On 17th September 2014, the Italian Competition Authority (the “ICA”) opened an in-depth investigation into four companies (the “Accused Companies”) providing services in the waste recycle sector for alleged infringements of Article 2 of the Law No. 287 of 1990 (the “Italian Competition Law”), the prohibition of anti-competitive agreements.
The investigation stemmed from an anonymous complaint, which alleged anti-competitive conduct during tenders made for providing organic waste disposal services within the province of Rovigo; a small part of the Italian region Veneto.
Tender procedures were based on a lowest bid mechanism so that the invitation containing the lowest discount to a set price won the tender.
It is alleged that only the Accused Companies were in a position to make invitations for four tenders but they did not compete amongst themselves. Indeed, each Accused Company made one invitation for each of the four tenders without any overlap. Therefore each company won a tender without facing any competitive pressure or bid.
In light of the above, the ICA alleges that the Accused Companies tried to avoid competing with each other for tenders and had decided to illegally allocate markets by deciding the winner of the relevant tender before making invitations.
Through this alleged strategy, the Accused Companies sustained far lower costs (and higher profit margins) than they would have borne by competing. Such higher costs caused obviously damage to both consumer and other competitors.
The conduct, if found, would breach Article 2 of the Italian Competition Law. In fact, any agreement not to compete with competitors would fall under the law which forbids bid rigging and market allocation.
It is noted that the ICA has increased its focus on the waste recycling sector as investigations of this kind are becoming more numerous. However, if wrongdoing is found, the ICA investigation and subsequent enforcement action could be considered a high profile deterrent against bid rigging and allocating markets. The alleged wrongdoing is not proven at this stage and the investigation continues.