The recent decision of the Italian Regional Administrative Court of First Instance (TAR Latium), Sec. I, 7 October 2013, No. 8671 (hereinafter, the judgment) closed a judicial proceeding launched by the action brought by Marcegaglia S.p.A. against the Italian Competition Authority (AGCM), aimed to annul the AGCM’s decision No. 23931 issued in 2012.
It appears useful to recreate the framework in which the decision was adopted by the AGCM.
In September 2012, the AGCM closed its investigation, ascertaining that seven companies, which represented around 95 percent of the market for road and highway barriers – Industria Meccanica Varricchio Imeva S.p.A., Marcegaglia, Metalmeccanica Fracasso S.p.A., San Marco S.p.A. – Industria Costruzioni Meccaniche in liquidation, Tubosider S.p.A., Car Segnaletica Stradale S.r.l. and Ilva Pali Dalmine Industries S.r.l. infringe d Article 101 of Treaty on the functioning of the European Union (TFEU) TFEU by forming an anticompetitive agreement.
In light of this, the AGCM imposed the following sanctions on the basis of revenue and length of participation in the cartel: Imeva €4,866,690; Marcegaglia €11,865,217; Metalmeccanica €11,013,165; San Marco €814,520; Tubosider €7,385,805; Car €1,338,994; and Ilva €33,174.
All the sanctioned undertakings were part of Comast consortium (Consorzio Manufatti Stradali Metallici in liquidation), dissolved in 2007 in light of a criminal proceeding according to which the consortium was the vehicle for engaging in collusive behaviors. The related investigation confirmed this conclusion. In light of this, the Special Market Protection Unit of the Guardia di Finanza (Italian Tax Police) sent to the AGCM a report that became the basis of the investigation.
The investigation unveiled behaviors constituting an agreement aimed at dividing up the market and at sharing reference prices through the exchange of strategically- sensitive information. The anti-competition mechanism, which lasted from 2003 to 2007 (until dissolution of the consortium), first entailed notification of the existence of a supply request by subjects interested in purchasing the barriers (guardrails) through public tendering, followed by the precise division of sales and the simultaneous sharing of reference prices.
Marcegaglia challenged the decision on seven grounds aimed at annulling it. According to Marcegaglia:
- The anticompetitive conducts under discussion would be realized by a subsidiary of Marcegaglia and in light of this they could not be directly attributed to Marcegaglia
- The decision would be issued after the period of limitation (five years) provided by Article 28 of Law 24 November 1981, No. 689
- The AGCM infringed Article 14 of Law 24 November 1981, No. 689, pursuant to which a sanctioning decision needs to be served within 90 days and
- The related investigation would take too long.
The judgment rejected the first two grounds and accepted the residual arguments. In light of this, it did not take into account the further five grounds submitted by Marcegaglia.
It seems useful to highlight that meanwhile the Court accepted Marcegaglia’s interlocutory request aimed at suspending the execution of the decision because the imposed sanctions were so high.
The TAR, through the judgment under discussion, decided to annul the decision.
However, the TAR rejected the first two grounds concerning the liability for the infringement and the limitation, respectively.
Specifically, with reference to the first ground, according to Marcegaglia its liability would be excluded by the selling of the involved branch to Marcegaglia Building S.p.A., a subsidiary. However, in the Court’s view, this transfer was not sufficient to exit from the related market. Indeed, pursuant to European case law, the controlling company is presumed to be liable for antitrust infringements realized by its subsidiaries. Finally, Marcegaglia was not able to pass this presumption.
In the same manner, the Court rejected Marcegaglia’s second ground. According to the company, the decision would be adopted in contrast with Article 28 of Law No. 24 November 1981, No. 689 as quoted by article 31 of Law No. 287/1990 (hereinafter, Italian Competition Law). Pursuant to this article, the AGCM shall collect the sanctions imposed within five years from the day on which the infringement was realized.
However, in this regard the TAR invoked dominant administrative case law, according to which, with reference to administrative sanctions, every act of the investigation is a formal notice able to interrupt the said limitation. On this basis, the decision through which the AGCM decided to launch the related investigation was considered enough to interrupt the limitation.
In contrast, the Court accepted the third and the fourth grounds of Marcegaglia. The grounds under discussion were jointly examined, both concerning the timetable of the AGCM during the investigation.
It seems useful to take into account that the AGCM decided to launch the related investigation on 13 January 2010. In the same manner, it extended the proceeding to Marcegaglia through the decision of 14 December 2011, communicated to the company only on 23 February 2012.
On this basis, according to the third ground of Marcegaglia this conduct would have infringed Article 14 of Law No. 24 November 1981, No. 689, pursuant to which an infringement needs to be served by ninety days from the date of the related ascertainment. On this basis, in the undertaking’s view the AGCM would have had to serve to Marcegaglia the decision aimed to extend the investigation to Marcegaglia by ninety days from the launch of the investigation.
Pursuant to the fourth ground of Marcegaglia the Decision would have closed a proceeding in which the AGCM “acts as if it has an unlimited lapse of time in order to conclude its investigation”. Indeed, in Marcegaglia’s view, the decision was issued on 28 September 2012, about three years after the launch of the investigation (13 January 2010) and about two years from the original deadline for completing the proceeding (31 December 2010). In this regard, the deadline under discussion was successively postponed to 30 June 2011 and to 31 December 2011. Finally, through the decision that extended to Marcegaglia, the investigation was delayed to 2 July 2012.
According to Marcegaglia, this dilatory practice would allow the AGCM to infringe Article 6 of the Decree of the President of the Republic of 30 April 1998, No. 217 (hereinafter, the Regulation of investigation procedures of the AGCM) pursuant to which the Authority’s resolution to initiate the investigation shall indicate inter alia the deadline for completing the proceeding.
The TAR agreed with both the said grounds. First of all, under the judgment in its decision of 14 December 2011, the AGCM did not argued the reasons which justified extending the investigation to Marcegaglia. However, on the basis of the same decision, it was not based on documents and information additional to those in the original Tax Police’s report. On the contrary, this extension follows the status of Marcegaglia (controlling party), which the AGCM would have had to take into account by the term ex Article 14 of Law No. 24 November 1981, No. 689.
In the same manner, the Court concluded that the decision was unlawful due to its long duration.
According to the TAR, an antitrust proceeding needs to have a prearranged deadline which shall not be postponed ad libitum. Indeed, Article 6 of the Regulation of investigation procedures of AGCM is founded on the principle of legal certainty. Clearly, this does not mean that an original deadline cannot be postponed. However, it is essential that – in contrast to what occurred in Marcegaglia’s case – this deferment is adequately argued.
On this basis, the TAR justified only the last postponement concerning the proceeding under discussion and based on the extension of the investigation on Marcegaglia. On the contrary, the deferments to 30 June 2011 and to 31 December 2011, which were based only on formal and identical arguments, were considered completely unjustified.
Accepting both the said grounds, the Court annulled the decision with reference to Marcegaglia’s position.
The judgment confirms the thorny relationship which recently exists between AGCM and administrative judges.
The judgment is significant expressly because it confirms a principle already inferable from Italian and European legal frameworks. According to this principle, the AGCM may postpone the deadline of a proceeding only when the delay is clearly justified. Only in this case, the AGCM’s enforcement can be considered consistent with the principle of legal certainty as transposed in the Italian Law concerning administrative proceedings (Law No. 241/1990) and in the Regulation of investigation procedures of the AGCM.
CALL TO ACTION
The investigated companies should take into consideration the long duration of the investigation carried out by the Antitrust authority. Indeed, it could impact on the lawfulness of the Authority’s final decision.