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Investigations

Initiating an investigation

Who can initiate an investigation of potential cartel conduct?

According to Article 12 of the Competition Act (287/90), after assessing the elements in its possession and those brought to it by the public authorities or any other interested party, the Italian Competition Authority (ICA) can conduct an investigation to ascertain any infringements of the prohibitions provided for by Article 2. However, the ICA is under no obligation to start an investigation. In this case, the ICA sends a letter to the complainant explaining its position.

In practice, the ICA initiates proceedings:

  • by its own motion;
  • based on a leniency application; or
  • following a complaint filed by a third party.

If an investigation is initiated by complainants or third parties, what rights (if any) do they have?

Under Article 6(4) of Decree-Law 217/1998, parties that have a direct, immediate and present interest in an investigation and have submitted reports or complaints relevant to its commencement are entitled to receive a notice of the decision to initiate proceedings. 

Under Article 7(1)(a) of Decree-Law 217/1998, the following parties may participate in the proceedings:

  • parties that have received a notice of the decision to initiate proceedings under Article 6(4); and
  • parties representing public or private interests and associations representing consumers that might be directly, immediately and presently damaged by any infringements forming the subject of the investigation or by any measures adopted as a result of it, provided that they submit reasoned requests to intervene within 30 days from the date of publication of the notice of the decision to initiate proceedings in the ICA Bulletin.

Under Article 7(2) of Decree-Law 217/1998, complainants and other third parties admitted to participate in the proceedings have the right to:

  • access the investigation file (with the exception of confidential information); and
  • produce written submissions, documents, arguments and opinions.

In addition, under Article 7(3) of Decree-Law 217/1998, parties that have received a notice of the decision to initiate proceedings can be heard by ICA officials. Complainants and other third parties admitted to participate in the proceedings, may, on a reasoned request, participate in the final oral hearing (Article 14(6) of Decree-Law 217/1998).

What obligations does a company have on learning that an investigation has commenced?

Undertakings and their representatives must supply the information and documentation requested and cannot refuse to supply such information or documents on any of the following grounds:

  • confidentiality or the exercise of powers and authority imposed by company regulations or internal instructions, including oral instructions;
  • the need to protect the party concerned from the risk of tax or administrative penalties; or
  • the need to protect company or industrial confidentiality, unless the ICA acknowledges particular requirements of this kind that have already been brought to its attention.

What obligations does a company have if it believes that an investigation is likely?

According to its guidelines on setting fines, the ICA considers the provision of information and documents during an investigation which, on closer analysis, is deemed to be crucial to the identification of other infringements to be a mitigating circumstance (entailing a reduction of up to 50% of the basic amount). It may also be a legitimate ground for conditional immunity from penalties, in accordance with the leniency programme.

What are the potential consequences of failing to act or delaying action?

Under Article 14(5) of the Competition Act, the ICA may fine an undertaking that refuses or fails to provide the requested information or documents without justification.

Formal stages of investigation

What are the formal stages of and approximate timeframe for investigations?

Under Article 6(1) of Decree-Law 217/1998, investigations are formally opened by means of an ICA Board decision. The information that must be contained in the decision to open proceedings is listed in Article 6(3) of the decree-law (eg, the essential elements of the alleged infringements, the deadline for completing the proceedings and the name of the person responsible for the proceedings). The decision to open proceedings is notified to the undertakings allegedly involved in the infringement and to the complainants that have a direct, immediate and present interest (Article 6(4) of the decree-law). This decision is frequently notified to the undertakings under investigation together with the parallel decision to conduct a dawn raid.

Once the ICA Board considers that it has acquired sufficient evidence, it will authorise the issue of a statement of objections (Article 14(1) of Decree-Law 217/1998). The undertakings under investigation and the complainants admitted to the proceedings can file written submissions in response to the statement of objections (Article 14(4) of the decree-law).

If the undertakings under investigation so request, a final hearing takes place before the ICA Board (Article 14(5-9) of the decree-law). After the final hearing, the ICA adopts a final decision.

The proceedings as a whole vary in length; however, a final decision is usually adopted no earlier than 18 months from their commencement. 

Investigative powers

What investigative powers do the authorities have?

The ICA’s investigative powers are set out in Article 14(2) of the Competition Act and Articles 8 to 11 of Decree-Law 217/1998.

The ICA can request in writing information and documents from any individual, undertaking or entity in possession of information and documents that may be relevant to an investigation. Requests for information and the disclosure of documents can also be made orally in the course of hearings or inspections. Oral requests and responses to these requests are recorded in the minutes of the hearing or inspection. Responses provided during the hearing or inspection can be supplemented within the deadline set out in the minutes. The offices may also:

  • hear any other individual, undertaking or person for the purposes of aiding the investigation; and
  • make written records of any information collected.

The ICA can also inspect the business premises of any party that may be in possession of documents that are relevant to the investigation. ICA officials must exhibit a document issued by the ICA that indicates:

  • the object of the inspection; and
  • the penalties for refusing, omitting or delaying to supply the requested documents and information or for supplying untruthful documents or information.

ICA officials have the power to:

  • enter any premises, land and means of transport of a party under inspection, excluding their place of residence or domicile where it is extraneous to the operations of the undertaking under investigation;
  • examine and copy books, business records and documents that are relevant to the investigation; and
  • ask for oral explanations and request information.

Minutes are taken of an inspection.

The ICA Board can authorise the production of expert reports and statistical and economic analyses and may consult experts, as proposed by the offices.

The measure with which expert testimony and analyses are requested, and the ensuing results, are notified to the parties to which the investigation refers to enable them to exercise their right of defence. 

What is the geographic reach of public enforcement actions?

Italy.

When is court approval required to invoke these powers?

The ICA does not require court approval to exercise its investigative powers.

Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?

Inspections of private premises are prohibited under Italian law. During the inspection, ICA officials are assisted by the Italian Customs and Excise Police. ICA officials are under no obligation to wait for legal advisers to arrive. 

What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?

Refusal or failure to provide the information or documents requested by the ICA without justification may trigger a fine of up to €25,821. Submitting untruthful information or documents may trigger a fine of up to €51,643. 

Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?

Only communications between external lawyers and clients are protected by legal professional privilege. In-house lawyer communications are not protected by legal privilege unless they are limited to copying advice received by external lawyers.

Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?

Not applicable.

What is the process for objecting to an authority’s exercise of its claimed powers?

An ICA decision to open competition proceedings or authorise an inspection can be challenged only in limited circumstances – for example, when the ICA lacks the power to open proceedings (Lazio Regional Administrative Court Judgments 864/215 and 865/2012).

Publicity and confidentiality

What information about investigations will be made publicly available and at which stage(s) of the process?

The decision to open proceedings is usually public and posted on the ICA’s website, together with a press release, shortly after proceedings are opened. This contains some basic information concerning the nature of the infringement under investigation, as well as a reference to the undertakings involved and, sometimes, to whether inspections were carried out.

Is any information automatically confidential and is confidentiality available on request?

Under Article 14(3) of the Competition Act and Articles 12 and 13 of Decree-Law 217/1998, parties can submit a request to the ICA that certain documents and information be treated as confidential.

Based on the principle established by the administrative courts with regard to leniency materials (Supreme Administrative Court Judgment 6481/2010), it is reasonable to conclude that the ICA can on its own initiative (ie, even absent a request by the relevant undertaking) consider and treat as confidential certain information provided by the parties. However, in such cases, the ICA is not legally bound to conduct a confidentiality assessment in relation to the information contained in the file.

International cooperation

Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?

Beyond the cooperation required by the European Competition Network, no cooperation agreements with authorities in other jurisdictions exist.

Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?

No.

Decisions

How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?

Under Italian law, a cartel investigation ends with a finding of either infringement, combined with a prohibition and often a penalty, or no infringement.

There is no settlement procedure under Italian competition law. However, under Article 14ter of the Competition Act, parties can offer commitments. If the commitments are capable of eliminating the anti-competitive nature of the conduct under investigation, the ICA may accept them and close the investigation with neither a finding of infringement nor a fine. However, the ICA does not usually accept commitments in cartel cases.

What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?

Commitments should be submitted to the ICA within three months from the opening of proceedings, although this term is not mandatory. When not manifestly inadequate, they are posted on the ICA website and published in the ICA Bulletin in order enable third parties to submit comments (market test). If needed, the ICA can also issue specific requests for information to gather further useful elements from third parties. Following the market test, the undertakings that have offered the commitments can submit their comments on the information and third-party arguments and can also amend the commitments originally submitted in light of the results of the market test.

After assessing the suitability of the commitments, the ICA can make them binding on the undertakings concerned and end the proceedings. The commitment decision is then published in the ICA Bulletin.

If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?

Cartels follow the ICA’s general procedure for the enforcement of competition law.

Which party must prove its case? What is the relevant standard of proof?

In line with the principles of EU competition law, the burden of proof rests on the authority alleging the infringement.

With specific regard to cartels, conscious parallelism among competitors cannot be the only evidence of an agreement or concerted practice. However, the ICA must show:

  • the absence of alternative plausible explanations of the parallel behaviour; and
  • actual contact or exchanges of information between the parties.

The burden to prove the absence of alternative explanations for the conduct in question rests on the ICA. In a recent judgment concerning an alleged agreement between two insurers regarding participation in tendering procedures to provide insurance services to the public transport sector (Judgment 1066/2017), the Supreme Administrative Court confirmed that, for a concerted practice to exist, uncertainty as to the competitors’ future conduct must be eliminated or lessened. In the absence of any significant external evidence, the ICA must prove that the parallelism in the parties’ conduct on the market is the result of an infringement and cannot be logically explained in an alternative way. In the case at hand, the ICA did not provide such proof, whereas the parties provided many possible alternative logical explanations based on the market’s specific characteristics.

In particular, the court found that the decision of the other insurers – which were not parties to the proceedings and which represented a large share of the market – not to participate in the calls for the tenders concerned or take part in the bids could have been due to the sector’s low profitability, rather than the result of unlawful collusion between the two companies.

Is there a hearing? If so, what is the process for submitting evidence and testimony?

The procedure followed by the ICA provides for two types of oral hearing:

  • Under Article 14(1) of the Competition Act and Article 6(3) of Decree-Law 217/1998, when the ICA notifies the undertakings of the opening of an investigation, they have the right to request a hearing with the officials within the deadline prescribed in the opening decision. Such a right may be exercised again before the investigative phase ends.
  • Under Article 14(5) of Decree-Law 217/1998, the undertakings and entities concerned may avail themselves of the right to be heard by the ICA Board at a final oral hearing, provided that they have so requested within five days from being notified of the statement of objections.

The board may also hear other parties to the proceedings which have submitted a reasoned request to be heard.

What are the accused’s procedural rights?

The accused has the following procedural rights:

  • the right to be heard by ICA officials when the investigation is opened and before it is closed;
  • the right to be heard by the ICA Board at a final oral hearing;
  • the right to produce, at any time during the investigation, written submissions, documents, arguments and opinions; and
  • the right to access the investigation file (with the exception of confidential information).

With regard to access, the Supreme Administrative Court, on appeal from the Regional Administrative Court, recently overturned an ICA decision to refuse a company (that had already been penalised for taking part in a cartel in the concrete industry) access to confidential documents gathered in the context of new cartel proceedings, in which the company was also involved (Judgment 3409/2016). The reason for the refusal was that the documents concerned different geographic areas to those in which the applicant’s alleged anti-competitive conduct had occurred. The court referred to the quasi-criminal nature of antitrust proceedings to conclude that the parties must be granted access to all administrative documents that appear necessary for the exercise of their rights of defence – both in antitrust administrative proceedings and in appeal proceedings before the courts.

Finally, during an inspection, lawyers may assist companies to avoid the acquisition of documents which are not directly related to the subject of the proceedings or are covered by legal professional privilege.

Appeal process

What is the appeal process?

Pursuant to Article 33(1) of the Competition Act, the Lazio Regional Administrative Court has exclusive jurisdiction over appeals of ICA decisions, which must be brought within 60 days from notification. A Lazio Regional Administrative Court judgment can be appealed before the Supreme Administrative Court within 30 days from its notification or three months from its publication. Supreme Administrative Court judgments can be appealed before the Supreme Court of Cassation for jurisdictional and competence issues or for revocation.

The appellant may also ask the Lazio Regional Administrative Court for a stay of execution when it may cause serious and irreparable damage to its position.

To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?

An appeal is essentially limited to a review of the legality of the ICA’s decision (ie, an assessment of whether the ICA based its conclusions on accurately stated facts and supported its decisions with adequate and consistent grounds). However, the review court cannot replace the ICA’s assessment, which is within the discretionary powers vested therein, with its own appraisal.

Pursuant to Article 134 of the Administrative Code, the administrative judge has full merits jurisdiction on fines (including reducing or eliminating a fine). 

Penalties

Penalties for companies

What are the potential penalties for companies involved in a cartel?

Pursuant to Article 15 of the Competition Act (287/90), the Italian Competition Authority (ICA) may impose fines of up to 10% of the worldwide turnover realised by each undertaking during the previous financial year. 

Are there guidelines in place for penalties? If not, how are penalties normally calculated?

Detailed criteria for setting fines are set out in the 2014 Guidelines on the Application of the Criteria for  the Quantification of Administrative Fines Pursuant to Article 15(1) of Law 287/90.

The main elements of the guidelines can be summarised as follows:

  • The calculation of a fine’s minimum ‘floor’ is based on the value of the relevant undertaking’s annual turnover in the relevant market during the past full year. Depending on the severity of the violation, this amount may be up to 30% of the undertaking’s turnover. For the most serious infringements, the minimum percentage should be no less than 15% of the value of sales.
  • In case of a serious competition law violation, the basic fine will be adjusted upwards by an entry fee, ranging from 15% to 25% of the value of sales.
  • The criteria for assessing the gravity of the offence include:
    • the relevant market’s competitive conditions;
    • prejudice against innovation; and
    • the extent of the actual economic impact or – more generally – the effects on the market and consumers, where this can be reliably estimated.
  • The fine may be adjusted if aggravating or mitigating circumstances exist. Each circumstance accounts for 15% of the basic amount.
  • The fine may be increased by up to 50% if the undertaking concerned:
    • recorded a particularly high global turnover during the financial year preceding the issue of the infringement decision; or
    • belongs to a group of significant economic size.

The penalty may also be further increased in consideration of the amount of unlawful gains resulting from the infringement.

  • Specific  criteria  exist for  calculating  the  value  of  sales  in  cases  of  collusion  in public procurement procedures.
  • Provisions exist which concern several concurrent offences (eg, where the same conduct violates Articles 2 and 3 of the Competition Act or Articles 101 and 102 of the Treaty on the Functioning of the European Union or involves multiple violations of the same provisions.

Do the authorities take into account any penalties imposed in other jurisdictions?

No.

How can a company mitigate its exposure to fines?

Mitigating factors include:

  • the provision of information and documents during an investigation that proves to be crucial to the identification of other infringements. This may result in a penalty reduction and may be legitimate grounds for conditional immunity from penalties; and
  • the adoption and implementation of a specific compliance programme, although its mere existence will not be considered a mitigating circumstance in itself in the absence of evidence of a credible and effective commitment thereto.

Penalties for individuals

What are the potential penalties for individuals involved in a cartel?

Not applicable.

Do the authorities take into account any penalties imposed in other jurisdictions?

Not applicable.

Is a company permitted to pay a penalty imposed on its employee?

Not applicable.

Is a company permitted to continue to employ an employee involved in cartel conduct?

Not applicable.

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