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Legal framework

Antitrust law

What are the legal sources that set out the antitrust law applicable to vertical restraints?

The national legal source that sets out the antitrust law applicable to vertical restraints is Law No. 287 of 10 October 1990 (Law No. 287/90). In particular, the substantive provisions relating to anticompetitive agreements are contained in article 2 (which substantially mirrors article 101, paragraphs 1 and 2 of the Treaty on the Functioning of the European Union (TFEU)) and article 4 (analogous to article 101(3) TFEU).

The national rules do not include regulations or guidelines dealing specifically with vertical restraints.

In certain situations, vertical restrictions may also constitute an abuse of dominant position, in violation of article 3 of Law No. 287/90, or an abuse of economic dependence, in violation of article 9 of Law No. 192/98. However, these issues are not considered in this chapter, which deals solely with the rules on vertical agreements.

Types of vertical restraint

List and describe the types of vertical restraints that are subject to antitrust law. Is the concept of vertical restraint defined in the antitrust law?

Law No. 287/90 does not define the concept of vertical restraint. However, the case law covers various types of vertical restraints, such as:

  • resale price maintenance (RPM): obligations restricting the buyer’s ability to determine its resale price;
  • non-compete obligations: obligations requiring the buyer not to manufacture, purchase, sell or resell competing goods or services, or to purchase from the supplier (or from another undertaking designated by the supplier) more than 80 per cent of its requirements on the relevant market;
  • exclusive distribution: agreements by which the supplier undertakes to sell the contract goods or services to only one distributor for resale in a certain geographical area, and where the distributor is normally obliged not to actively sell the goods or services in territories exclusively allocated to other distributors (or reserved to the supplier);
  • exclusive customer allocation: agreements by which the supplier agrees to sell the contract goods or services to only one distributor for resale to a specific group of customers, and where the distributor is normally obliged not to actively sell the goods or services to customers exclusively allocated to other distributors (or reserved to the supplier);
  • selective distribution: agreements by which the supplier agrees to sell the contract goods or services only to distributors selected on the basis of specified criteria and the distributors agree to sell the goods or services only to final customers and other authorised distributors, in the territories covered by the selective distribution system;
  • exclusive supply: obligations requiring the supplier to sell the contract goods or services to only, or mainly to only, one buyer, in general or for a specific use;
  • franchising: agreements by which the franchisor grants the franchisee a licence for its intellectual property rights (eg, trademark and know-how) for the use and distribution of goods or services; and
  • most-favoured nation clauses (MFNs): clauses that generally require a party to sell on a certain platform at the lowest price or at the best conditions (or both) offered either on that party’s own website (narrow parity clauses) or on other platforms or sales channels (wide parity clauses).

Legal objective

Is the only objective pursued by the law on vertical restraints economic, or does it also seek to promote or protect other interests?

The national rules on vertical restraints only seek to promote effective competition.

Responsible authorities

Which authority is responsible for enforcing prohibitions on anticompetitive vertical restraints? Where there are multiple responsible authorities, how are cases allocated? Do governments or ministers have a role?

The Italian Antitrust Authority (IAA) is the authority responsible for the public enforcement of the rules on anticompetitive vertical restraints.

The civil courts have jurisdiction for actions for damages and for the declaration of invalidity of the agreements.

Interim measures can be issued by both the IAA and by the civil courts. The government and ministers do not have a role.

Jurisdiction

What is the test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? Has the law in your jurisdiction regarding vertical restraints been applied extraterritorially? Has it been applied in a pure internet context and if so, what factors were deemed relevant when considering jurisdiction?

A vertical restraint will be subject to antitrust law in Italy when it has an impact on the national territory. When this is the case, the IAA issues proceedings against foreign companies just like against Italian companies.

The IAA has conducted only a few proceedings in relation to online sales. In Case I779 (Market for touristic services - online hotel reservations) (closed in 2016), the IAA issued proceedings against both the Italian companies, Booking.com (Italia) Srl and Expedia Italy Srl, and their parent companies, Booking.com BV, registered in the Netherlands, and Expedia Inc, registered in the US.

Agreements concluded by public entities

To what extent does antitrust law apply to vertical restraints in agreements concluded by public entities?

As a general rule, competition law applies to both private and public undertakings (see article 8(1) of Law No. 287/90).

Indeed, all undertakings carrying out an economic activity are subject to antitrust rules, regardless of their (private or public) nature.

As a partial derogation from this general principle, article 8(2) of Law No. 287/90 provides that competition rules do not apply to undertakings that, by law, are entrusted with the operation of services of general economic interest or operate on the market in a monopoly situation, in relation to the activities strictly connected to the performance of their specific tasks.

Sector-specific rules

Do particular laws or regulations apply to the assessment of vertical restraints in specific sectors of industry (motor cars, insurance, etc)? Please identify the rules and the sectors they cover.

Article 62 of Decree Law No. 1/2012 provides for specific rules concerning the relationships between undertakings active in the agricultural and food farming sector.

Article 8 of Decree Law No. 223/2006 and article 5 of Decree Law No. 7/2007 prevent insurance companies and their agents from entering into agreements providing for the exclusive distribution and the imposition of minimum prices or maximum discounts for the offer to consumers of non-life policies.

Article 1,166 of Law No. 124/2017 provides that rate (and other conditions) parity clauses in agreements between hotels and travel agencies are null and void, whatever the governing law applicable to the contract.

Legislative Decree No. 9/2008 contains specific rules relating to the commercialisation of audiovisual rights of sports events.

General exceptions

Are there any general exceptions from antitrust law for certain types of agreement containing vertical restraints? If so, please describe.

There are no national rules providing for general exceptions from antitrust law for vertical restraints.

The IAA applies the EU rules, also on the basis of article 1(4) of Law No. 287/90, according to which the national rules shall be interpreted in accordance with the principles of EU competition law.

Types of agreement

Agreements

Is there a definition of ‘agreement’ - or its equivalent - in the antitrust law of your jurisdiction?

The national rules do not contain a definition of ‘agreement’.

The IAA applies the same (wide) concept of agreement that is applied by the European Commission and EU courts.

In order to engage the antitrust law in relation to vertical restraints, is it necessary for there to be a formal written agreement or can the relevant rules be engaged by an informal or unwritten understanding?

Informal and unwritten understandings also fall within the scope of antitrust law.

For example, the following may be considered agreements for the purpose of competition law:

  • a gentlemen’s agreement, such as an oral understanding that one party shall operate as exclusive distributor for another party;
  • the general terms and conditions contained in an invoice, in the context of regular commercial relations; and
  • a circular sent by a supplier and explicitly or implicitly accepted by its distributors (by tacit acquiescence).

Parent and company-related agreements

In what circumstances do the vertical restraints rules apply to agreements between a parent company and a related company (or between related companies of the same parent company)?

The national competition rules do not contain specific provisions on vertical agreements between a parent company and its subsidiary (and between subsidiaries of the same group).

The IAA follows the EU principles on single economic entity.

Agent-principal agreements

In what circumstances does antitrust law on vertical restraints apply to agent-principal agreements in which an undertaking agrees to perform certain services on a supplier’s behalf for a sales-based commission payment?

When dealing with such an issue, the IAA follows the EU principles, in particular those contained in Regulation No. 330/2010 and in the Guidelines on Vertical Restraints (see Case I639 (Disinfectant products), closed in 2006).

Where antitrust rules do not apply (or apply differently) to agent-principal relationships, is there guidance (or are there recent authority decisions) on what constitutes an agent-principal relationship for these purposes?

In judgment No. 1009/2008, the Supreme Administrative Court held that the intermediary could not be considered as an agent because it bore specific economic and financial risks. In particular, the Court found that the sales commission was calculated as a set and invariable percentage of the turnover, regardless of the level at which such turnover could drop, and therefore did not necessarily guarantee the coverage of the costs borne by the agent. Moreover, the intermediary bore the financial risks deriving from the provision in the agency agreement of the del credere and the successful conclusion clause. According to the Court, this last clause made the intermediary liable for its entrepreneurial choices, making it autonomous from the principal. Finally, the Court also considered that the intermediary carried out further activities in favour of other undertakings, which provided higher turnover than the income generated by the execution of the mandate.

Intellectual property rights

Is antitrust law applied differently when the agreement containing the vertical restraint also contains provisions granting intellectual property rights (IPRs)?

The national competition rules do not contain any guidance in this respect.

Analytical framework for assessment

Analytical framework for assessment

Framework

Explain the analytical framework that applies when assessing vertical restraints under antitrust law.

The analysis conducted by the IAA is analogous to that conducted by the European Commission, both when determining whether the agreement restricts competition and when assessing whether it meets the conditions for (individual or group) exemption from the prohibition.

The main peculiarity of the national law is that article 2 of Law No. 287/90, unlike article 101 TFEU, contains an express reference to the ‘appreciability’ of the restriction and requires competition to be affected in a ‘substantial’ part of the national market.

The IAA has never issued guidance on what constitutes an appreciable restriction and on when a part of the market can be considered substantial.

An analysis of the case law shows, however, that the requirement of appreciability has led the IAA to look at factors such as the market shares held by the parties involved and the duration of the agreement.

As for the notion of ‘substantial part of the national market’, the first instance administrative court (TAR Lazio) has made clear that this does not mean that the local market must represent a substantial portion of the national market. According to the court, regard must be had to the importance of the local market for consumers, in view of the alternatives reasonably available to them (judgment of TAR Lazio, No. 7444/2002; in that case, some of the conducts sanctioned by the IAA consisted of exclusive agreements between the main theatres of the city of Salerno and the major film distributors).

Market shares

To what extent are supplier market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other suppliers relevant? Is it relevant whether certain types of restriction are widely used by suppliers in the market?

The market shares held by the parties are relevant when assessing the legality of individual restraints, not only when determining whether the agreement restricts competition, but also when determining whether it meets the conditions for (individual or group) exemption from the prohibition.

The IAA will also look at the market positions and conduct of other suppliers and will consider whether the restrictions are widely used by suppliers in the market. For example, in Case I757 (Obstacles to access to the market by a new mobile phone operator), the IAA analysed the possibly exclusionary effects deriving from the presence of analogous clauses in the agreements with multi-brand dealers entered into by two mobile operators (Telecom and Wind), holding an overall market share higher than 50 per cent. Similarly, in Case I702 (One-firm agents), the IAA analysed the provisions contained in the agreements entered into by the main insurance companies (representing over 80 per cent of the market) and their respective networks of agents, with a view to determining whether they led to a cumulative effect of foreclosure. Both proceedings ended with the acceptance of commitments.

To what extent are buyer market shares relevant when assessing the legality of individual restraints? Are the market positions and conduct of other buyers relevant? Is it relevant whether certain types of restriction are widely used by buyers in the market?

The market shares held by the parties are relevant when assessing the legality of individual restraints, not only when determining whether the agreement restricts competition, but also when determining whether it meets the conditions for (individual or group) exemption from the prohibition.

The IAA will also look at the market positions and conduct of other buyers and will consider whether the restrictions are widely used by buyers in the market. For example, in Case I779, the IAA conducted an investigation against the online travel agencies Booking.com and Expedia, relating to the use of MFNs in contracts with their hotel partners. A crucial factor in the analysis was the fact that the MFNs were used by the main platforms on the market, representing 70 per cent of the market for online hotel reservations (for further details, see question 25).

For an assessment of buyer power in the relationships between mass market operators and suppliers, see the sector inquiry IC43 (closed in 2013).

Block exemption and safe harbour

Function

Is there a block exemption or safe harbour that provides certainty to companies as to the legality of vertical restraints under certain conditions? If so, please explain how this block exemption or safe harbour functions.

The national rules do not provide for any block exemption or safe harbour. When dealing with issues under article 101 TFEU, the IAA applies the block exemption provided by Regulation No. 330/2010.

When dealing with a purely local matter under Law No. 287/90, the IAA follows the same principles contained in Regulation No. 330/2010.

Types of restraint

Assessment of restrictions

How is restricting the buyer’s ability to determine its resale price assessed under antitrust law?

Restricting the buyer’s ability to determine its resale price, by setting fixed or minimum resale prices, is one of the most serious violations, considered as hardcore.

Such restriction (RPM) can take various forms; for example, setting fixed or minimum resale prices, limiting the buyer’s ability to give rebates or discounts, making the granting of discounts or incentives conditional upon the buyer’s observance of a certain price level, etc.

Conversely, setting maximum prices or giving mere recommendations on resale prices is normally not objectionable, provided that such recommended or maximum prices do not ultimately result in fixed or minimum prices owing to pressure or incentives. The IAA has recently conducted three investigations concerning RPM.

Case I718 (Enervit - Distribution contracts) (closed in 2014) concerned, inter alia, RPM provisions imposed in relation to online sales (a maximum percentage of discount applicable to consumers). The IAA specified that RPM is a hardcore restriction, which excludes the applicability of the block exemption and determines a relative presumption of anticompetitiveness.

Case I766B (Solar and wind energies inverters - Imposition of minimum prices) (closed in 2014) concerned provisions imposing minimum prices to retailers for solar and wind energies inverters. The IAA specified that RPM is a hardcore restriction, which could not be exempted under any de minimis rule, according to the principles set forth by the European Commission’s De Minimis Notice.

Case I813 (Restrictions to the online sale of stoves) (closed in 2018) concerned, inter alia, the imposition of minimum resale prices (ie, maximum discounts applicable on list prices).

In all these cases, however, the IAA accepted the commitments proposed by the suppliers and closed the investigations without ascertaining any infringement. It is worth noting that, in Case I718, the IAA specified that the RPM concerned only one online retailer and, therefore, constituted a marginal phenomenon.

In the past, the IAA held that an agreement between the Italian Bookshops Association and several publishing houses constituted a restriction by object, insofar as it limited the maximum discounts that bookshops and mass market retailers could apply when reselling books (Case I157 (Italian Bookshops Association), closed in 1996; see also Case I92 (Milk - Dairy Retailers Association), closed in 1994, and Case I165 (Fuel Supply Agreements), closed in 2000).

For an example of recommended prices that were deemed compatible with article 2 of Law No. 287/90, see Case I528 (Universal Music Italia-Resellers) (closed in 2003).

Have the authorities considered in their decisions or guidelines resale price maintenance restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign; or specifically to prevent a retailer using a brand as a ‘loss leader’?

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Relevant decisions

Have decisions or guidelines relating to resale price maintenance addressed the possible links between such conduct and other forms of restraint?

Some of the proceedings conducted by the IAA in relation to RPM have also involved other restrictions.

In particular, in Case I718, the agreements also included the prohibition of passive sales within an exclusive distribution system and a non-compete clause of an indefinite duration. Similarly, Case I813 also concerned the prohibition of deliveries outside Italy of products sold online and limits to the warranty for products sold abroad.

However, the proceedings were closed with commitments, so the decisions are fairly brief and do not contain a detailed analysis of the links between the various forms of restraints.

Have decisions or guidelines relating to resale price maintenance addressed the efficiencies that can arguably arise out of such restrictions?

In Case I157, the parties requested the agreement to be exempted on the basis of article 4 of Law No. 287/90, relying on the peculiarities concerning the sale of books. The IAA refused to grant an exemption, stating that the restrictions were not indispensable and so lacked one of the fundamental requirements for their exemption.

Explain how a buyer agreeing to set its retail price for supplier A’s products by reference to its retail price for supplier B’s equivalent products is assessed.

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Suppliers

Explain how a supplier warranting to the buyer that it will supply the contract products on the terms applied to the supplier’s most-favoured customer, or that it will not supply the contract products on more favourable terms to other buyers, is assessed.

The matter was briefly considered in an old case (Case I123 (SIPAC), closed in 1996), where the IAA fined the three main cement producers and a concrete manufacturer for an agreement fixing prices and other conditions for the sale of cement. The case, which dealt mainly with horizontal aspects, also contained a vertical element (ie, the system of discounts applied by cement producers to the concrete manufacturer), by which the latter was granted a price for the purchase of cement systematically not higher than that applied by each cement producer to other concrete manufacturers. However, the case does not offer particular insights on the IAA’s approach towards wholesale MFNs.

Explain how a supplier agreeing to sell a product via internet platform A at the same price as it sells the product via internet platform B is assessed.

In Case I779, the IAA conducted an investigation on the ‘wide’ MFN clauses applied by Booking.com and Expedia, which provided that hotels could not offer their services (whether directly, through other online travel agents (OTAs) or through any other booking channel, online or offline) at lower prices or with better conditions than those offered on Booking.com’s and Expedia’s platforms, respectively.

During the investigation, Booking.com submitted commitments consisting of a significant reduction of the scope of its MFN clause. In particular, it proposed a ‘narrow’ MFN clause that applies only to prices and other conditions publicly offered by hotels through their own direct online sales channels, leaving them free to set prices and conditions on other OTAs and on their direct offline channels, as well as in the context of their loyalty programmes.

By its decision of 21 April 2015, the IAA accepted those commitments, made them binding on Booking.com and closed the proceedings (in relation to Booking.com only) without any finding of infringement.

Regarding Expedia, by its decision of 23 March 2016, the IAA stated that - on the basis of the information available - the reasons for intervening against Expedia no longer applied. Expedia had, in fact, removed from the existing contracts (and would not include in contracts still to be entered into) the price and other conditions parity clauses. As a result, the company amended the contracts with hotels in Italy in a similar way to Booking.com.

Following the end of these proceedings, the Italian legislator issued a law providing for the outright ban of rate (and other conditions) parity clauses imposed on hotels by travel agents. The ban is contained in article 1,166 of Law No. 124/2017 and applies to both wide and narrow MFN clauses.

Explain how a supplier preventing a buyer from advertising its products for sale below a certain price (but allowing that buyer subsequently to offer discounts to its customers) is assessed.

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Explain how a buyer’s warranting to the supplier that it will purchase the contract products on terms applied to the buyer’s most-favoured supplier, or that it will not purchase the contract products on more favourable terms from other suppliers, is assessed.

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Restrictions on territory

How is restricting the territory into which a buyer may resell contract products assessed? In what circumstances may a supplier require a buyer of its products not to resell the products in certain territories?

In Case I718, the IAA dealt, inter alia, with a restriction prohibiting (active and passive) sales outside Italy by a retailer and with a restriction prohibiting passive sales by wholesalers in the context of an exclusive distribution system.

In its decision of 20 November 2013 (opening proceedings), the IAA conducted a preliminary analysis, pursuant to Regulation No. 330/2010 and the Guidelines on Vertical Restraints, stating that:

  • the restriction on the territory into which a distributor may sell the contract products and the prohibition of passive sales in the context of an exclusive distribution system are hardcore restrictions (as per article 4b) and 4b)i) of Regulation No. 330/2010);
  • the presence of such restrictions in a vertical agreement leads to a relative presumption of unlawfulness; and
  • the de minimis rule in these cases does not apply.

As mentioned above, the case ended with commitments; the decision, therefore, does not contain an in-depth assessment of the matter.

Have decisions or guidance on vertical restraints dealt in any way with restrictions on the territory into which a buyer selling via the internet may resell contract products?

In Case I813, the IAA dealt, inter alia, with the prohibition of deliveries outside Italy of products sold online and with the limits to the warranty for products sold abroad. In particular, the supplier had sent a circular to its distributors specifying that:

  • online sales had to be made only on websites in the Italian language and with a domain suffix of ‘.it’;
  • using other languages for promoting the products online was prohibited;
  • the deliveries could only be made in the Italian territory; and
  • only authorised resellers could promote and sell products online.

The circular also stated that consumers had to accept that the warranty would not be valid if the product purchased online was not installed by a technician authorised by the supplier.

In the decision of 17 May 2017 (opening proceedings), the IAA conducted a preliminary analysis pursuant to Regulation No. 330/2010 and the Guidelines on Vertical Restraints, stating that the above mentioned restraints could amount to hardcore violations as per article 4 of Regulation No. 330/2010.

As mentioned above, the case was closed with commitments; the decision, therefore, does not contain an in-depth assessment of the matter.

Restrictions on customers

Explain how restricting the customers to whom a buyer may resell contract products is assessed. In what circumstances may a supplier require a buyer not to resell products to certain resellers or end-consumers?

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Restrictions on use

How is restricting the uses to which a buyer puts the contract products assessed?

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Restrictions on online sales

How is restricting the buyer’s ability to generate or effect sales via the internet assessed?

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Have decisions or guidelines on vertical restraints dealt in any way with the differential treatment of different types of internet sales channel? In particular, have there been any developments in relation to ‘platform bans’?

Case I813 concerned, inter alia, a provision contained in a circular sent by a supplier to its distributors prohibiting sale advertisements on online platforms (eg, Ebay, Eprice, Amazon).

However, the case was closed with commitments and the IAA did not comment on this issue; not even in the context of the preliminary remarks contained in the decision opening proceedings.

Selective distribution systems

Briefly explain how agreements establishing ‘selective’ distribution systems are assessed. Must the criteria for selection be published?

In judgment No. 20688/2016 of 13 October 2016 (Volkswagen Group Italia), the Supreme Court stated that Volkswagen’s business decision of restructuring its distribution network was merely aimed at strengthening Audi’s brand in the premium segment and did not adversely affect intra-brand competition. In this respect, the Court observed that each authorised dealer could make sales in all EU member states (and even non-EU countries), and was free to buy from other suppliers (with the only limit being that 30 per cent of its annual requirements had to be purchased from Volkswagen).

In an order recently issued by the Court of Turin in the context of interim proceedings (Court of Turin order of 22 March 2017), concerning the refusal by Fiat to admit a distributor of spare parts to its selective distribution system based on qualitative criteria, the Court stated that, having regard to Regulation No. 330/2010, the head of a selective distribution network is under no obligation to contract with every applicant that meets the qualitative criteria set forth by the supplier.

Are selective distribution systems more likely to be lawful where they relate to certain types of product? If so, which types of product and why?

The civil courts have, in some cases, taken a rather narrow view on what sort of products deserve a selective distribution system. For example, in an old judgment of 14 November 1991 (Beecham v Nuova Corsiglia), the Court of Milan held that cosmetics were unsophisticated products that did not require a selective distribution system.

On the other hand, the Supreme Court did not challenge the use of a selective distribution system for unsophisticated products, such as newspapers (see Supreme Court judgments Nos. 2018/1985 and 2634/1983).

In two recent cases, the Supreme Court and the Court of Turin did not raise objections as to the use of a selective distribution system by motor vehicle suppliers (Supreme Court judgment No. 20688/2016 and Court of Turin order of 22 March 2017).

In selective distribution systems, what kinds of restrictions on internet sales by approved distributors are permitted and in what circumstances? To what extent must internet sales criteria mirror offline sales criteria?

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Has the authority taken any decisions in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorised buyers or sales by authorised buyers in an unauthorised manner?

A case dealt with by the Court of Milan concerned the commercialisation of jewellery by an unauthorised retailer that sold them in an outlet centre (Case Chantecler SpA v Gens Aurea SpA, order of 11 January 2016). The Court recalled the judgment of the Court of Justice in case C-59/08 (Copad), stating that, even if the owner of the products has placed the goods on the market in the EU, this does not exhaust its right to oppose further circulation of the goods if that further circulation is in violation of the limits imposed by a selective distribution system and may damage the reputation of the trademark (contrary to article 5(2) of the Industrial Property Code).

According to the Court, the applicability of this legal ground depends on a number of requirements (the burden of proof lying on the trademark owner), such as:

  • the luxury nature of the product;
  • the systematic nature of the sale by the third party and the awareness of the third party of the existence of a selective distribution system;
  • the nature of the products normally marketed by the third party; and
  • the marketing methods normally used in that sector of activity (to show that, while inside the distribution network the product is sold in an ‘exclusive’ context, typical of luxury products, the resale by the third party occurs in a context that contradicts the exclusive aura of luxury products and is therefore capable of devaluing the brand).

Such ruling was quashed on appeal by the Court of Milan (order of 3 March 2016), on the ground that the supplier had not provided evidence of the existence of a serious, tangible and severe damage to the trademark.

Another case dealt with by the Court of Rome concerned a dispute between a producer of gifts and decorative items and a former authorised distributor, which continued to sell the products after the termination of the distribution contract (judgment of 17 February 2016). According to the Court, the conduct of the retailer was capable of inducing customers to believe that it was still part of the network of authorised distributors and thereby led to the misappropriation of the values deriving from the inclusion in such system. In the opinion of the Court, such circumstances - together with the awareness by the retailer of the existence of a selective distribution system and the fact that the retailer knowingly contributed to the breach of contract by the authorised distributor - were in contrast with the rules on professional integrity and, therefore, constituted an infringement of article 2598(3) of the Civil Code.

Does the relevant authority take into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market?

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Has the authority taken decisions (or is there guidance) concerning distribution arrangements that combine selective distribution with restrictions on the territory into which approved buyers may resell the contract products?

In judgment No. 20688/2016, the Supreme Court found that there were no restrictive effects, considering, inter alia, that each authorised dealer could make sales in all EU member states (or non-EU countries).

Other restrictions

How is restricting the buyer’s ability to obtain the supplier’s products from alternative sources assessed?

In Case I436 (Heineken horeca channel) (closed in 2001), the IAA analysed the agreements between Heineken and its distributors, which contained, inter alia, a clause obliging retailers to purchase Heineken beer exclusively from a specific distributor or wholesaler. According to the IAA, the agreements were not covered by the Block Exemption applicable at that time (Regulation No. 2790/99) because Heineken’s market share was around 33 per cent; the above-mentioned clause could eliminate intra-brand competition between wholesalers and could lead to market partitioning.

The IAA, however, concluded that the clause did not lead to appreciable foreclosure effects considering that most of the contracts lasted for only one year (although were tacitly renewable) and the exclusivity clause concerned only a limited percentage of the retailers.

How is restricting the buyer’s ability to sell non-competing products that the supplier deems ‘inappropriate’ assessed?

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Explain how restricting the buyer’s ability to stock products competing with those supplied by the supplier under the agreement is assessed.

Many decisions taken by the IAA in the 1990s concerned agreements between banks and insurance companies relating to the sale of insurance products in the banking channel. In some of these cases, the IAA issued an infringement decision (see, for example, Case I219 (Assicurazioni Generali v Unicredito), closed in 1997). In other cases, the IAA granted an individual exemption (pursuant to article 4 of Law No. 287/90) mainly in view of the fact that the agreement would have allowed the creation of a new distribution channel for standardised insurance products with lower intermediation costs, benefiting consumers (see, for example, Case I61 (INA v Banca Di Roma), closed in 1993).

In Case I487 (Sagit - Contracts for the sale and distribution of ice cream) (closed in 2003), the IAA based its non-infringement decision mainly on the fact that a significant proportion of the retailers (43 per cent) were not affected by the non-compete clauses applied by Sagit (and other suppliers on the market) and could, therefore, be accessed by new entrants and existing competitors. Conversely, in an earlier case (Case I212 (Contracts for the exclusive distribution of ice cream), closed in 1996), the IAA held that similar clauses contained in the agreements entered into by the four main suppliers, which tied 70 per cent of the retailers, appreciably restricted competition and could not be exempted.

More recently, the IAA accepted commitments in a case concerning the provisions contained in the agreements entered into by the main insurance companies (representing over 80 per cent of the market) and their respective networks of agents, which, according to the IAA, could constitute de-facto non-compete obligations (see Case I702, closed in 2014).

How is requiring the buyer to purchase from the supplier a certain amount or minimum percentage of the contract products or a full range of the supplier’s products assessed?

In Case I558 (Pirelli tyres - Resellers) (closed in 2003), the IAA held that an agreement between a tyres producer (with a market share of 20 per cent) and some of its resellers, which required the latter to purchase a percentage (confidential, but above 30 per cent) of their requirements from Pirelli did not appreciably restrict competition, as it did not contain territorial restrictions and allowed resellers to purchase the remaining part of their requirements from competing suppliers. Moreover, the IAA considered that the agreements entered into by other suppliers did not contain similar clauses, so there was no cumulative foreclosure effect.

Explain how restricting the supplier’s ability to supply to other buyers is assessed.

In Case I363 (Agreement between film distributors and theatres) (closed in 2001), the IAA held that the exclusivity granted for new releases, by some major film distributors, to a group of theatres with a market share of around 60 per cent was capable of foreclosing access by competing theatres in a period that is the most crucial for the business (the first few weeks after the film’s release).

Explain how restricting the supplier’s ability to sell directly to end-consumers is assessed.

To date, no IAA decision has focused on this specific issue.

The assessment would be the same as under EU law.

Have guidelines or agency decisions in your jurisdiction dealt with the antitrust assessment of restrictions on suppliers other than those covered above? If so, what were the restrictions in question and how were they assessed?

There are no major issues worth noting.

Notification

Notifying agreements

Outline any formal procedure for notifying agreements containing vertical restraints to the authority responsible for antitrust enforcement.

Until 1 May 2004, undertakings often notified their agreements to the IAA requesting it to state that the agreement did not fall within the prohibition or deserved an exemption from the prohibition.

At the end of the proceedings, the IAA published a reasoned and rather detailed decision.

As from 1 May 2004, following the entry into force of Council Regulation (EC) No. 1/2003, the possibility to notify an agreement to the IAA is limited to cases of purely local relevance (ie, when the practice may not affect trade between member states). Notably, in the past 14 years, no decisions have been issued by the IAA following the notification of a vertical agreement.

Authority guidance

If there is no formal procedure for notification, is it possible to obtain guidance from the authority responsible for antitrust enforcement or a declaratory judgment from a court as to the assessment of a particular agreement in certain circumstances?

In the context of an action before the civil court, the party wishing to enforce an agreement may ask the court to declare that it does not restrict competition or that it meets the conditions for exemption from the prohibition provided by article 101(3) TFEU.

Enforcement

Complaints procedure for private parties

Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?

Private parties may file a complaint to the IAA relating to alleged unlawful vertical restrictions. There are no particular formalities to be followed. The IAA does not have any legal obligation to launch an investigation.

After receiving a complaint, the IAA normally starts a pre-investigation phase, during which it gathers all the data and information necessary for the preliminary assessment of the matter (eg, by hearing the complainant and requesting further information from the complainant itself and to any other entity, such as other competitors, clients, suppliers, or even the undertakings whose conduct is complained of).

The law does not provide for a deadline within which the IAA must open proceedings (or dismiss the complaint).

When the IAA refuses to open an investigation, it issues a reasoned opinion that can be appealed by the complainant before the administrative courts, provided that it proves that the decision jeopardises its interests.

Regulatory enforcement

How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?

Until recently, the IAA concentrated all its efforts on horizontal practices and abuse of dominance cases. The investigations launched in relation to vertical agreements in the past 10 years represent a minimal percentage of the total cases.

The main enforcement priorities regarding vertical restraints in recent years are RPM and online sales.

What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?

According to article 2(3) of Law No. 287/90, prohibited agreements are null and void and, therefore, unenforceable.

Invalidity may affect the single restrictive clause, or clauses, or may extend to the whole contract. As per article 1419 of the Civil Code, the invalidity of single clauses leads to the nullity of the entire contract if it appears that the parties would not have entered into the contract without that part of its content which is affected by invalidity. Moreover, the nullity of a single clause does not lead to the invalidity of the contract when the law provides for mandatory rules to replace the void clauses.

May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?

The IAA imposes penalties independently (ie, without gaining prior permission by any other entity).

Pursuant to article 15 of Law No. 287/90, in the event that the IAA, following an investigation, ascertains a violation, it shall set a deadline within which the undertaking (or undertakings) concerned is to remedy the infringement.

Moreover, in the case of serious infringements, the IAA imposes fines of up to 10 per cent of the undertaking’s turnover of the previous financial year (prior to the decision ascertaining the infringement).

In the most recent cases on vertical restraints, the IAA accepted the commitments proposed by the parties and closed the investigations without ascertaining any infringement. This can be viewed as an indication of a lenient attitude by the IAA towards vertical restrictions or, alternatively, as a signal that vertical restraints, which have long been neglected, will no longer be ignored.

Investigative powers of the authority

What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?

When starting an investigation, the IAA normally carries out unannounced inspections at a company’s premises, land and vehicles. During the raid, the IAA’s officials, with the assistance of the Tax Police, may review and make copies of any documents relevant to the investigation and may request any manager or employee of the company to give oral information and explanations, which are then recorded in the minutes of the inspection.

In the course of the proceedings, the IAA may send written requests for information to the undertakings under investigation and to any third parties (including companies domiciled outside its jurisdiction).

Requests for information may also be sent by the IAA in the pre-investigation phase, in order to assess whether the case raises possible concerns that are worth investigating. Such requests for information may be sent to the company or companies whose conduct is concerned, as well as to any third parties.

Private enforcement

To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?

Italian law allows both stand-alone and follow-on private enforcement actions. The civil remedies that are available are essentially actions for the declaration of invalidity of agreements (or single clauses) and damage claims. Parties may also apply for interim relief.

With reference to damage actions, compensation can only cover the actual loss and loss of profit (plus interests), and does not allow for overcompensation.

The court may request the IAA’s assistance in determining the amount of damages. Actions can, in principle, be brought by both non-parties to agreements containing vertical restraints and by the parties to agreements themselves. As per article 140-bis of the Consumer Code (Law No. 206/2005), class actions are also allowed, based on an opt-in model: the action can be brought by consumers individually or through associations to which they grant power or committees in which they participate.

According to article 18 of Legislative Decree No. 3/2017, only the ‘Specialised Chambers in Company Law’ of the civil courts of Milan, Rome and Naples have jurisdiction, on a territorial basis, on antitrust actions.

First-degree proceedings usually last around three years. The unsuccessful party shall be ordered by the court to bear the costs of the proceedings, the amount of which is, however, determined by the court.

Other issues

Other issues

Is there any unique point relating to the assessment of vertical restraints in your jurisdiction that is not covered above?

No.

Update and trends

Recent developments

What were the most significant two or three decisions or developments in this area in the last twelve months?

Recent developments

The only decision issued by the IAA in the past 12 months is Case I813 (Restrictions to the online sales of stoves), concerning RPM and online sales.

It remains to be seen whether the IAA will follow the European Commission’s path and keep concentrating its efforts on vertical restrictions affecting the online channel, with the possibility of also investigating the use of algorithms.

Anticipated developments

The IAA recently recruited IT experts with specific expertise in algorithms and big data, and launched a sector inquiry into big data, in cooperation with the Telecommunication Regulator and the Data Protection Agency (Case IC53 (Big Data), launched on 30 May 2017 and still ongoing).

This may suggest that, in the near future, the IAA will concentrate its enforcement efforts on tackling vertical restraints that might affect the development of the digital sector.