authorisation.

Notification of cooperative joint ventures is not mandatory. However, if a joint venture may infringe article 2, the IAA may start an investigation on its own initiative or following a third-party complaint.

There is also the risk of claims by any party (including third parties) who has an interest in a declaration of nullity of the cooperative joint venture or in damages.

Is there a definition of ‘control’ and are minority and other interests less than control caught?

Article 7 of the Law contains a very broad definition of control for the purposes of merger control. First, the provision expressly refers to the definition of ‘controlled companies’ in the Italian Civil Code, namely:

  • companies in which another company has the ability to control, directly or indirectly, including through fiduciary companies, the majority of votes at the shareholders’ meeting;
  • companies in which another company has, directly or indirectly, including through fiduciary companies, sufficient voting rights to exercise a dominant influence in its shareholders’ meetings; and
  • companies that are under the dominant influence of another company by virtue of contractual links.

Second, the concept of control also includes any legal or factual situation whereby one party can exercise (including jointly with another party) a decisive influence over an undertaking. Relevant factual or legal elements include ownership or other rights over the assets or part of the assets of the undertaking, and any rights, contracts or other legal relationships that confer a decisive influence in determining the composition, resolutions or decisions of the corporate bodies of an undertaking.

As a result (and also in light of the express general obligation contained in the Law to interpret its provisions in accordance with the relevant EU principles as developed by the EU institutions), the definition of control for merger control purposes under Italian law is very broad and substantially corresponds to the definition of control applicable under EU merger law. The Law may thus apply to the acquisition of minority shareholdings (provided that this is sufficient to confer joint or sole control over the acquired company - see below) and concentrative joint ventures. More precisely, consistently with relevant European Commission practice:

  • a minority interest confers joint control over the acquired undertaking if, by virtue of the provisions of a shareholders’ agreement or through other contractual or de facto mechanisms, the holder of the minority interest can exercise veto powers over certain ‘strategic’ decisions of the acquired company; and
  • a minority interest can be sufficient to confer even sole control over an undertaking, given other factors, the most important of which is that the remaining shareholding is dispersed among a large number of shareholders.

Given the substantive approach to the notion of control, board or management representation that grants one minority shareholder a veto over strategic decisions, would be considered in assessing whether this minority shareholder holds joint or even sole control, and this irrespective of the actual shareholding held. Even merely contractual arrangements could give rise to a situation of control by a non-shareholder.

Thresholds, triggers and approvals

What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?

The Law that provides two cumulative turnover thresholds has recently been modified. In August 2017, the Italian Parliament approved a law that decreased the first threshold (ie, the combined turnover of all undertakings concerned) from €499 million to €492 million, and - most importantly - introduced a twofold change of the second threshold by, on one hand, reducing from €50 million to €30 million the amount of the relevant turnover and, on the other, referring to the Italian turnover of each of at least two undertakings involved (and not, as it was under the old regime, only to the Italian turnover of the target). The thresholds are updated each year to reflect adjustments in the GDP deflator index, and the new figures are published in the IAA’s Bulletin and on its website (www.agcm.it). The last change was in March 2019 and the test applicable since then requires that:

  • the Italian turnover of all undertakings involved is higher than €498 million; and
  • the Italian turnover of each of at least two undertakings involved is higher than €30 million (ie, this has not been revised from the 2017 legislative amendment referred to above).

Turnover is defined as the amount derived from the sale of products or the provision of services (excluding turnover taxes) in the preceding financial year.

In the case of banks and ‘financial institutions’ (ie, firms active in securities investment, asset management, consumer credit or leasing), the turnover used for the purpose of calculating the thresholds is equal to the value of one-tenth of their total assets, excluding memorandum accounts, and, in the case of insurance companies, the value of premiums collected. As a matter of practice, with regard to the turnover of credit and other financial institutions, the IAA, therefore, still follows the guidance contained in the old 1994 European Commission Notice on the calculation of turnover.

The Law will not apply to any transaction caught by the provisions of the EU Merger Regulation (EUMR), with the exception of referrals, as provided for in the EUMR (as set out in the European Union chapter).

Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?

Pre-merger filing is mandatory.

There are, however, a few exceptions according to which an acquisition or merger is not considered a ‘concentration’ within the meaning of the Law and thus does not have to be notified. These are:

  • acquisitions of shares by banks or other financial institutions, solely for resale, in undertakings being incorporated or in relation to capital increases, as long as the acquiring institutions do not exercise any voting rights attached to the shares acquired and sell them on within 24 months of the original acquisition (financial exception); and
  • acquisitions of, or mergers with, companies that do not carry out any economic activity and do not have any direct or indirect control over another undertaking, nor hold licences, permits, concessions, or any other rights that would allow them to engage in business activities, nor have direct or indirect control over another undertaking holding any of those rights.

Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?

Concentrations between foreign companies must be notified to the IAA whenever, by virtue of their sales in Italy, the parties satisfy the cumulative turnover thresholds. The presence of assets or subsidiaries in Italy is not a relevant factor for the purpose of determining the existence of a notification obligation. The rules of the Law therefore also apply to foreign-to-foreign mergers. The cumulative nature of the two turnover thresholds means that the jurisdictional nexus between a foreign-to-foreign deal and Italy is satisfied every time the merger turnover thresholds are met. The recent change in the Law (see question 5) further reinforces the local nexus requiring that at least two of the undertakings concerned generate material turnover in Italy for a transaction to be reportable.

Are there also rules on foreign investment, special sectors or other relevant approvals?

Special powers apply to a wide range of M&A transactions relating to assets in specific industries: national defence and security, energy, communications and transportation. These ‘golden powers’ (so-called as they replace the former ‘golden share’ provisions) impose mandatory filing obligations on the parties involved in any deal where key strategic assets and undertakings are being transferred and grant the government - not the IAA - far-reaching powers to impose vetoes and restrictions on such deals. Failure to comply with the new rules gives rise to heavy sanctions (see, for example, the approximately €74 million fine issued by the Office of the Prime Minister against Telecom Italia for failing to file about its acquisition of control by Vivendi - this fine is currently suspended). Recently, the Italian government has introduced amendments in the ‘golden power’ rules, broadening the scope of review, including critical or sensitive infrastructure (eg, storage and management of data or financial infrastructure), critical technology (eg, artificial intelligence, robots, semiconductors), security of procurement for critical high-tech inputs, and access to, or the capacity to control, sensitive information.

In addition, there are specific provisions applicable to special sectors, as outlined below:

  • With regard to the cinema exhibition services, acquisitions leading to the creation of a market share of more than 25 per cent in one of the main Italian cities must be notified to the IAA.
  • In the case of mergers involving banks, the IAA has to take a decision within 60 days of the submission date. The IAA will assess whether the concentration gives rise to any antitrust concerns, and the Bank of Italy, in line with its financial supervisory role, will assess the transaction under prudential rules in a parallel proceeding also lasting 60 days. In 2007, the Bank of Italy and the IAA signed a protocol agreement setting up procedural guidelines for the exchange of information in relation to concentrations with effects on banking markets.
  • Mergers in the insurance sector are subject to the Law. However, IVASS, the relevant authority for insurance companies, which in 2013 become a division of the Bank of Italy, must be asked for a non-binding opinion before the IAA takes any measures.

Legislation prohibits ‘interlocking directorates’ in the banking, insurance and financial services sectors, making it illegal for individuals to sit on the board of more than one corporate body in competing undertakings in any of these sectors. Because the merger notification form requires the merging parties to fill in a section on interlocking directorates, merger control in the above-mentioned sectors can also be used as a means for spotting potential infringements of this law.

With regard to telecommunications, the 1997 Telecoms Law requires that before issuing a decision on any merger (or agreement) in the telecoms, broadcasting and media sector the IAA must require a non-binding opinion from the Italian Communications Authority (AGCOM). Further, a resolution (last updated in 2016) of the AGCOM provides that any concentration (as defined under the Law) involving undertakings active in the media sector and that meets the relevant alternative turnover thresholds (see question 5) is subject to a mandatory notification to the AGCOM, which could block or impose conditions on the transaction if it is likely to threaten pluralism in the relevant area. This obligation is in addition to the possible parallel filing to the European Commission or the IAA. In this regard, in April 2017 AGCOM ascertained that Vivendi’s position, in light of the stake held in Telecom and the 28.8 per cent stake recently acquired in Mediaset (both giving Vivendi the possibility to exercise decisive influence over the two latter undertakings), constituted an infringement of a law that prevents any undertaking generating, directly or through affiliated companies, more than 40 per cent of the revenues in the electronic communication sector (ECS) from having more than 10 per cent of the Communications Integrated System (SIC). AGCOM concluded that, in 2015, Telecom registered revenues that could attribute to Vivendi a share exceeding 40 per cent in the ECS, while Mediaset revenues could attribute to Vivendi a share exceeding 10 per cent in the SIC. According to AGCOM, Vivendi’s position could produce negative effects on competition and pluralism in the media sector, leading to the strengthening of Mediaset and Telecom’s positions in their respective markets. In particular, AGCOM was concerned that Vivendi, by leveraging Telecom and Mediaset’s positions (also considering that media and telecommunications are neighbouring markets), could adopt exclusionary or discriminatory practices. In April 2018, to comply with AGCOM’s decision, Vivendi transferred approximately 20 per cent of its voting shares in Mediaset to a blind trust. Finally, when undertakings entrusted with the operation of services of general economic interest, or operating under a statutory monopoly, wish to operate in markets outside the scope of their current activity, they must do so through a separate company (corporate unbundling). The incorporation of such new companies, or the acquisition of a controlling interest in existing companies operating in new markets, is subject to a prior filing to the IAA and there are penalties of up to €51,645 for failure to notify. The filing obligation applies irrespective of turnover. The IAA has published a notice regarding the formalities applicable. In particular, the notice specifies the situations in which notification is required, and the minimum information required. Since the introduction of this specific filing obligation in 2001, the IAA has prosecuted undertakings for failure to comply with this obligation 28 times, with fines ranging between €1,000 and €50,000.

Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

A concentration must be notified prior to its implementation; that is, before the purchaser has acquired the ability to exercise a decisive influence over the behaviour of the target undertaking.

The earliest a notification can be submitted is as soon as the parties have agreed the essential terms of the transaction, which would allow the IAA to conduct a thorough appraisal. In general, the IAA prefers to be notified of a binding agreement; however, in exceptional cases, a filing has been accepted even before signing the final agreement, provided that the parties could assure the IAA that the main terms and conditions of the transaction - and in particular the aspects that are relevant for an antitrust analysis - would not change. While the IAA has generally adopted a strict approach to this issue, rejecting filings not supported by a binding agreement, its practice varies from one sectoral unit of the IAA to another, and it is advisable to discuss this with officials from the competent unit if necessary.

Fines for failure to notify may amount to up to 1 per cent of the worldwide turnover of the notifying party or parties in the last fiscal year. The IAA has informally indicated that it will adopt a zero-tolerance approach against those that disregard merger filing obligations. In 2016, the IAA opened two different proceedings concerning the banking sector, one against Banca di Credito Cooperativo di Roma and one against Banca per lo Sviluppo della Cooperazione di Credito for their failure to notify their acquisition of sole control, respectively, over Banca Padovana Credito Cooperativo in Liquidazione Coatta Amministrativa and Banca Romagna Cooperativa. The IAA closed both proceedings, imposing on the two banking institutions a €5,000 fine.

Which parties are responsible for filing and are filing fees required?

In the case of acquisition of sole control, the acquirer must make the notification. In the case of a merger or acquisition of joint control, each party that merges or acquires joint control is obliged to notify. The parties may, however, file jointly using the same form by appointing a common representative.

No filing fees apply.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

As a general rule, implementation of the transaction does not have to be suspended after filing but prior to clearance (although, as a matter of practice, in most cases the parties to a concentrative transaction make clearance by the IAA a contractual condition of closing). The IAA, when opening second-phase proceedings, may, however, order, with a formal decision in such regard, the parties not to implement the transaction until it concludes its Phase II review. However, this must be justified on the grounds that the transaction raises serious competition concerns. Since 1990, this has occurred only three times (the most recent case was Unipol/Fondiaria in 2012) (see question 26).

In any event, even if this order is issued, a public takeover offer may be completed during such a suspension period provided that the purchaser does not exercise voting rights at the acquired company’s shareholders’ meetings until the transaction has been cleared.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

Implementing a transaction subsequent to notification but prior to clearance does not give rise to any infringement under the law and so no sanction is applied. Nevertheless, this course of action involves the risk that where a transaction raises serious competition problems, the IAA will decide not to authorise it or to authorise it subject to remedies. Thus, if a transaction is closed prior to clearance, the antitrust risk (ie, the risk of a prohibition or conditional approval decision) will be largely borne by the acquirer only, unless otherwise provided by specific contractual arrangements.

While the absence of a standstill obligation attenuates the risk of ‘jumping the gun’ in the pre-clearance phase in this regard, undertakings must remain wary that any interaction between them prior to clearance and completion of the deal remain subject to review by the IAA under article 2 of the Law, the Italian equivalent of article 101 TFEU, as well as under the latter.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

There are no sanctions for closing before clearance (see questions 11 and 12), provided completion occurs after a complete notification has been submitted.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

As indicated, a transaction, including a foreign-to-foreign deal, could be closed before clearance.

Thus, implementation of a foreign-to-foreign concentration, as well as concentrations involving national undertakings, can occur after having filed (and even before clearance), except where the IAA has issued a specific suspension order to the contrary when opening Phase II proceedings.

In relation to cases where the IAA has issued a specific suspension order, be it a foreign-to-foreign deal or not, while in principle acceptable, the actual feasibility of a local ‘hold-separate’ arrangement will ultimately depend on the geographic dimension of the relevant markets and how such arrangement would affect the potential restrictive effects of the proposed concentration.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

A national public takeover bid that may give rise, if completed, to a notifiable concentration must be submitted to the IAA at the same time it is filed with the Italian financial regulator (CONSOB). In the case of a national public bid (ie, public takeover subject to Italian capital market regulations), the term relating to the first-phase assessment period is reduced to 15 days. As indicated in question 11, where the IAA, having opened a second-phase investigation, issues a suspension order preventing the parties from closing, a public bid may nevertheless be completed provided that the purchaser does not exercise voting rights at the acquired company’s shareholders’ meetings until the transaction has been cleared. Non-national public takeover bids are subject to the provisions applicable to ordinary concentrations.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

Parties may still notify a transaction by completing a form, two copies of which need to be submitted to the IAA along with the relevant attachments. However, the IAA promotes electronic filing by CD-ROM and it is also possible to file by certified email.

Completing the form can be time-consuming. The information required includes details of the parties, description and details of the transaction, and information about the markets affected by the concentration. Additional detailed information on the relevant market must be provided whenever:

  • more than one party is active on a relevant market and, after the concentration, they will hold a combined market share of not less than 15 per cent;
  • after the transaction, one party will hold a market share of not less than 25 per cent when at least another party is present in an upstream or downstream market; or
  • the target undertaking holds a market share of more than 25 per cent even if the other undertakings concerned are not active in the same market or in upstream or downstream markets.

As a matter of practice, the IAA tends to require full filings even where the market share thresholds indicated above are not met. Accordingly, the undertakings concerned should be prepared to supply the IAA with extensive market information in any event.

A considerable amount of documentation must be provided, including all documents concerning the transaction (ie, the execution copies plus the relevant signatory pages and related attachments), balance sheets and annual reports of the companies involved relating to the three financial years preceding the transaction. A power of attorney for the representative signing the filing must also be enclosed (with no particular formalities required). In practice, it is very difficult to file a complete notification in less than two weeks (in particular because the active cooperation of the notifying party or parties and of the target is required). The notification must be submitted in Italian, while as a matter of practice the IAA accepts attached documents (ie, transaction documents) in the original language (if in English, French or Spanish, while a translation may be required in relation to other languages). The notifying party should indicate in its notification which information constitutes business secrets to be treated as strictly confidential (and the reasons for its confidentiality). Fines of up to €25,823 for failure or refusal to provide information and up to €51,645 for supplying false information may be imposed, but only in the case of Phase II proceedings. More broadly, depending on the relevance of the missing or false information to be provided, any such conduct could potentially amount to a criminal offence (although this remains a remote scenario).

The IAA operates a voluntary pre-notification practice. In those cases, at least 15 days before the relevant formal filing, the parties may file with the IAA a briefing paper describing the essential terms of the transaction and the market or markets potentially involved. The parties and the IAA may then meet informally to discuss possible competitive effects of the transaction and the scope of the information to be provided in the actual filing.

Moreover, the IAA publishes a ‘notice of merger submission’ on its website (subject to the parties’ consent). The notice contains a summary description of the transaction and of the affected economic sectors. Third parties are then entitled to submit their observations within five days of the publication.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

The IAA has wide-ranging powers, which only apply, however, if second-phase proceedings are opened. It can gather all relevant information, order the production of documents, order inspections and make copies of corporate documents. Even during the first phase, it cannot be ruled out that the IAA may want to informally contact competitors, clients or suppliers to ask for comments or to verify whether the information submitted is true. In some cases, the officials may contact the parties directly to ask for clarifications or explanations of the transaction. The parties may make submissions in writing and may apply to be heard at hearings. As stated in question 16, fines of up to €25,823 for failure or refusal to provide information and up to €51,645 for supplying false information may be imposed, but only in the case of Phase II proceedings.

What is the statutory timetable for clearance? Can it be speeded up?

A first-stage investigation takes 30 calendar days (15 for national public bids), after which the IAA may:

  • clear the transaction if it does not raise serious doubts as to its compatibility with the Law; or
  • open second-phase proceedings if serious doubts concerning the compatibility of the transaction with the Law arise.

Usually, the IAA does not issue a first-phase decision much earlier than 30 days from receipt of notification. This is because of various factors such as the amount of the information that the officials must consider, the internal procedural rules of the IAA and its considerable workload. However, in the least problematic cases the issuing of a decision before the expiry of the 30-day period cannot be ruled out.

If the IAA considers that the parties have not provided complete information, it may formally require such information to be submitted, and this interrupts the running of the 30-day period. This term will run afresh from the moment the IAA considers that the information is complete. It is not uncommon for the IAA to interrupt the 30-day review period through such information requests. However, as a matter of practice, the IAA’s officials will normally seek to obtain the relevant information from the parties in an informal way (ie, over the phone), though this is typically done by setting very short deadlines (normally, two to three days, sometimes even less). In principle, only when these deadlines are not complied with does the IAA issue a formal letter interrupting the 30-day first-phase period. The new procedure entailing an informal pre-notification meeting described in question 16 has been introduced, in part, to avoid these interruptions. During such a meeting, the IAA would generally make clear to the parties all the information that it needs to assess the competitive effects of the transaction, so that the parties will be able to provide a complete filing. Second-phase proceedings must be closed within 45 calendar days (unless the undertakings have failed to provide information available to them, in which case the term can be extended for a further 30 calendar days, although this extension can be made just once).

Accordingly, provided that the 30-day first-phase period is not interrupted, the overall duration of proceedings can run up to 105 calendar days.

Substantive assessment

Substantive test

What is the substantive test for clearance?

A concentration is prohibited whenever it creates or strengthens a dominant position as a result of which competition is eliminated or substantially reduced in the Italian market. Despite this being in line with the pre-2004 EUMR substantive test, in practice the criteria for evaluating a merger are largely in line with the new EUMR test, and include market shares, the choice suppliers and users have, access to sources of supply or market outlets, the structure of the relevant markets, the existence of any barriers to entry, and supply and demand trends. The IAA in fact interprets the test broadly, thus effectively applying a test close to that of the current EUMR.

The IAA’s approach has not been affected by the global economic crisis and, although in some cases the IAA has considered the current trends and companies’ corporate restructuring in some markets as background elements of the transaction (for instance the Stato Federale della Baviera/BayernLB Holding case, a concentration related to a bank nationalisation in Germany and, most recently, the Quaestio capital management/Banca popolare di Vicenza (2016) and Quaestio capital management/Veneto banca (2016), both concerning the banking sector, and Ferrovie dello stato italiane/Ferrovie del sud est (2016), concerning the rail transport sector), it does not appear that this has been a key element in its merger assessment. The IAA has, however, been prepared to accelerate the procedure in such cases. The IAA has not used the failing-firm defence or any similar ‘failing firm’ theory over the past few years. Notably, in the Emmelibri/Effe 2005 Gruppo Feltrinelli/Newco case (2014) the notifying parties while putting forward defensive arguments highlighting that absent the merger EFFE 2005 would have ceased its distribution activities, explicitly excluded any failing firm defence. In 2012 the IAA issued a temporary suspension order to prevent the implementation of the proposed acquisition of Fondiaria Sai, the second-largest insurer in Italy, by Unipol, also one of the key players in the Italian insurance market, despite the rationale of the transaction being that of rescuing the target company’s group from financial difficulties. The transaction was eventually cleared subject to structural remedies.

Is there a special substantive test for joint ventures?

There is no special substantive test for concentrative full-function joint ventures, which are exclusively appraised under the broad ‘dominance’ test that applies to other concentrations. Cooperative joint ventures (and under Italian law this concept also includes full-function joint ventures where both parents remain in the same market of the joint venture) are not treated as concentrations and are assessed under the restrictive practices test (see question 3). In January 2017, in the Lottomatica/Admiral Entertainment/Newco case the IAA, despite a referral back by the EU Commission, closed the proceedings considering that the notified joint venture had no structural nature and hence it did not amount to a concentration. In particular, it concerned the creation of a Newco (70 per cent by Lottomatica and 30 per cent by Admiral Entertainment - part of the Novomatic group) that would have been active in the gambling market (in the AWP and VLT machines segment). The parent companies would have remained active both in the gambling market at retail level and in the upstream market for the production and marketing of AWP and VLT software. Further, the transaction included a non-compete agreement between Lottomatica and Novomatic with regard to the Newco for the acquisition of gaming halls. Taking into account all these elements, the IAA considered that the transaction did not concern any transfer of business, but rather could lead to substantial cooperative effects, and therefore it opened proceedings under article 101 TFEU (the IAA closed the proceedings in May 2017, as the parties withdrew the transaction).

Theories of harm

What are the ‘theories of harm’ that the authorities will investigate?

The IAA is required to follow European Commission case law and practice, including that on collective dominance in merger cases. Even before the 2004 EU reform, the IAA was ready to apply the theory of coordinated effects to block a merger (eg, the 2002 Granarolo/Centrale del Latte di Vicenza case). The IAA has so far never applied the pure ‘unilateral effects’ theory of harm, now possible under the EUMR, when the transaction does not involve or lead to a situation of dominance, and some authors believe that this would not be possible under the Law. In Ardagh Glass/FiPar Finanziaria di partecipazioni Industriali (2011), the transaction involved horizontal effects in the glass and metal packaging sector. While, depending on the relevant market definition, the transaction could be seen as a three-to-two deal, the IAA cleared it without conditions essentially in consideration of the likelihood of entry and the role of potential competition. In its assessment, the IAA carried out an in-depth economic analysis, taking into consideration a number of elements, such as the structure of the markets and the fact that the merged entity would have faced strong competitive pressure from other potential players. The IAA cleared the merger in Phase I, noting that the creation of a single or collective dominant position was unlikely. The most recent case blocked by the IAA was the 2013 Italgas-Aceagas/Isotina Reti Gas case. In particular, the IAA blocked the proposed change of control of Italian gas distributor Isotina Reti Gas also because no other competing undertakings active in other areas in Italy would have an interest in participating in tenders for the award of gas distribution services where the parties were already present. This case was upheld by the Council of State in January 2015, overturning the first instance decision that had quashed it.

The IAA’s enforcement history also includes challenges to vertical mergers on the basis of their expected foreclosing effects; challenges to conglomerate mergers in relation to the related potential portfolio effects that they might generate; and the strengthening of a joint-­dominance situation based on multi-markets contacts of the undertakings concerned.

Unilateral effects were considered a serious concern in the Arnoldo Mondadori editore/RCS Libri case (March 2016), involving two of the main operators in the book publishing and book retail sectors. The dominant position that would have been gained by Mondadori in four distinct markets and corresponding sub-segments could have resulted in entry barriers in the market for the acquisition of authors’ rights. Also, the concentration would have likely resulted in the systematic refusal by the merged entity to provide book catalogues to other distributors, thus having an anticompetitive impact on both the upstream and downstream markets. Ultimately, the IAA cleared with conditions the acquisition of RCS Libri by Mondadori (see question 25).

On the other hand, in Edenred Italia/Ristochef (2011), the IAA initiated a Phase II investigation as it was initially concerned by significant horizontal aspects, as the concentration could have strengthened the dominant position of the leading player in the luncheon vouchers market. The IAA eventually authorised the transaction without imposing conditions, as it concluded that, despite the large market share imputable to the combined entity post-merger, the operation did not produce significant anticompetitive effects on any of the relevant markets in light of factors such as the bidding nature of the relevant market and the absence of barriers to entry. By contrast, in March 2017 the IAA closed with commitments the Gruppo Editoriale l’Espresso/Italiana editrice case, concerning a transaction in the book publishing sector. According to the IAA, the transaction was likely to create or strengthen a dominant position in the advertising market for daily newspapers in the provinces of Turin and Genoa. In fact, the IAA noted that in the local area of Turin, the estimated combined market share post-merger would have been 90-95 per cent, while in the province of Genoa, the transaction would have led to a de facto monopoly. In this context, the IAA was concerned that third parties would have not been able to exercise any competitive pressure on the merged entity and the entry of new competitors was considered unlikely. The IAA accepted behavioural commitments consisting in the granting to third parties of licence agreements for advertising activities on the Repubblica newspaper both for Turin and Genoa local editions. In particular, the IAA considered the duration of these agreements (five years) sufficient to let third parties enter in the relevant market and exercise effective competition. The IAA took into account both horizontal and conglomerate effects in the 2016 Reti Televisive Italiane/Gruppo Finelco case, concerning a concentration in the radio broadcasting sector. In addition to the dominant position that the merged entity could have gained in the radio advertising market, the IAA also considered the dominant position already held by Reti Televisive Italiane in the free-TV advertising market. The IAA was concerned about the incentives that the merged entity would have had to foreclose in the sale of advertising space in both the radio and video advertising markets. Therefore, the acquisition was cleared with conditions. In particular, the IAA prohibited the merged entity from renewing any concession contracts through which the combined entity would have marketed the advertising space of two other radio broadcasters; in addition, the IAA required video and radio advertisings to be managed by two separate undertakings; lastly, the IAA imposed a four-year prohibition on acquiring new radio broadcasters and concluding new advertising concession contracts with other radio broadcasters.

The IAA is also interested in the ‘harm to innovation’ and ‘common ownership’ theories of harm to which the EU Commission has recently been paying attention; with regard to the former, when, in November 2018, the IAA authorised the Luxottica Group/Barberini merger upon commitments (ie, the merged entity would enter into supply agreements with all interested market operators), the imposed remedies were among other things based on IAA’s concerns of reduction of ability to innovate by competitors.

Non-competition issues

To what extent are non-competition issues relevant in the review process?

In principle, as a matter of law, a prohibited concentration may, exceptionally, be authorised by the IAA for reasons connected with the general interests of the national economy. However, the applicability of this ‘general interest exception’ requires the prior issuance by the Italian government of the necessary guidance criteria, something that has not occurred yet and is unlikely to happen in the near future. Something arguably similar occurred in 2008 in respect of an acquisition by Alitalia (in a situation of distress), but the clearance was then adopted by the IAA pursuant to specifically adopted (and time-limited) legislation.

Moreover, even in ordinary merger procedures, notwithstanding clearance by the IAA, the President of the Council of Ministers may prohibit, for essential reasons of national economy, an acquisition of an Italian company by a foreign company if, in the country of origin of the buyer, Italian companies are subject to discrimination, in particular in relation to their ability to acquire local companies. This provision is intended to ensure reciprocity, but it has never been used to date.

Having said so as a matter of law, it is clear that social considerations may have some influence over the review of certain mergers, although the IAA has always tried to distance itself from any situation that could not be fully explained on purely technical grounds.

Finally, in the banking sector, the IAA may approve a concentration, following a proposal from the Bank of Italy, even if this leads to the creation or strengthening of a dominant position, on financial stability grounds. Even if this power was not resorted to, in the Cassa Centrale Raiffeisen dell’Alto Adige/Gruppo Bancario Cooperativo delle Casse Raiffeisen merger, this transaction was unconditionally cleared in May 2018 after a Phase II investigation (despite the sometimes very high market shares (above 60 per cent or even 70 per cent in the local retail catchment areas)), commitments having originally been deemed necessary. Clearance was given taking into consideration the functional and structural peculiarities of the banks and the fact that these were cooperative banks also supporting local economies, which had to change their corporate nature pursuant to new sector legislation.

Economic efficiencies

To what extent does the authority take into account economic efficiencies in the review process?

Thus far the IAA has made it clear, albeit informally, that efficiencies are not autonomously considered in the context of merger assessment. In light of the enhanced role of merger efficiencies under EU law and taking into account the economic approach to merger analysis adopted and developed throughout the years by the IAA, it is possible that the treatment of efficiencies will in the future also have some, although limited, direct relevance under Italian law. In a case concerning newspapers and periodicals distribution (M-DIS - Servizi Stampa Liguria - Società di Edizione e Pubblicazioni/GE-DIS, 2013), the IAA conducted an analysis of the horizontal and vertical effects of the merger and assessed the efficiency claims raised by the parties. Also in the SEL-Società elettrica altoatesina/Azienda energetica case (2015) concerning the creation of a joint venture active in the markets for gas and electricity distribution, the IAA assessed the efficiency claims raised by the parties (in particular in terms of production and distribution costs savings, which would have been ultimately transferred to consumers), but concluded that these efficiencies were not specifically attributable to the transaction and ultimately authorised the transaction subject to conditions. The same assessment was made in the 2i Rete Gas/Nedgia case (2018), also regarding the market for gas distribution, where the IAA concluded that the efficiencies claimed by the parties could not considered as merger specific. Most recently, the expected efficiencies deriving from the concentration (avoidance of certain organisational duplications) were deemed suitable to have a positive impact on consumers, which helped with the unconditional clearance (in May 2018) of the Cassa Centrale Raiffeisen dell’Alto Adige/Gruppo Bancario Cooperativo delle Casse Raiffeisen banks merger.

Remedies and ancillary restraints

Regulatory powers

What powers do the authorities have to prohibit or otherwise interfere with a transaction?

The IAA may block a transaction or clear it subject to conditions (offered by the notifying party) or measures (imposed by the IAA), or both. If a prohibited transaction has already been implemented, the IAA may order all measures, including divestment, that are necessary to restore the parties to their pre-merger positions. Should the parties implement the transaction despite a negative decision or fail to comply with the relevant conditions, the IAA may also impose fines of between 1 per cent and 10 per cent of the turnover of the businesses party to the transaction. This principle has been confirmed by the Supreme Administrative Court, which specified that the sanction for failure to comply with an IAA decision shall apply not only where the transaction was subject to an outright prohibition but also when the transaction is cleared subject to conditions and those conditions have not been complied with (Edizione Holding/Autostrade). Fines have been imposed in a number of cases, mostly in the maritime transport sector. In the CIN/Ramo di azienda di Tirrenia di navigazione case at the end of 2013, the IAA imposed fines of €500,000 and €271,000 for failure to comply with the conditions imposed in its conditional clearance decision adopted in June 2012. More recently (April 2016), the IAA sanctioned Moby €374,000 as it did not respect clearance conditions for the merger with Toremar, which had been authorised in 2011.

In 2014 the IAA reviewed one of the measures imposed in the Telecom Italia/SEAT Pagine Gialle case at the time of the merger between Telecom Italia and SEAT (2000). The merger had been cleared on condition, inter alia, that Pagine Bianche (the new phone directory) and Pagine Gialle (the Italian incumbent phone directory for residential and business numbers) were not jointly distributed. The IAA, taking into account corporate and legislative changes since its decision, removed this prohibition. In 2014 and 2015, the IAA reviewed the measures imposed in relation to: the life insurance sector in the Banca Intesa/Sanpaolo IMI case (2006 as amended in 2010); the insurance sector in the Unipol/Fondiaria case (2012); and the payments system network in the Società per i Servizi Bancari - SSB/Società Interbancaria per l’Automazione - Cedborsa case (2007). In light of market changes and of corporate and legislative changes, in July 2016 the IAA resolved to remove certain measures previously imposed in the Unicredit/Capitalia case (2007), concerning the banking and insurance sectors, as such measures (consisting, among others, in eliminating certain commissions for cash withdrawals and avoid entering in any partnership with Generali insurance group) were no longer justified. Further, in July 2016 and later on in January 2017, the IAA resolved to amend the measures imposed in the Enrico Preziosi-Artsana/Newco-Bimbo Store case (2015), concerning the manufacturing and distribution of toys and other products for babies and children (healthcare, nursing etc). In 2017 the IAA also resolved to amend one of the measures imposed in the Gruppo Editoriale/l’Espresso case concerning the book publishing sector.

In 2011 and 2013, the IAA blocked two mergers in the energy sector (Compagnia Valdostana delle acque/Deval and Vallenergie and Italgas-Acegas/Isontina Reti Gas) owing to the presence of barriers to entry and absence of potential competition.

Remedies and conditions

Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?

During both stages of the proceedings, the IAA may indicate to the notifying parties those elements of the proposed transaction that are likely to distort competition and ask the parties to eliminate or modify them as a condition for clearance. Negotiations are often carried out between the IAA and the parties, during which the IAA may ask for, or the parties propose, structural undertakings such as the sale or divestment of a part of their business or the transfer of a trademark, or behavioural undertakings aimed at maintaining an effective degree of competition on the market. Divestitures in Phase I do not technically amount to commitments (which are only available in Phase II under Italian law) and the IAA is more inclined to go to Phase II if the transaction calls for significant remedies. They are therefore not binding and in the case of violation, the IAA may only consider that the factual scenario on which it based its clearance decision has changed and, accordingly, that the transaction that was cleared was different from the one actually implemented. The IAA cannot impose fines for their violation. This means that Phase I commitments have been very rare and must be clear-cut for the IAA to take them into consideration.

In a vast range of cases, commitments involved the adoption of structural remedies proposed by the merging parties. In 2016, the IAA accepted remedies in three cases: in the Arnoldo Mondadori Editore/RCS Libri case (2016), Mondadori would have acquired a dominant position in several markets in book publishing and retail. The IAA cleared the transaction subject to the withdrawal by RCS Libri of its participation in the publishing-house Marsilio and divestment of Bompiani (see question 21). Further, the IAA accepted various behavioural measures. Most notably, in the RTI/Gruppo Finelco case (2016) the IAA imposed only behavioural measures so as to limit potential vertical and conglomerate effects that could be produced by the merger. In particular, these measures consisted of the prohibition for the merged entity to conclude other advertising concession contracts so as to limit its market power. Most recently, in 2016, the IAA in the A2A/Linea Group Holding case imposed both structural measures to limit the market power of the merged entity and behavioural remedies to guarantee access and equal treatment to potentially interested third operators active in the relevant market. In 2017, in the Gruppo Editoriale l’Espresso/Italiana editrice case, the IAA imposed only behavioural measures considered capable of neutralising the horizontal overlaps between the merging parties and the risk to the independence of third parties in the relevant market (see question 21). In April 2018, in the 2I Rete Gas/Nedgia case, the IAA imposed both structural and behavioural measures. In particular, in two of the relevant markets (ie, ATEM, the minimum territorial areas of the tenders in the natural gas distribution sector), the structural measure consisted in the divestment of some 2i Rete Gas assets conditional upon obtaining, by way of derogation from the standard public tender procedure in similar cases, a minimum reserve price, to reduce the risk of merely speculative acquisitions. Moreover, the potential buyers would have to be selected among operators who currently do not hold relevant market positions in the two ATEM. In the scenario where none of the interested parties would offer such minimum price, the alternative 2i Rete Gas would have to implement a set of behavioural measures aimed at reducing financial and information barriers to entry, thus increasing the degree of contestability in future tenders. In the Profumerie Douglas/La Gardenia Beauty-Limoni case, the structural measures imposed by the IAA consisted in the divestment of several retail stores. Finally, the above-mentioned commitments imposed in the Luxottica Group/Barberini case (2018) also show a significant degree of flexibility (particularly if compared to the EU Commission) towards behavioural (rather than structural) remedies (at least, as far as vertical or foreclosure issues are concerned).

What are the basic conditions and timing issues applicable to a divestment or other remedy?

As for the substantive conditions, the IAA relies upon the principles laid down by the European Commission in its 2008 Commitments Notice. Remedies may be offered in both stages of the proceedings (but see question 25). There are no particular rules as to their timing. However, although usually not expressly mentioned in the official merger clearance decisions or subsequent decisions, the recent financial crisis most likely played an important role in the extensions granted by the IAA to merging Italian banks to implement some of the measures attached to the clearances - namely the divestment of a number of local branches, which might be greatly affected by the lack of liquidity, the current restructuring that most banking groups are going through, or both (see question 19).

The IAA has indicated that behavioural remedies are the exception, in consideration of the difficulties associated with monitoring compliance (particularly, in relation to the 2000, 2002 and 2004 Edizione Holding/Autostrade cases). Nonetheless, along with structural measures the IAA has also continued to accept behavioural remedies (see question 25).

Given the short Phase II timeline that the IAA must follow (45 calendar days that can be extended only once for an additional 30 days), there is not a specific timing for proposing remedies, which thus should be discussed very early in Phase II.

What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?

In Solvay Sodi, which involved a foreign-to-foreign merger in the field of sodium carbonate, the IAA accepted a commitment by Sodi to dispose of a relevant part of the company’s production in favour of a competitor established in Turkey and a commitment not to start anti-dumping action against imports in Europe by US competitors. The transaction was approved subject to these undertakings.

Ancillary restrictions

In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?

As a rule, the IAA (unlike the European Commission) evaluates ancillary restrictions expressly together with the assessment of the related concentration. Their analysis takes into account the proportionality principle as well as the principles set out in the 2005 EU Notice on Ancillary Restrictions.

Involvement of other parties or authorities

Third-party involvement and rights

Are customers and competitors involved in the review process and what rights do complainants have?

In Phase I, the IAA - with the express consent of the parties involved in the notified transaction - informs the public of the filing of a transaction (see question 5) through a notice on its website. Any interested party, including customers and competitors, may then submit observations on the notified concentration within five business days of the publication of the notice on the website. Since the introduction of such ‘notice of merger’, the disclosure that a notification has been submitted has had the effect of further increasing the numbers of third-party interventions during Phase I.

Decisions whereby the IAA opens Phase II proceedings are published in the Bulletin of the IAA and posted on its website (www.agcm.it), inter alia, for the purpose of enabling customers or competitors to intervene in the process through oral or written submissions. In many cases, customers and clients are contacted directly by the IAA, either informally or formally, by way of a request for information during the ‘market test’ phase. Experience shows that these contacts can influence the final decision of the IAA to a significant extent.

Third parties may lodge a complaint against a competitor that has not notified a concentration. Third parties must also be granted access to documentation under laws relating to the transparency of conduct that apply to public bodies. As recently stated by the Council of State (the Supreme Administrative Court deciding on second and last instance appeals against decisions of the IAA) third parties providing evidence that they have been harmed by a decision are entitled to bring an action for annulment of the decision before the relevant administrative courts.

Publicity and confidentiality

What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?

The IAA now posts on its website a notice on the filing of any merger, inviting third parties to submit their observations. Further, decisions by which the IAA opens Phase II proceedings or closes proceedings are publicised in the IAA Bulletin and posted on its website. Normally there are three weeks between the time a decision is taken and its actual publication (this period is reduced to approximately one week or less in relation to decisions by which the IAA opens a Phase II merger investigation).

The legal framework for disclosure and access to file is contained in the Regulation. All parties having an existing, direct and immediate interest in the merger proceedings may request access to the file. Access is not granted to documents containing business secrets. The IAA officials are bound by professional secrecy obligations.

Cross-border regulatory cooperation

Do the authorities cooperate with antitrust authorities in other jurisdictions?

The IAA is strongly in favour of full cooperation with the European Commission and the creation of a network with other national competition authorities for the joint examination of transnational cases. In practice, in merger cases, informal contacts between the European Commission and the IAA are frequent, especially in cases where, although the EUMR applies, there is a substantial impact in Italy. One of the units within the IAA is specifically dedicated to the relationship with the Commission and the other national competition authorities (NCAs) in the context of the European Competition Network. Finally, the IAA is an active member of the International Competition Network, one goal of which is to promote international cooperation among NCAs.

In 2010, the record shows only one referral under article 22 of the EUMR, which eventually became case COMP/5959 SCJ/Sara Lee, and one request for referral made by the IAA under article 9 (the Commission concluded, however, that there was no need for the matter to be examined by the IAA - Case COMP/5960 Crédit Agricole/Cassa di Risparmio della Spezia/Agences Intesa Sanpaolo). No referral from the IAA to the European Commission appears to have been made under article 22 in recent years. But there have been four voluntary referrals back to the IAA under article 4(4) EUMR (in the Lottomatica/AdmiralEntertainment/Newco case, the Holcim Calcestruzzi-Colabeton/Conferimenti di impianti in Cava di Cusago case, the Sonepar Italia/Sacchi case and the CVC/La Gardenia/Limoni case).

Judicial review

Available avenues

What are the opportunities for appeal or judicial review?

Interested parties may appeal against a decision of the IAA to the TAR Lazio, which has exclusive jurisdiction in these matters. The TAR Lazio may annul a decision of the IAA only on the grounds of lack of jurisdiction or competence, violation of the law, or abuse or misuse of powers. The discretionary judgment of the IAA is not subject to judicial review except in limited circumstances. Decisions of the TAR Lazio are subject to appeal before the Supreme Administrative Court (Council of State).

In September 2015, TAR Lazio confirmed the remedies imposed by the IAA on Alitalia in 2012 with the aim of mitigating its dominant position, which had been not contestable in the previous three-year period because of ad hoc legislation. The contested behavioural measures consisted of the dismissal of four slots in Milan-Linate airport. According to TAR Lazio, Alitalia - which deemed it sufficient to dismiss two slots instead of four - did not provide any evidence capable of demonstrating that the measures imposed by the IAA were not proportional. Further, in 2016 TAR Lazio upheld the structural remedy imposed by the IAA in the Enrico Preziosi-Artsana/Newco-Bimbo Store case, which required the merged entity to divest 27 shops in an area where the combined market share of the merging parties exceeded 50 per cent of the relevant market (see question 25). Enrico Preziosi and Artsana tried to persuade TAR Lazio of the lack of proportionality of the imposed measures, owing to an incorrect definition of the relevant market. However, TAR Lazio confirmed the IAA’s decision in its entirety, upholding the IAA’s market definition and the method used for identifying the stores to be divested.

Time frame

What is the usual time frame for appeal or judicial review?

Usually each judicial degree takes between one and two years and it is therefore possible to have judicial review completed in three to four years. However, the Supreme Administrative Court may transfer the case back to the IAA.

Enforcement practice and future developments

Enforcement record

What is the recent enforcement record and what are the current enforcement concerns of the authorities?

Because of the above-mentioned 2012 change in the law, which now entails two cumulative merger filing thresholds, the number of merger cases have substantially decreased. The IAA reviewed around 21 cases up to April 2018, 57 cases in 2017, 51 cases in 2016, 44 in 2015, 40 in 2014 and 59 cases in 2013 (which will leave the IAA far from the 451 cases in 2012 or even more so from the 843 and 817 cases respectively in 2007 and 2008). However, as highlighted below, the recent 2017 law change in the second threshold (summarised in question 5), has recently at least inverted this trend, and this was in fact triggered by the concern expressed by the IAA to the Parliament that its merger jurisdiction had been narrowed down too far.

In 2017, the IAA opened a Phase II investigation in only two cases. In the Gruppo editoriale l’Espresso/Italiana Editrice case, concerning the book publishing sector, the IAA’s main concerns were the horizontal overlaps, as the merged entity would have had a 90-95 per cent market share in the local area of Turin and a de facto monopoly in the local area of Genoa (see question 25), and the IAA was concerned that third parties would not have been able to exercise competitive pressure on the merged entity and the entry of new competitors was considered unlikely. The IAA accepted behavioural commitments to guarantee the entrance of new alternative operators and competitive pressure in the relevant market. In the Italcementi/Cementir Italia case, concerning the cement and ready-mix concrete sector, the IAA’s main concerns were that Italcementi would have gained (or reinforced) a dominant position in the market as well as the fact that the transaction could have facilitated coordination among independent cement manufacturers, owing to the reduction of the number of undertakings. Moreover, the IAA also considered vertical effects, as the merged entity would have been also active in the ready-mix concrete sector. The IAA accepted structural commitments (ie, the divestment of some plants) as well as behavioural ones.

In 2018, the IAA pursued several Phase II investigations, particularly in the first months. In the Profumerie Douglas/La Gardenia Beauty-Limoni case, triggered by a voluntary referral under article 4(4) (see question 31), the transaction would have resulted in the aggregation of the first and second operators in the market, both being each other’s closest competitor. As the combined entity would have gained a market share above 45 per cent in half of the relevant markets considered, and above 60 per cent in the other half, and as the IAA considered that the merged entity would not transfer to consumers any cost saving generated (see question 21), it was eventually deemed necessary to divest a number of stores to avoid overlaps in excess of 45 per cent in any of the 14 identified micro-markets. In 2I Rete Gas/Nedgia, regarding the distribution of gas in some regions in the south of Italy, the IAA was concerned that the concentration may lead to a strengthening of a dominant position in tenders for the awarding of the natural gas distribution service, which would have discouraged participation of competitors (see question 25). In the Cassa Centrale Raiffeisen Dell’alto Adige/Gruppo Bancario Cooperativo Delle Casse Raiffeisen case, the IAA’s main concerns (which were ultimately abandoned - as already explained) were the horizontal overlaps in the bank funding market, as the merged entity would have had a 45-50 per cent market share in the local area of Bolzano. Finally, in the NOAH2/Mondial Pet Distribution case, concerning the distribution of pet products, the IAA found a potential significant impediment to effective competition, as the merged entity would have a market share well above 45 per cent in some local areas, and two divestitures were accordingly required. Later, in November 2018 the already cited Luxottica Group/Barberini merger was authorised by the IAA upon commitments, which were mostly grounded on foreclosure concerns because of the integration of the parties’ respective frames and lenses capabilities.

In March 2019, a Phase II investigation was opened on the acquisition by Sky Italia of R2, the technical platform for the provision of terrestrial digital television services of Mediaset Premium. While this transaction may be abandoned - as anticipated - because of the concerns raised by the IAA, the case has been opened following a cooperation agreement between Sky and Mediaset that has already been in place for several months, and which, inter alia, resulted in the parties providing each other access to, and hosting in, the respective satellite and terrestrial digital platforms and channels, particularly after Mediaset’s exit from the market of the pay-tv contents of Serie A and Champions League football games (somewhat anticipating the consequences of the deal).

Over the past years, the IAA, while dealing with a wide range of sectors, seems to have overall focused its attention on access to key inputs and facilities and barriers to entry.

For instance, the IAA has been particularly concerned about slots in the airline and maritime transport sectors. Besides the Alitalia case (see question 32), there have been two cases involving Moby, a major ferry operator in Italy and the Mediterranean, acquiring two formerly state-owned ferry operators (Toremar and Tirrenia Navigazione). In the Moby/ToreMar-Toscana Regionale Marittima Phase II investigation, concerning the provision of liner transportation services for passengers and freight between the Tuscan coast and the Tuscan Islands, the IAA cleared the merger (in July 2011) subject to Moby’s commitment to divest six slots on the Piombino-Isola D’Elba route to its competitors. However, in 2016 the IAA fined Moby €374,000 for its failure to comply with the measures imposed in 2011.

With regard to the sectors currently under scrutiny, the energy sector (in particular gas distribution) seems to attract the IAA’s attention: after clearing the acquisition of SNAM (which in turn controls the largest operator Italgas), the IAA blocked the Italgas-Acegas/Isontina Reti Gas merger (see question 21). In Compagnia Valdostana delle acque/Deval - Vallenergie, the IAA determined that the merger would have created a near monopoly in the market for low-voltage retail energy sales to domestic clients in the Valle D’Aosta region. The merged entity would indeed have achieved a nearly 100 per cent share in terms of the number of points served in the domestic market and a 90+ per cent share in the non-domestic market for low-voltage connections. A good portion of the IAA’s analysis focused on the negative impact of the regional regulations that provided a barrier to entry. During the investigation, the IAA rejected the merging parties’ price commitment (ie, to freeze prices in the free market at particularly affordable levels for two years, with a possible extension to four) as the IAA deemed this insufficient to achieve the long-term elimination of the competition issues. In 2015, the IAA cleared with conditions a concentration in the electricity energy sector between Società Elettrica Altoatesina and Azienda Energetica. The IAA was concerned that the merged entity could restrict competition in the future market for a tender for the distribution of natural gas in the local area of Bolzano given the fact that the parties already held control over incumbent operators. The IAA imposed the complete sale of one of the subsidiaries involved in the tender and the divestment of a business, amounting to the 30 per cent share held in the market for the supply of natural gas to small-sized customers. Further, recently the IAA focused also its attention in the publishing and advertising sector: in fact, in 2016 and 2017 the IAA cleared with conditions three such concentrations, namely Reti Televisive Italiane/Gruppo Finelco, Arnoldo Mondadori Editore/RCS Libri and Gruppo Editoriale l’Espresso/Italiana Editrice (see earlier in this question).

Finally, from a merger control angle, the IAA increasingly seems to see itself as the watchdog for market structures at the local level, even going as far as identifying micro-markets through isochrone analysis, and requesting parties’ and market data at such geographical level even for non-problematic concentrations. Local ‘catchment’ areas were also considered in the Cassa Centrale Raiffeisen dell’Alto Adige/Gruppo Bancario Cooperativo delle Casse Raiffeisen banks merger, ultimately cleared without commitments in Phase II (2018).

Reform proposals

Are there current proposals to change the legislation?

Over the last few years the IAA has considered aligning the substantive test and the treatment of concentrative and cooperative full-function joint ventures with the EU merger rules, and the introduction of a simplified procedure for non-problematic mergers, but no formal steps have been taken in this respect.

Update and trends

Key developments of the past year

What were the key cases, decisions, judgments and policy and legislative developments of the past year?

Key developments of the past year36 What were the key cases, decisions, judgments and policy and legislative developments of the past year?

The IAA decided six Phase II cases during 2018, and, in the first months of 2019, opened one; overall, it published 72 merger decisions in 2018. While still displaying significantly diminished merger control activity compared to that up to the early 2010s, this year marks an increase compared to 2017 (which saw the clearing of only two Phase II operations) and may herald an inversion of the trend of contracting activity set in the 2013-2017 period. Said contraction appears mainly attributable to the significant reduction in the scope of IAA jurisdiction caused by a 2013 reform making the thresholds for notification cumulative, rather than alternative (pursuant to which, acquisitions even of very small undertakings by a large group used to regularly trigger a filing), thereby contributing to a steep drop from 500-600 filings per year to around 45-50. However, legislation passed in 2017, amending and lowering the second turnover threshold, has contributed to the higher activity in 2018.

In March 2019, the IAA opened Phase II proceedings on the acquisition by part of the Italian branch of television services provider Sky of the R2 unit Mediaset Premium, the technical platform for the supply of terrestrial digital television services of television content, and arguably the sole competitor of the Italian Sky branch. However, despite the formal abandonment of the deal by the parties, the IAA concluded with an innovative decision that the merger had in the meantime produced irreversible effects, having contributed to the exit of Mediaset Premium from the market and consolidating Sky’s dominance. Consequently, the IAA imposed certain behavioural remedies to try to restore the competion conditions existing prior to the merger.

With regard to the cases that the IAA closed recently, the merger between eyewear colossus Luxottica and glass lens producer Barberini must be noted. The IAA imposed the commitment that the merged entity would enter into supply agreements with all interested market operators, among other things allowing the former clients of Barberini access to innovative products even where covered by IP rights, displaying openness to employing behavioural measures to remedy vertical or foreclosure issues, rather than exclusively structural measures.

Finally, a new IAA chairman (Roberto Rustichelli, a Naples commercial judge) started work in early May 2018; however, it is difficult to predict which shifts, if any, this change may entail to the IAA’s agenda.

The author would like to thank Riccardo Fadiga for his contribution to this chapter.