On 31 October 2014, the Italian Competition Authority published its long-awaited guidelines on the method for setting fines for antitrust infringements (Guidelines), which present important changes to the current fining regime. In particular, the Guidelines include the following points:
- For most serious infringements (i.e., price fixing, market sharing and output limitation), the proportion of the value of sales taken into account as the basic fine amount will not be lower than 15 per cent.
- It is explicitly acknowledged that the adoption of an ad hoc effective compliance program will be regarded as a mitigating factor.
- Companies will be able to benefit from the “amnesty plus”, according to which the fine amount can be reduced up to 50 per cent if during the investigation the company provides information and documents which may be decisive for ascertaining a different antitrust infringement.
- The fine amount can be increased up to 50 per cent if the company achieved significant worldwide revenues or belongs to a large group.
Similar to the European Commission’s process, the Guidelines use a two-step methodology when setting the amount of the fine: determination of the basic amount, and upwards or downwards adjustment taking into accounts multiple aggravating or mitigating circumstances. The final amount shall not in any event exceed 10 per cent of the company’s total turnover in the preceding business year, as provided by Article 15 of the Law 10 October 1990 No 287.
The basic amount is determined by the value of sales of goods or services to which the alleged infringement directly or indirectly relates (net of value-added tax and other sale taxes). Per the European Commission, this amount cannot exceed 30 per cent of the value of the above sales, and it is multiplied by the number of years of participation in the alleged infringements. As mentioned previously, the Guidelines further specify that, for most serious infringements (i.e., price fixing, market sharing and output limitation), the proportion of the value of sales taken into account will not be lower than 15 per cent. In contrast, the European Commission does not state the proportion of the value of sales taken into account for horizontal price-fixing, market-sharing and output-limitation agreements, but only that “the proportion of the value of sales taken into account for such infringements will generally be set at the higher end of the scale”.
The Guidelines provide specific guidance on the calculation of the value of sales in relation to collusive agreements for participation in public tenders. In principle, the value of sales (for each company) corresponds to the amount to be adjudicated, with no need to adjust that value in light of the duration of the alleged infringement. However, should the relevant market be larger than the single tender, the Authority may take into account the overall value of sales corresponding to the entire product market concerned (i.e., all of the company’s sales on the relevant market, not just those related to the tender).
With reference to the second step in the method for setting the fine (i.e., upwards or downwards adjustments of the basic amount), as a general rule, each aggravating or mitigating circumstance cannot account for less or more than 15 per cent of the basic amount, up to an overall proportion of 50 per cent of the basic amount. However, in derogation of the above general rules, the amount of the fine can be
- Increased up to 100 per cent if the company has committed a similar infringement in the previous five years (ascertained by the Authority or the European Commission)
- Reduced up to 50 per cent if during the investigation the company provides information and documents which may be decisive for ascertaining another antitrust infringement (different from the one under investigation), falling within the scope of the leniency program (i.e., the amnesty plus)
Amongst the mitigating circumstances, the most important improvement is the explicit acknowledgment that adoption of an ad hoc compliance program, in line with national and European best practices, will be regarded as a mitigating factor. However, consistent with case law, the Authority makes clear that the mere existence of a compliance program will not be considered as a mitigating factor unless the company successfully demonstrates that it actually and effectively committed to comply with such program, by means of the following:
- Full engagement and participation by the management
- Identification of the person responsible for the compliance program
- Risk assessment and evaluation on the basis of the specific industry and market sector
- Adequate training programs in light of the size of the company concerned
- Provision of incentives and disincentives for those who do not comply with the program
- Monitoring and audit systems
Amongst the aggravating circumstances, in addition to those already applied by the European Commission, the Guidelines include the Authority’s power to increase the fine amount up to 50 per cent when the company concerned achieved significant worldwide revenue during the last financial year vis à vis the value of sales of goods or services that relate to the alleged infringement, or when the company belongs to a large group. Furthermore, the Authority may increase the fine on the basis of the profits achieved by the company as a result of the alleged infringement, provided that the Authority has sufficient elements that allow a fair estimate of such profits.
The adoption of the Guidelines follows a consultation launched by the Authority in May 2014 and concluded on 30 June 2014. The Guidelines will apply immediately to pending proceedings at the moment of their publication, when the statement of objections has not been notified to the parties yet.
The Authority was one of the few national competition authorities within the European Competition Network that had not adopted guidelines on the setting of fines. Until now, the Authority has applied both the European Commission’s guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, and the national case law on the application of pecuniary administrative fines.
The Guidelines provide increased transparency and legal certainty to international groups active in Italy. The Authority has made clear, however, that the Guidelines are intended to set out a methodology and will not be applied as a mere arithmetic exercise.
Overall, the Guidelines appear to be consistent with the framework provided at the EU level. At the same time, they take into account national legislation, namely the provisions on the application of pecuniary administrative fines (set out in the Law 24 November 1981 No 689), which provide that, in setting the amount of an administrative fine, the subjective conditions of the alleged infringer and its economic status, inter alia, should be taken into account.