The recent annual Italian law for the market and competition 2021 (Law No. 118/2022 – “2021 annual competition law”) has – among other things – supplemented Article 9 of Law 192/1998 with new provisions concerning the abuse of economic dependence by digital platforms. Among the novelties are a rebuttable presumption of economic dependence for digital platforms meeting specific requirements, a non-exhaustive list of abusive practices, and the jurisdiction of the courts’ division specialized in business matters and intellectual property. The updated framework will be applicable as of 31 October 2022.
Abuse of economic dependence
In summary, the legislation on abuse of economic dependence prohibits companies from abusing the state of economic dependence in which a customer or supplier company may find itself. “Economic dependence” is the situation in which a given company can bring about an excessive imbalance of rights and obligations in its relations with another company. In other words, the prohibition of abuse of economic dependence aims to protect the weaker party against those business partners that might take unfair advantage of any asymmetry in bargaining power. Although in Italy such a legal framework formally falls within sub-contracting (subfornitura), the provisions on abuse of economic dependence apply in general to vertical relationships between companies such as supply, distribution, and franchising.
A rebuttable presumption of dependence for digital platforms
The main novelty introduced by the 2021 annual competition law is a rebuttable presumption of economic dependence where “a company uses the intermediation services provided by a digital platform that plays a key role in reaching end users or suppliers, also in terms of network effects or data availability“. The burden of proving the absence of economic dependence thus shifts to the operators of digital platforms. In contrast, under the previous regime, it was up to the contracting party claiming economic dependence to prove its existence. The previous regime continues to apply to traditional operators and digital platforms that do not meet the requirement of playing a “key role” in reaching end users or suppliers, resulting in differential treatment. As some scholars pointed out, the introduction in Italy of such a rebuttable presumption is a unique case in the European legislative landscape (Colangelo, 2021). Other countries, such as Germany, which have explicitly extended the discipline of abuse of economic dependence to digital platforms, have not adopted any presumption model.
What is meant by “digital platforms”?
Without a specific definition, the notion of “digital platform” could encompass a wide range of entities, including transactional platforms and marketplaces, search engines, and app stores. For the new rules to apply, there must also be a “key role” of the digital platform in reaching end users or suppliers. This “key role” criterion seems to point to the “gatekeepers” under the forthcoming Digital Markets Act (DMA). However, the new domestic framework does not reference the specific requirements under the DMA, ending up in introducing a broad concept that may be subject to different interpretations.
At the European level, the increase in economic dependence and the growing contractual imbalance between online platforms and commercial users were the main prerequisites for adopting Regulation (EU) 2019/1150 (P2B Regulation). The P2B Regulation provides for certain obligations upon online platforms to protect the weaker position of commercial users, particularly on the content of the terms and conditions of service.
New examples of abusive practices by digital platforms
The 2021 annual competition law also introduces a non-exhaustive list of abusive practices that could be put in place by digital platforms: “providing insufficient information or data on the scope or quality of the service provided and requesting undue unilateral services not justified by the nature or content of the activity performed, or adopting practices that inhibit or hinder the use of different providers for the same service, including through the application of unilateral conditions or additional costs not provided for in the contractual agreements or existing licenses.“
The jurisdiction of the courts’ division specialized in business matters and intellectual property
Lastly, the 2021 annual competition law provides for the jurisdiction of the courts’ division specialized in business matters and intellectual property for civil actions concerning the abuse of economic dependence. This amendment resolves an interpretative uncertainty that had already been subject to decisions by the Italian Court of Cassation. In such cases (see, among others, Cass. ord. No. 22747/2017 and Cass. ord. No. 22584/2015), the Court of Cassation held that for compensation claims relating to abuse of economic dependence, there was no jurisdiction of the division specialized in business matters and intellectual property. The reason was that such claims were deemed to be purely contractual and unrelated to the concept of abuse of a dominant position.
The effective date of the updated legal framework on abuse of economic dependence is approaching, and technology companies falling within its scope will have to consider it when revising their operating model and the terms and conditions of their services. In this regard, to prevent litigation and promote good market practices, the 2021 annual competition law provides that the Presidency of the Council of Ministers may adopt guidelines to facilitate the application of the new provisions.
In addition to the risk of civil litigation, violations of the prohibition of abuse of economic dependence that are relevant to the protection of competition and the market may face pecuniary administrative sanctions under the antitrust law (Law No. 287/1990, Article 15), issued by the Italian Competition Authority (AGCM).