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Italy’s Competition Chair Confirms That ad hoc Compliance Programs Will Continue to be Considered as a Mitigating Factor

by Veronica Pinotti and Martino Sforza

On March 6, 2012, the members of the Italian Antitrust Association met with the new Chair of the Italian Competition Authority (ICA), Giovanni Pitruzzella. During the meeting, Pitruzella stated that ad hoc qualitative compliance programs will continue to be considered as an effective mitigating factor, confirming the ICA’s attitude towards compliance programs and encouraging the use of such programs. However, participation in general online compliance training sessions is unlikely to be considered as a mitigating factor because such sessions are not specifically tailored to a company’s needs. To mitigate the risk of potential antitrust infringements, therefore, multinational groups with operations in Italy should consider developing ad hoc antitrust compliance programs in their Italian subsidiaries. 

Italian Competition Authority Updates Merger Control Turnover Thresholds

by Martino Sforza

The Italian Competition Authority has updated its merger control turnover thresholds.  Effective as of today, November 21, 2011, Section 16(1) of Law no. 287 of October 10, 1990, requires prior notification of all mergers and acquisitions where either of the following conditions is fulfilled:

  • Aggregate turnover in Italy of all undertakings involved is above EUR 468 million
  • Aggregate turnover in Italy of the target company is above EUR 47 million

No notification is required if the target is a foreign company which did not generate any turnover in Italy in the last three years and is not expected to do so as a result of the transaction.

Italy’s merger control thresholds are adjusted annually to take into account increases in the GDP deflator index.  The updated thresholds are published in the Competition Authority’s Bulletin once this increase in index is announced officially.

Giovanni Pitruzzella Appointed New Chairman of the Italian Competition Authority

by Veronica Pinotti

The Presidents of the Italian Senate and the Lower Chamber have just appointed Giovanni Pitruzzella as new Chairman of the Italian Competition Authority, after Antonio Catricalà, the current Chairman was named under-secretary to the Prime Minister’s office and Secretary of the Council of Ministers, in the newly established Monti’s government. Pitruzzella is a Professor of Public Law at the University of Palermo and Avvocato admitted to practice before the Italian Supreme Court, and he has chaired various parliamentary and regional commissions.

European Developments: French Competition Authority Launches Public Consultation on Settlement and Compliance Programs and Italy’s Prime Minister Announces New Cabinet

Public Consultation on Settlement and Compliance Programs Launched by the French Competition Authority
by Louise-Astrid Aberg and Lionel Lesur

On October 14, the French Competition Authority (FCA) launched a two-month public consultation for guidelines on settlement and compliance programs.  Both these guidelines have been highly anticipated since they were first announced last May.

The draft settlement guidelines contain details on the FCA’s approach and decisional practices which were developed under the control of the French courts.  Among the guidelines, the FCA determined that settlement is possible in all cases where infringement on competition law has taken place, including cartels, vertical restraints and single firm conduct.  In the event of infringement, settlement becomes an option only after the parties have been formally charged.  Once parties fully acknowledge their participation in anticompetitive conduct, the casehandler in charge of the matter would decide whether to respond positively to their request for a settlement.  Parties retain the same procedural rights that they would in an ordinary procedure; in particular, they would be granted access to file.  The FCA would reward parties who wish to settle with a fine reduction of 10 percent.  In contrast to the settlement procedure of the European Commission (EC), it would not be possible to cumulate both a settlement reduction and a leniency reduction.  However, parties settling with the FCA may decide to adopt behavioral or structural remedies which would enable them to benefit from an additional reduction of 5-15 percent.  With regard to cartels, parties would benefit from a reduction up to 10 percent if they commit to changing their behavior in the future, in particular, by implementing a compliance program.

The draft guidelines elaborate further on the benefits of implementing a compliance program.  The FCA clarifies several instances in which a compliance program would enable a party to benefit from a reduction of its fine.  In the course of ordinary proceedings resulting in the imposition of a fine, the existence of a compliance program or the lack of it would not act as an attenuating or an aggravating circumstance.  However, in the case of a settlement procedure, the commitment to implement a compliance program would be considered a commitment by the company to change its behavior in the future and would, thus, enable the party to benefit from a reduction of its fine.  In this sense, the FCA and the EC agree that implementing compliance program would not have a significant effect on a fine that is set outside of a settlement procedure.  The FCA only differs with respect to the specific context of a settlement procedure.

A fine reduction of up to 10 percent may not be easy to obtain.  A compliance program would only be considered by the FCA if it includes the following characteristics: (i) the company’s top executives are strongly committed to the program, (ii) the company has designated persons to oversee the program and take charge of its implementation, (iii) the company has taken effective [...]

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Health Care Insurance Companies in Italy Fined Over €13 Million for Anti-Competitive Behaviour

by Veronica Pinotti

The Italian Competition Authority has found that four health care insurance providers—HDI-Gerling Industrie Versicherung AG, Faro Compagnia di Assicurazioni e riassicurazioni S.p.a., Navale Assicurazioni, and Primogest (a multi-firm agency)—participated in anti-competitive behaviour between 2003 and 2008.

The Authority has imposed fines against the companies totalling more than €13 million for setting up a unique and complex agreement to divide up various insurance tenders for the coverage of third party liability and operator liability, as determined by local health care and hospital companies in Campania (region located in the South of Italy). According to the Authority, the agreement affected 18 insurance tenders and nine different procurement entities, accounting for approximately 60 per cent of the health care insurance market in the region.

Antonio Catricalà, the Chairman of the antitrust authority stated that “this agreement is particularly serious due to the health insurance sector’s high vulnerability to coordinated participation in tenders… [and] the extended duration and reach of the agreement itself, which involved large numbers of public entities and contracts. I had already made it clear that health care could no longer be treated as an albero della cuccagna [gravy train]”.

According to the Authority, the alleged cartel manifested itself through the anti-competitive use of co-insurance (both before and after the awarding of tenders), and coordinated participation in tenders by means of exchanging lots and contacts sharing between companies.

Under the agreement, the firms participated in a contract “withdrawal/takeover” mechanism that allegedly avoided competitive confrontation and ensured levels of stability over time for the services provided. The Authority found that, Primogest, the multi-firm agency, played the most active role in coordinating the pre-bid preparatory phase and post-bid withdrawals/takeovers, maintaining relations with health care entities and maximising commissions, while enjoying the right of first choice for participation in future tenders with the companies.

Gerling is part of the Talanx AG group, the primary German insurance group. Faro is Italian and did operate several insurance branches, but is currently undergoing forced liquidation. Navale was a member of the Unipol group at the time of the events but was incorporated in UGF in 2011.

The Fines

  • HDI Gerling: €5,868,703
  • Faro: €2,015,544
  • Navale (now UGF): €5,471,168
  • Primogest: €228,100

Laure Carapezzi, trainee lawyer in McDermott Will & Emery LLP based in the Rome office, also contributed to this blog.

Italian Competition Authority Block Proposed Acquisition

by Veronica Pinotti and Martino Sforza

On 8 August 2011, the Italian Competition Authority blocked the proposed acquisition by Compagnia Valdostana delle Acque (CVA) of Deval and Vallenergia, both active in the retail sale of electricity in Valle d’Aosta, a mountain region in the north of Italy, close to the border with France. The case is interesting because, in reaching its decision to prohibit the transaction, the Authority took into account not just the parties’ market shares, but also the likely impact of local legislation granting incentives to retail suppliers of electricity. According to the Authority, as these incentives stand currently, they form increased barriers to entry.

The Authority also issued an official statement informing the local authorities of the alleged restriction to competition created by this legislation. It added that it may reconsider its assessment of the CVA acquisition if the legislation was amended to allow potential competitors to have access to the incentives.

The case shows, especially in highly regulated sectors (such as energy, water, and other former monopolies) that market share, although a useful indicator of the parties’ market power, must be considered within the regulatory context. As a result, even if the parties have relatively low market share, clients are well advised to assess carefully the likely impact on competition of any proposed transactions in regulated markets.

In addition, this case proves that the competition authorities are willing to review not only very large mergers, but also smaller deals, in terms of value of the transaction, product, or geographic size of the affected markets and, as in this case, may decide to block deals that are likely to impact relatively small local markets. It is therefore important to review any potential competition issues in the early stages of the negotiations, in order to be able to approach the relevant competition authorities well in advance of any formal filing and discuss any remedies and/or other measures required to avoid any delays in the clearance procedure.

Italian Competition Authority Finds Abusive Conduct in Withholding Data and Internal Communications Praising Company Strategy

by Veronica Pinotti, Martino Sforza and Christoph Voelk

On 5 July 2011, the Italian Competition Authority imposed fines of €5.1 million on a multinational crop protection company for having abused its dominant position on the market for fosetyl-based systemic fungicides in breach of Article 102 of the Treaty on the Functioning of the European Union.  In addition, the Authority issued an injunction restraining the company from such conduct in the future. 

To read the full article, click here.

Interplay Between Antitrust and Criminal Law in Europe

by Veronica Pinotti and Martino Sforza

In Europe, the interplay between antitrust and criminal law at the national level may vary significantly by jurisdiction. Some European Union member states, such as the United Kingdom, Ireland, and Romania, have criminalized competition law. Other jurisdictions, such as Germany and Italy, do not envisage criminal penalties for anticompetitive practices; however, such conduct may sometimes qualify as a separate criminal offense.  The following cases, across Europe, show that there appears to be a general trend towards more effective enforcement against serious antitrust violations – including by means of criminal penalties against individuals – and not only in the countries with criminal competition laws.

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Italian Competition Authority’s Investigation into Large-Scale Distribution in the Food Sector

by Veronica Pinotti, Philipp Werner and Martino Sforza

On 6 November 2010, the Italian Competition Authority launched an investigation into the role of large-scale retail distribution in Italy’s food sector.  The investigation aims at assessing potential antitrust issues in this sector, and will focus on the agreements and strategic negotiations between suppliers and large-scale distributors, the role of centralised purchasing, the use of private-label brands, and their likely effects on the final prices of food products.  This obviously also has an impact on large multinational food and beverage suppliers.

Companies involved will soon receive detailed questionnaires and requests for information, which need to be handled with care by antitrust attorneys in order to minimise the risk of a potential ad hoc investigation.  In the past, the Authority’s sectoral investigations have proven to be the prelude to specific investigations against individual companies predicated on the basis of the information gathered during the sectoral investigation.  It is therefore of utmost importance to have specialised assistance at this early stage of the investigation.  It is also crucial for companies to engage outside counsel to conduct an effective audit and create a tailored compliance programme in order to be prepared for potential dawn raids and prepare an effective defence.  In addition, the whole vertical relationship between suppliers and distributors may have to be reviewed in the light of the European Commission’s new vertical guidelines and experience from other Member States.

The food and beverage industry is under investigation in a number of jurisdictions, and a comprehensive strategy in dealing with these inquiries is therefore critical.  McDermott Will & Emery is particularly well-placed to assist companies in this connection, not only by reason of its extensive experience in the sector in Italy, but also by reason of its experience in dealing with similar investigations in other EU Member States.

Italian Merger Control Thresholds – New Revisions

by Veronica Pinotti and Martino Sforza

The Italian Competition Authority has updated its merger control turnover thresholds.  Effective as of 31 May 2010, Section 16(1) of Law no. 287 of 10 October 1990 requires prior notification of all mergers and acquisitions where either of the following conditions is fulfilled:

  • Aggregate turnover in Italy of all undertakings involved is above EUR 472 million (revised under the terms of the same Section 16(1))
  • Aggregate turnover in Italy of the target company is above EUR 47 million (as revised)

No notification is required if the target is a foreign company which did not generate any turnover in Italy in the last three years and is not expected to do so as a result of the transaction.

Italy’s merger control thresholds are adjusted annually to take into account increases in the GDP deflator index.  The updated thresholds are published in the Competition Authority’s Bulletin once this increase in index is announced officially.