Italian Competition Law Reform receives greenlight by the Government

Despite its name though, this legislative instrument has only been used once, with the adoption of the first “Annual Competition Law” in 2017 (Law n. 124/2017). Therefore, this second legislative intervention marks an important step in the Executive’s attempt to remove regulatory and administrative barriers to market opening and to make the Italian competition law framework fit for the economic investments required by the National Recovery and Resilience Plan (PNRR).

The need for a reform of the Italian competition law was first echoed by the European Commission, as one of the commitments taken by the Italian Government in order to get access to the Next Generation EU funds.

The rulebook approved by the Italian Government mirrors some of the recommendations issued by the Italian Competition Authority (ICA) in March 2021(see our May edition of Competitive Edge here), with the most relevant changes being introduced with reference to mergers and ICA enforcement powers.

In relation to mergers, Article 31 of the draft Annual Competition Law introduces the following amendments:

• Dominance test: the new provision will align the dominance test used by the ICA to evaluate mergers to the significative impediment to effective competition (SIEC) test used by the European Commission. Therefore, the ICA focus will be more on the impact of the merger on the effective competition in the Italian market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position.
  The ICA will also have the power to “assess the anti-competitive effects of acquisitions of control over small undertakings characterised by innovative strategies, including in the field of new technologies”, showing once more the need to adapt the current competition set of rules to the latest technological developments;
• Turnover criteria calculation of credit and financial institutions: the old criterion under Article 16(2) of Law n. 287/1990, according to which the turnover of the aforementioned institutions should be understood as one-tenth of the assets of the balance sheet, has been replaced with the criteria already applied by the Commission to calculate such turnover, namely: (i) interest and similar income; (ii) income from securities (shares, units and other variable income securities, participations, including in affiliated undertakings); (iii) commission income; (iv) profits from financial transactions; (v) other operating income;
• Extension of the ICA powers to investigate merger transactions: (i) in which only one of the two turnover thresholds provided for in Law n. 287/1990 (i.e., €511 million for the turnover achieved in Italy by all the undertakings concerned and €31 million for the total turnover achieved individually at national level by at least two of the undertakings concerned by the concentration) is exceeded or in which the undertakings concerned jointly achieve a worldwide turnover in excess of €5 billion; (ii) carried out up to six months before the start of the investigation; and (iii) for which the ICA finds a danger of concrete competitive risks. Such amendment is in line with the Commission evaluation of procedural and jurisdictional aspects of EU merger control published in March 2021, in which the Commission has admitted the possibility for National Competition Authorities to refer sub-threshold transactions with a significant impact on competition within their territories, especially when they are related to digital and pharmaceutical sectors and if the transactions have been closed no more than six months before the launch of the investigation.

With respect to the ICA enforcement powers, relevant amendments include:

• Settlement procedure: Article 30 of the draft Law will introduce the possibility for the undertakings under ICA scrutiny to present a settlement proposal with a view to get a reduction of the fine. This new provision will align the national procedure to the one already in place at the EU level, which has allowed the Commission to disclose several cartels in recent years;
• Requests for information: with Article 31 of the draft Law, the Government has strengthened the ICA powers to request information from both undertakings and organisations at any moment, with the possibility to impose high fines in case of non-compliance with the ICA requests.

Last but not least, the draft law has introduced a specific provision aimed at strengthening the fight against economic dependency abuse. Through Article 29 of the draft Law, the Government is introducing a presumption of economic dependency of those operators who entered into commercial relations with providers of intermediation services through digital platforms, deemed to "play a decisive role in reaching end users and/or suppliers, including in terms of network effects and/or data availability". Such provision is thus directly aimed at tackling some of the competition concerns raised by big techs’ behaviours in digital markets, somehow anticipating the new regulatory framework that will be introduced at the EU level with the Digital Markets Act (DMA).

The draft text of the 2021 Competition Law approved by the Government will now be transmitted to the two houses of the Italian Parliament for their approval, before its official entry into force.

The press release of the Council of Ministers meeting is available here (in Italian only).

For further information, please contact Federico Marini Balestra or Lucia Antonazzi.