Italian government approves Draft Annual Law for Competition 2021

With press release n. 45 of November 4, the Italian government reported that it has approved the draft annual law for the market and competition 2021, in accordance with the obligation set out in article 47 of Law no. 99/2009 – which was followed by the adoption of a single Law for Competition in 2017 (law no. 124) – and in line with the programmatic objectives defined by the PNRR.

The draft law, which is now to be examined by the Chamber of Deputies and the Senate, largely reflects the proposals presented in March 2021 by the Italian Competition Authority with Report AS1730.

As highlighted in the press release, the draft law is aimed at:

  • promoting competition, also in order to guarantee access to markets for smaller companies;
  • removing both administrative and normative regulatory barriers to market entry; and
  • ensuring consumer protection.

The changes introduced by the draft law mainly concern:

  • Concessionary regimes: with the aim of removing barriers to market entry, the draft law intervenes on the publicity and transparency of concessions for state-owned port areas, for natural gas distribution and of concessions of large-scale hydroelectric derivation.
  • Local public services and transport: the draft introduces provisions aimed at redefining the rules governing local public services and non-line public transport; encouraging the use of public procurement procedures for local and regional public transport services; devolving to conciliation procedures dealt by the Transport Authority the solution of conflicts between economic operators that manage transport networks, infrastructures and services and users or consumers; strengthening controls where new in-house companies are set up.
  • Energy and environmental sustainability: among the principal changes, the draft provides for the adoption of public procurement procedures for selecting the operators who will manage the realization of electric charging infrastructures on freeways.
  • Health protection: among the main changes, of particular interest is the introduction of provisions aimed at removing barriers to market entry for generic medicines and at incentivizing pharmaceutical companies to set the reimbursement price for medicines.
  • Telecommunications: the draft introduces changes concerning access to infrastructure and the realization of optic fiber networks.
  • The revision of administrative procedures and the simplification of the controls on economic activities.
  • ICA’s powers: the draft law strengthens the merger control powers of the Authority; it provides for an economic dependence presumption where a company uses the intermediation services offered by a digital platform with a determining role in reaching end users or suppliers; it introduces a settlement procedure within the investigation proceedings opened by ICA in relation to presumed anticompetitive agreements or abuses of dominant position; it expands the Authority’s investigative powers.

The scope ratione temporis of EU Directive 2014/104 on antitrust damages: Opinion of Advocate General Rantos

In the Opinion delivered on October 28, Advocate General Rantos expressed his views on the scope ratione temporis of Directive 2014/104/EU.

The AG Rantos first pointed out the difference between substantive rules (which do not have a retroactive effect) and procedural rules (which do have a retroactive effect). He then concluded that article 10 of the Directive laying down rules on the limitation period, as well as the national provisions transposing it, due to their substantive nature, do not apply to an action for antitrust damages, which, although brought after the entry into force of the Directive and of the national legislation transposing it, relates to facts and fines which occurred before the entry into force of those provisions.

In private enforcement actions relating to facts occurring before the entry into force of the Directive, according to the AG, the rule provided by Art. 17, para. 2, of the Directive and the national provisions transposing it, according to which it is to be presumed that cartel infringements cause harm, cannot apply. In this regard, the AG specified that even where that rule cannot be applied, the national courts are nevertheless entitled to apply any presumptions on the presence of harm that existed at national level before the implementation of the Directive, on condition that such presumptions comply with EU law, in particular regarding the general principles of effectiveness and equivalence.

According to the AG, the provisions on judicial equitable assessment of damages, adopted to transpose art. 17, para. 1 of the Directive, have a procedural nature and may therefore apply to actions which, although brought after the entry into force of the Directive and the transposing rules, relate to infringements that ended before the entry into force of those rules.

Commission approves EUR4.5 billion Italian state aid scheme to support companies and the economy in the context of the COVID-19 outbreak

With Decision of November 10, published on November 25, the European Commission approved a EUR4.5 billion state aid scheme, in the form of limited amounts of aid, notified by Italy to support companies particularly affected by the COVID-19 emergency and by the restrictive measures that the Italian government had to implement to limit the spread of the virus.

The aid measures notified by Italy, concerning respectively “Non-repayable grants for start-ups” and “Equalising grants”, will take the form of:

  • direct grants of up to EUR1,000 for companies registered between January 1 and December 31, 2018, whose business activity started in 2019 and whose turnover did not exceed EUR10 million in 2019; and
  • direct grants of up to EUR150,000 for legal persons engaged in business and farming activities as well as self-employed individuals that hold a VAT number, that, following the COVID-19 outbreak, have experienced, in the tax period in progress on 31 December 2020, a worsening of at least 30% of their economic performance, compared to 2019.

The measures are open to all sectors except the financial sector.

The aid amount per beneficiary will be calculated taking into account any previous support granted by the Italian Revenue Agency to the company itself or to one of its affiliates.

The scheme was approved since the Commission found that it is in line with the conditions set out in the State aid Temporary Framework, adopted by the Commission to enable Member States to use the full flexibility foreseen under state aid rules to support the economy in the context of the COVID-19 outbreak.

The Commission also assessed that the measure is necessary, appropriate and proportionate, in line with Article 107(3)(b) TFEU and with the conditions set out in the Temporary Framework.

‘Google Shopping’ – General Court largely dismisses Google’s action

With a judgment published on November 10, the EU General Court largely dismissed the action brought by Google LLC and its parent company Alphabet, Inc. against the Commission’s decision of June 27, 2017, closing the “Google Shopping” investigation. In that decision, the Commission had imposed a fine of EUR2.4 billion on Google for abusing its dominant position in the markets for general search services and online comparison services, favoring its own shopping comparison service over the comparison services offered by competitors. In particular, the Commission ascertained that Google had assigned to the comparison results provided by Google Shopping a more favorable display and positioning compared to the results of competing comparison services, which were instead demoted by specific algorithms.

The General Court confirmed the anticompetitive nature of Google’s conduct, finding that the undertaking had effectively prevented competition on the merits with respect to comparison services. In its assessment the General Court took into consideration: (i) the importance of the traffic generated by Google’s general search engine for comparison shopping services; (ii) the behavior of users, who typically concentrate on the first few results; (iii) the large proportion of traffic that was “diverted” from competing comparison services to Google Shopping; and (iv) the universal vocation of Google’s general search engine designed to index results which makes the promotion of only one type of results, namely its own, abnormal.

The General Court also upheld the Commission’s view that Google’s general results page is to be regarded as an “essential facility” inasmuch as there is no actual substitute, effective or potential, that would enable it to be replaced in an economically viable manner on the market. In this regard, the General Court rejected Google’s arguments based on the need to assess the conduct fined by the Commission in light of the Bronner judgment, which sets out precise conditions that must be met for a “refusal to supply” to be considered abusive. The General Court found that Google’s conduct did not concern a “refusal to supply a service”, but rather a difference in treatment by Google for the sole benefit of its own comparison service.

The General Court then confirmed the Commission’s analysis of the harmful effects on competition caused by the fined conduct on the specialized market for comparison services. In the General Court’s view, the Commission had not only sufficiently demonstrated that the traffic that had been “diverted” from competing comparison services to Google Shopping as a result of Google’s anticompetitive conduct represented a large proportion of the total traffic of competing comparison services, but also that that proportion of “diverted” traffic could not have been effectively replaced by other sources of traffic such as advertising (AdWords), mobile applications or social networks. However, by upholding a ground of appeal filed by Google, the General Court found that the Commission had wrongly concluded that Google’s conduct would also have an effect on the further, distinct general market for online searches, since it had not sufficiently demonstrated that the conduct was capable, even potentially, of having an effect on that market.

Lastly, with regard to the objective justifications for the conduct provided by Google, the General Court first held that, although the algorithms for indexing results may in principle favor the development of competition, this does not justify the unequal treatment between Google Shopping and the comparison services offered by its competitors. Secondly, in the view of the General Court, Google has not demonstrated the efficiency gains linked to that conduct that would counteract its negative effects on competition.

In the light of the above, the General Court dismissed Google’s action and confirmed the amount of the fine imposed on Google.

ICA launches investigation on agreements on discounts on drugs and other products sold by pharmacies

Following a complaint by a pharmacist, on October 19, 2021, the Italian Antitrust Authority (ICA), launched an investigation into the Interprovincial Order of Pharmacists of Bari-Barletta-Andria-Trani and 16 pharmacies based in the city of Altamura in Southern Italy.

According to the complainant, starting from 2014, the pharmacies concluded an anti-competitive agreement to limit the application – or establishing in advance the extent – of discounts on drugs and parapharmaceutical products, including food supplements, paid directly by customers and sold in the pharmacies of the city of Altamura.

According to the ICA, the conducts under investigation – considered particularly serious as they may directly affect the price of products – would have been endorsed by the Interprovincial Order of Pharmacists to which the pharmacies belong, which would have participated in meetings among pharmacies with representatives.

The ICA pointed out that the anti-competitive nature of agreements regarding the price/discount to be applied to clients exists regardless of the binding nature of the price indications discussed, as they may affect the behavior of operators.

Although the alleged agreement is limited to a specific geographical area, this case may represent the first step of a new a specific trend of application of antitrust rules to the activity of pharmacies by the ICA.

Beach concessions and Bolkestein Directive: the Council of State to stop concession extensions

With judgments no. 17 and 18 of November 9, the Plenary Session of the Council of State ruled that the extension of state-owned maritime concessions for tourism and recreational purposes until 2033, provided by Italian Law no. 145/2018, is contrary to European rules and should not be applied.

According to administrative judges, Directive 2006/123/EC on the liberalization of services, the so-called "Bolkestein" Directive, applies to all sectors (with some specific exceptions), including the one in question; on the basis of the case law of the European Court of Justice in the Promoimpresa case (judgment of July 14, 2016, in joined cases C-458/14 and C-67/15), the concessions of state-owned areas for tourism and recreational purposes represent authorizations for carrying out the relevant services, and must be granted by means of tenders.

Article 12 of Directive 2006/123/EC provides that, in case of scarcity of natural resources or usable technical capacity, the Member States must carry out a transparent and non-discriminatory selection procedures for the issue of authorizations to potential candidate service providers.

The situation of scarcity would occur in this case, with reference to the portions of suitable coastline, which can be usefully used by "economic operators other than those currently ‘protected’ by the extension ex lege".

In this regard, the Council of State repeated the importance of the EU law principles on competition and free movement, which require the granting authority to ensure an adequate level of publicity "that allows the opening of the relevant market to competition, as well as the control on the impartiality in the award procedures".

The judgment apparently puts an end to a long story that includes, inter alia, infringement procedures by the European Commission against Italy and judgments by the Italian Constitutional Court, which declared unlawful the provisions of some regional laws providing for extensions of concessions.

To limit the relevant social and economic impact of the judgment, the Council of State ruled that the current concessions will be effective until December 31, 2023; after which all existing concessions will be considered ineffective.

As noted by the Council of State, a new action by the Italian lawmaker, which should redefine the matter in compliance with the principles of EU law, is now expected.