Italy: Cartels

Both EU and national competition rules may apply to cartels enforcement in Italy. In particular, cartel proceedings related to conducts which do not affect trade between EU Member States are launched under Article 2 of the Competition and Fair Trading Act (Law No. 287/90) (“Competition Act”), which largely reflects the content of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”).

If the alleged anticompetitive agreements may affect trade between EU Member States, Article 2 of the Competition Act and/or Article 101 TFEU will apply (see Article 3(1) of EC Regulation No 1/2003).

Procedural steps are regulated by Presidential Decree No 217/98, laying down detailed rules on the procedure to be applied in case of cartel investigations (“Procedural Regulation”).

No. Article 2 of the Act prohibits agreements which have as their “object or effect” the prevention, restriction or distortion of competition within the domestic market or a substantial part of it. Therefore, a “restriction by object” is sufficient to establish an infringement, even if the anticompetitive agreement has no effect on the market.

Conducts which occur outside Italy are caught by Italian cartels legislation if such conducts have as their “object of effect” the restriction of competition within Italy. By contrast, cartel conducts occurring in Italy (e.g. anticompetitive meetings among competitors) which exclusively concern foreign markets should not fall within the scope of Italian cartel legislation in so far as such conduct do not have as their object or effect the Italian market or a substantial part of it.

Cartels investigations are carried out by the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) (“ICA”), an administrative independent body established by the Competition Act. The ICA has general competence, inter alia, on competition law (specifically on cartels, abuse of dominance and merger control) as well as on consumer protection issues (namely on unfair commercial practices, misleading and unlawful comparative advertising).

The ICA has both investigative and decision-making powers.

Specific competencies are provided in case of anticompetitive agreements related to certain sectors (namely banking, insurance and communication). In particular, in case of cartels proceedings in the insurance and the communication sector, the ICA must request non-binding opinions of, respectively, the Insurance Authority (IVASS) and the Communication Authority (AGCOM). As regards the banking sector, agreements between competitors can be in principle authorized, for a limited period of time, if such authorization is in the interest of the efficiency of the payments system. However, no application has been made of such provision until now.

The opening decision is adopted by the ICA’s Board upon proposal of the ICA’s services. Such proposals may be based on fact-finding investigations carried out by the ICA and/or third party claims (competitors, consumers, public authorities, etc.).

As regards the duration of the pre-investigation phase, it is worth noting that the Supreme Administrative Court (Consiglio di Stato) has recently clarified that the ICA is obliged to contest the infringement within 90 days from when it has become aware of it (Judgment 21 January 2020, No. 512).

The decision to open cartel proceedings contains, inter alia, a general description of the alleged infringement and the term-limit within which the proceedings must be concluded. If the investigated conduct may cause a “serious and irreparable” damage to competition, the ICA may also adopt interim measures.

The opening of the investigation is served to the addressees of the investigation and the other interested third parties (e.g. complainants), and it is also published on the ICA website and its weekly bulletin.

Cartel investigations are carried out by the ICA services (through a case team) under the supervision of the secretary general.

The parties may submit statements and documents and may ask to be heard by the case team throughout the entire duration of the investigation.

At the end of the investigation, the ICA’s case team proposes to the ICA’s Board a draft statement of objections. The ICA’s Board, once verified “the non-manifest groundlessness” of such proposal, shall authorise the case team to send the statement of objections (SO).

When sending the SO, the case team indicates the term-limit within which the investigation must be concluded (which cannot be shorter than 30 days). Once received the SO, the interested parties may:

1. within the following 5 days, ask to be heard during the final oral hearing;
2. submit statements of defense and documents up to 5 days before the term-limit of the conclusion of the investigation.

The final oral hearing is held before the ICA’s Board. The ICA’s Board may decide, upon request, to admit third interested parties which have taken part to the cartel proceedings to attend the oral hearing. The final decision is usually adopted within few days from the final oral hearing.

The ICA may at any time of the investigation (i) require information and documents; (ii) conduct inspections and take copy of relevant documents; (iii) obtain economic and statistical expert opinions; (iv) hear any person.

Written requests for information must indicate (a) the facts and circumstances on which clarification is required; (b) the purpose of the request; (c) the deadline for answering; (d) how the information should be provided; (e) the applicable fines in case of refusal, omission or delay (up to EUR 25,822 or, in case of untrue documents/information, EUR 51,645).

Requests for information and/or documents can also be made orally. In this case, the interested party will normally be granted the right to supplement/correct the answer in writing within a certain term-limit.

The ICA’s Board can authorize the case team to proceed with inspections of “anyone deemed to be in possession” of company documents useful for the purpose of the investigation. In this respect, the ICA services (assisted by the tax police) may (a) have access to all premises, land and means of transport of the investigated entity, with the exception of places of residence or domicile outside the business under investigation; (b) check the relevant documents and take copy of them; (c) request oral information and explanations. Investigated companies may ask to be assisted by external legal counsels. A summary of the activities carried out during the dawn-raid is recorded in the inspection minutes.

Legal privilege can be invoked before the ICA under the same conditions indicated by the European Court of Justice in Azko (Case C-550/07 P), i.e. the confidentiality of written communications between lawyers and clients is protected if two cumulative conditions are satisfied: (i) the exchange with the lawyer is connected to ‘the client’s rights of defence’ and, (ii) the exchange is with ‘independent lawyers’ (i.e. lawyers who are not bound to the client by a relationship of employment) admitted in a EU Member State.

It follows that legal professional privilege does not cover exchanges within a company or group with in-house lawyers, unless such exchanges are limited to reflect the correspondence with external lawyers and/or contain internal notes on which it is requested external legal advice (see Consiglio di Stato, judgment 24 June 2010, No. 4016).

The conditions for granting full immunity are detailed in the ICA Notice on immunity from fines and reduction of fines (“Leniency Notice”), which applies to secret horizontal agreements as well as to cartels with “some vertical aspects”.

The ICA may grant full immunity from administrative fines to an undertaking that is the first to provide spontaneously information or documental evidence on an anticompetitive agreement, if the following cumulative conditions are satisfied:

• the information provided is decisive in order to prove the existence of the infringement, possibly through a targeted inspection;
• the ICA does not already have sufficient information or evidence;
• the immunity applicant terminates its participation in the cartel immediately, unless otherwise indicated by the ICA (e.g. if this is deemed necessary in order to safeguard the success of the investigation);
• the immunity applicant cooperates fully and continuously (see answer to question 3.4 below);
• the immunity applicant wishing to apply for leniency must not disclose its intention, with the exception of other competition authorities or, in order to obtain legal advice.

The immunity applicant must submit a formal application. Prior to the submission of a leniency application, the company may also contact the ICA anonymously. The immunity application must contain:

1. name and address of the immunity applicant and other cartelists
2. a detailed description of the cartel in question;
3. any evidence available to the applicant accompanied by the explanations and clarifications;
4. information on any other leniency applications on the same agreement.

Upon the applicant’s request, the ICA may accept oral corporate statements, which will be recorded at the ICA’s premises. Even in case of oral statements, the applicant must provide the same documentary evidence requested in case of written application.

If the application satisfies the above requirements, its acceptance by the ICA will be conditional upon compliance with the other leniency conditions. In practice, the ICA will take its final position on immunity/leniency applications only in the final decision.

Access to leniency statements by the other parties under investigation is deferred until the notification of the SO.

Subsequent applicants may benefit from a fine reduction (up to 50%) if they provide the ICA with elements that significantly strengthen the evidence already in the ICA’s possession and their requests meet the cumulative conditions set out in letters (c), (d) and (e) of the answer to question 3.1 above.

In order to determine the appropriate measure of the reduction, the ICA takes into account the time at which the evidence was submitted and the extent to which it represents added value.

Upon reasoned request, the ICA may grant a marker and set a deadline for the completion of the application for leniency with all the evidence requested. To be eligible to secure a marker, the applicant must provide (a) its name and address and those of other cartelists; c) a description of the alleged cartel; (d) information on other leniency applications regarding the same infringement.

If the applicant perfect the marker within the deadline set by the ICA, the leniency application will be deemed to have been submitted on the date when the marker was granted.

Immunity and leniency applicants are requested to cooperate fully and continuously with the ICA throughout the investigation. In this respect, in particular, applicants are requested to:

• promptly provide all relevant information and evidence;
• answer ICA’s requests;
• make employees available for interviews;
• Nrefrain from destroying, altering or concealing relevant information or documents.

The immunity/leniency applicants, unless otherwise decided by the ICA, must refrain from disclosing the existence of a leniency application.

No.

Yes. The undertaking that, during an investigation for a certain conduct, is the first to provide information on a second (different) infringement may receive both total immunity for the second infringement and a significant reduction (up to 50%) for the infringement which was already under investigation.

No settlement procedure is provided under Italian cartel provisions. In principle, investigated undertakings may submit commitments to meet the concerns expressed in the opening decision. However, the ICA does not usually admit commitments in cartel cases.

The ICA is a member of the International Competition Network (ICN). Moreover, together with the European Commission and the competition authorities of the EU Member States, the ICA is member of the European Competition Network (ECN). On 11th of February, 2020 the ICA and the Brazilian Competition Authority (CADE) entered into a memorandum of understanding to strengthen bilateral cooperation between the agencies on general aspects.

Inter-agency cooperation was particularly fruitful, for example, in the Booking.com and Expedia cases, where the ICA, the French Competition Authority and the Swedish Competition Authority coordinated their investigations and adopted parallel decisions (assisted by the European Commission).

Both Articles 2 of the Competition Act and 101 TFEU provide that anticompetitive agreements shall be automatically void. Moreover, in its infringement decisions, the ICA:

1. will lay down a time-limit to cease the infringement;
2. in case of serious breaches, may impose administrative fines up to 10% of the worldwide consolidated turnover.

In case of non-compliance with the order sub (i) above, the ICA may apply fines of up to 10% of the worldwide consolidated turnover. However, if a fine sub (ii) had been already applied, the fine for non compliance with the order sub (i) will be no less than double the amount already applied. In cases of repeated non-compliance, the ICA may suspend the company’s activities for up to 30 days.

The Competition Act does not provide for any criminal sanction for cartels (or any other antitrust infringement). However, certain cartel conducts may qualify as criminal offences under other provisions of law. For instance, a cartel conduct may, under certain circumstances, qualify also as an obstruction of public tender procedure (Articles 353 and 353bis of the Criminal Code), a fraudulent abstention from public auctions (Articles 354 of the Criminal Code), as a speculative conduct aimed at altering certain prices (Articles 501bis of the Criminal Code) or as a boycott (Articles 507 of the Criminal Code). Criminal sanctions for the aforesaid criminal offences may include both financial penalties and imprisonment.

It is worth noting that, by decision of 17 October 2019, the Court of Appeal of Palermo qualified certain cartel conducts (namely the same conducts of the European Commission Case C.39258 – Airfreight) as “criminal association for the purposes of committing fraud and insider trading”. As a result of such qualification, the Italian court accepted the request for extradition of the District Court Northern District of Georgia and authorized the extradition of a Dutch national to the United States.

Calculation of administrative fines applied in cartel cases is regulated by the Guidelines on calculation of fines pursuant to Section 15 of Law. 287/1990 (“Guidelines on Fines”), which largely reflect the calculation method adopted by the European Commission, and the criteria set out by Law No. 689/81 [1]. The Guidelines on Fines present the general methodology for the setting of fines, but the particularities of a given case may justify departing from the described methodology or from the limits specified (e.g. see Case I742 – Tondini per cemento armato).

The formula provided by the Guidelines on Fines to calculate cartel fines can be resumed as follows:

[1] Namely: seriousness of the infringement, actions to remove or reduce the effects of the infringement; the fined party’s previous conduct and its economic conditions.

[2] Sales of goods or services to which the infringement, directly or indirectly, relates in the relevant market in the last financial year (net of VAT any tax directly connected to the relevant selling). Based on the Fine Guidelines, the percentage of Relevant Sales in cartel cases is normally no lower than 15%.  

[3] The application of the entry fee is only potential. However, since the adoption of the Fine Guidelines in 2014, it has been applied in a number of cartel cases. 

A parent company may be held responsible for a conduct of a subsidiary where the latter does not decide independently upon its own conduct on the market, but carries out the instructions given to it by the parent company. In such a situation, the parent company and its subsidiary are considered to form a “single undertaking”, and the ICA may address a decision imposing fines to the parent company.

Where a parent company holds, directly or indirectly, all or almost all of the capital in a subsidiary which has committed an infringement, there is a rebuttable presumption that that parent company actually exercises a decisive influence over its subsidiary (ex pluribus, see Consiglio di Stato, judgment 29 January 2019, No. 4990).

Yes. On 3rd February 2017 Legislative Decree No. 3/2017 (“Antitrust Damages Decree”), implementing Directive No. 2014/104/EU on actions for antitrust damages (“Damages Directive”), entered into force. The Antitrust Damages Decree set forth the conditions under which the persons who have suffered harm caused by anticompetitive agreements can effectively exercise the right to claim full compensation for that harm.

The Antitrust Damages Decree also applies to class actions. In this respect, it is worth noting that on 19 April 2020 the new Italian Class Actions Act (Law No. 21/2019) entered into force.

Under the Antitrust Damages Decree, any individual (both direct and indirect purchasers) can claim compensation for the harm suffered as a result of the cartel. In particular, claimants are entitled to full compensation of the damage suffered, including actual loss (damnum emergens), loss of profit (lucrum cessans) and interest. It is expressly excluded the possibility of overcompensation (i.e. punitive damages).

In order to facilitate claims brought by indirect purchasers, Antitrust Damages Decree provides for a presumption of passing-on (i.e. a presumption that the overcharge was passed on to their level).

Against the ICA’s decisions interested parties may propose an action for annulment before the Rome regional administrative court (TAR Lazio). Judgments rendered by the TAR Lazio may be appealed to the Supreme Administrative Court (Consiglio Di Stato), whose decisions, in turn, may be appealed (on a very limited extent) before the Italian Supreme Court (Corte di Cassazione).

In principle, actions for annulment may be brought for a typical set of pleas in law, i.e. infringement of law (violazione di legge), lack of competence (incompetenza) and misuse of powers (eccesso di potere). In practice, the administrative courts may fully review the facts on which the ICA’s has based its decisions (this includes both the evaluation of the evidence offered by the parties and the assessment of the facts considered by the ICA in its decision).

As regards the review of technical and economic appraisal by the ICA, it can be noted a growing trend of the courts to in-depth analyze the logic, reasonableness, accurateness and reliability of the ICA’s decisions. However, the courts acknowledge the ICA’s margin of appreciation in economic or technical matters and – once verified that the decision is factually accurate, reliable and consistent – they abstain from replacing the ICA’s appraisal with their own discretionary assessment.

TAR Lazio and Consiglio di Stato have full jurisdiction on fines and may substitute their own appraisal for the ICA’s (and, consequently, cancel, reduce or increase the fine imposed).

Interested parties my file an appeal against ICA’s decisions within 60 days from receipt of the notification. Furthermore, within the same term, the applicants can request the adoption of interim measures (in particular a stay of execution of the appealed decision). Interim measure requests are usually discussed before the court within few days from the submission.

Hearings on the merit are normally set within the following months (such term is usually shorter in cases where the interim requests have been dismissed). The parties may submit documents (at least 20 days before the hearing), statements of defense (at least 15 days before the hearing) and replies (at least 10 days before the hearing).

As said, TAR Lazio decisions may be appealed before the Consiglio di Stato. First instance judgments are immediately enforceable but interested parties may, under certain conditions, ask for a stay of appealed judgment.

In recent years there has been a remarkable increase in fines level applied by the ICA for cartel infringements. Specifically, on 20 December 2018 the ICA imposed its largest overall fine in a cartel case (over € 678 million) on car producers and their captive banks: the case concerned an exchange of allegedly sensitive information and was qualified as a restriction of competition “by object”. Furthermore, it is worth noting that the infringement was also contested to parent companies (not only those holding 100% or nearly 100% of their subsidiary, but, for the first time, also to controlling parents of a joint venture).

Another recent case, concluded on 17 July 2019, concerned the existence of anticompetitive agreements in the markets for corrugated cardboard among manufacturers of cardboard sheets and packaging, as well as the relevant trade association, which were fined a total of over 287 million euros. It is worth noting that in this case the ICA applied a strong reduction (94%) due to the inability to pay of one of the investigated companies.

Since the beginning of 2019, the ICA concluded 9 cartel proceedings and started 5 new cases. The analysis of such cases clearly shows that the ICA continues to pay strong attention to bid-rigging cases (9 out of 14 cases).

In the vast majority of cases (10 out of 14), the ICA’s investigative powers were triggered by third-party claims (mainly competitors and/or public authorities). Leniency applications (3 out of 14) still remains well below the EU levels.

Since the entry into force of the Guidelines on Fines (adopted on 22 October 2014) the amount of fines applied by the ICA in cartel cases has constantly increased. Specifically, while in 2014 the total amount of fines applied by the ICA was around €184 million, in the following years it has steadily increased to €234 million in 2015, €245 million in 2016, €350 million in 2017, €681 million in 2018 and €692 million in 2019. The average amount of fine passed from €18 milllion in 2015 to €40 in 2016, €70 in 2016, €170 in 2018 and €98 in 2019.

Almost the totality of the infringement decisions adopted by the ICA is appealed before the TAR Lazio.

Finally, it is worth noting that in September 2018 the ICA adopted its guidelines on antitrust compliance, which largely reflect European and international best practices. In particular, for programs adopted before the opening of the investigation, it is provided a reduction of up to 15% of the fine.

In the coming months enforcement activities will obviously be influenced by the Covid-19 outbreak. In this respect, certain temporary measures have already been adopted (e.g. term-limits suspension)

Based on its recent decisions, it would seem confirmed the ICA’s attitude to refuse commitments and apply heavy fines on serious cartel infringements.

The ICA will probably continue to prioritize its enforcement activities on public tenders. In this respect, it may be expected that the health care and life science, also due to the Covid-19 outbreak, will be among the most affected business areas.