Italian Competition Authority’s wish-list for 2021: an overview of the recommendations for the Italian annual Competition Law

Telecoms networks

• The Authority’s proposals for telecoms networks aim to encourage investments by promoting infrastructure-based competition (e.g. public support instruments for the development of telecoms infrastructure in grey areas). The key focus areas are to reduce administrative and authorisation-related burdens, align the Italian regulatory framework to the European Standards in view of the EECC implementation process, and prevent lock-in contractual clauses to increase demand for ultra-broadband connections.

Electricity grid infrastructure

• For electricity grid infrastructure, the Authority calls for an ex-ante intervention in the electricity market with a view to eliminate the market power retained by key economic entities in certain geographic areas to reduce the costs charged to consumers and to stimulate innovation in renewable resources.

Environmental sustainability

• One of the Authority’s key aims is to ensure and promote fair competition in the development of innovative sustainable infrastructure, to support growth in competitive markets which focus on the provision of services, such as charging points for electric cars and waste sorting.

Health sector

• Following the pandemic, the Authority’s proposals also target the national healthcare service and the pharma sector. In relation to Pharma, the Authority aims to increase competition in public tenders for medicine purchases. To facilitate generic drugs being put on the market, the Authority also proposes to remove the provisions linking the registration and refundability of such medicines on the expiry of the patent (“patent linkage”).

However, the most relevant proposals go beyond responding to the pandemic and seek to address problems of a more systemic nature. These proposals aim generally to align Italian competition law with the EU competition law framework, but also increase the Authority’s powers in the process.

The main proposals which aim to align the national law with the EU framework include:

• Harmonisation of merger control measures with the EU regime, namely:
  
  
  • A new test to evaluate the compatibility of a merger, based on the merger on the effective competition in the market. This new test aims to supersede the current one which mainly considers whether a company is in a dominant position or not;
    
    
  • Changes to the merger notification system. This system is not considered adequate anymore as it doesn’t take into account future growth of the merging parties, as well as developments in the digital markets. The aim of the Authority’s proposal is to give it power to intervene in any deals completed within the last 6 months, where there is evidence of a concrete threat to competition in the market and the global turnover of the merging parties exceeds either 5 billion euros or fulfils one of the current turnover thresholds established under Article 16 of Law n.287/1990;
    
    
  • The extension of national merger control to cooperative joint ventures, currently excluded from the scope of application of the Italian competition law. This would align the Italian provisions to the EU competition rules and ease the assessment of multi-jurisdictional mergers;
    
    
  • A new method to calculate turnover thresholds in mergers involving banks and/or financial institutions – this would be based on the effective economic activity carried out by the entities, rather than on their relative size of their assets.

• The introduction of a rebuttable presumption that an economic dependency exists when it comes to digital platforms, based on the level of the intermediary powers detained by the platforms themselves and on their role in reaching providers and final users.
  
  
• Increasing the Authority’s powers when investigating the market power of undertakings that are active in multiple markets. The Authority would be able to identify these companies as “undertakings of primary importance”, based on pre-established parameters, such as the existence of a dominant position, the degree of vertical integration and the influence on third party operators.
  
  
• Changes to the procedural rules and integration of the Authority’s powers to intervene.

The recommendations therefore reflect the Authority’s willingness to focus even more on areas that are already subject to intense scrutiny by competition enforcers, as well as crucial areas to enable effective growth in the digital and green revolutions. At the same time, they also show a clear attempt to further expand the powers currently available to the Italian competition enforcer. It is now up to the Italian Government to decide whether to make the Authority’s wish-list a binding legislative proposal.

The full Report by the Authority (in Italian) is available at the following link.

For more information contact Federico Marini Balestra and Lucia Antonazzi.