On April 10, 2019, the Italian Competition Authority (“ICA”) levied a fine of € 1.1 million on SAD – Trasporto Locale S.p.A. (“SAD”), a company entrusted by the Autonomous Province of Bolzano (“APB”) with the provision of suburban public passenger land transport services in the Bolzano area, for an alleged infringement of Article 102 TFEU.[1] According to the ICA, SAD abused its dominant position on the local market for suburban public passenger land transport services, by refusing to provide the APB with information necessary to carry out a public tender procedure for the assignment of transport services in the Alto Adige region.
Case Summary
In the Bolzano area, local public passenger transport services are carried out by several companies, including SAD, on the basis of concessions granted by the APB. In the Sixties, SAD was entrusted by the APB with the provision of public passenger land transport services with respect to certain suburban lines, where it enjoyed a legal monopoly.
In view of the forthcoming expiration of the concessions in 2018, the APB decided to implement a new territorial organization of local public transport services, by splitting the Alto Adige region into four geographic areas and issuing a public tender procedure for the assignment of the right to provide local public transport services in each of these geographic areas.
In January 2018, following a complaint submitted by the APB, the ICA opened an investigation against SAD for alleged abuse of dominant position. According to the complainant, SAD had unlawfully refused to provide information that was essential to prepare the supporting documentation required to carry out a public tender procedure for the assignment of the suburban public passenger land transport services in the Bolzano area. The APB argued that, as a consequence of the alleged refusal, SAD’s potential competitors were placed in a disadvantageous position compared to the incumbent, due to an information asymmetry with respect to data indispensable to participate in the public tender procedure.
After having rejected the commitments submitted by SAD, at the end of its investigation, the ICA concluded that SAD had abused its dominant position. According to the ICA, SAD had engaged in an obstructive conduct vis-à-vis APB, by delaying and ultimately refusing to provide updated information regarding certain production factors used for the provision of the transport services (e.g., the list of vehicles used and logistics, such as storage and parking spaces) as well as the personnel employed. As a consequence, the ICA imposed on SAD a € 1.1 million fine.
SAD’s dominant position
The ICA defined the relevant product market as the market for the provision of suburban public passenger land transport services. The geographic dimension of the relevant market corresponded to the areas of the Alto Adige region that included the lines for which SAD, on the basis of a concession granted by the APB, provided on an exclusive basis the suburban public passenger land transport services.
The ICA rejected SAD’s claim that the relevant market corresponded to the public tender procedure issued by the APB, on the ground that the market should be defined on the basis of factual elements existing at the time of the alleged anticompetitive conduct. As a consequence, in the ICA’s view, the relevant market should be defined by taking into account the service organization in the period under investigation (i.e., SAD’s position of legal monopoly) and not the public tender procedure, which took place after SAD’s refusal to provide the information requested by the APB.
The refusal to provide the essential information
The ICA found that SAD failed to provide the APB with the information requested for a particularly long period of time. While initially SAD used delaying tactics (such as claims that the information was not indispensable for the purposes of organizing the public tender procedure), it later explicitly refused to comply with the APB’s request, sticking to its position even after the opening of the ICA’s investigation. Over time (but many months after the expiry of the deadline set by APB’s first request for information), SAD provided some of the information requested, but the complete set of data was provided only one year after the first request.
During the ICA’s investigation, SAD argued that its refusal was justified for two reasons. First, it claimed that the APB already had all the information requested, given that such information was the basis for the calculation of the standard annual cost of local public transport services (which was periodically carried out by the APB with a view to compensating the public service obligations imposed by the concessions). Second, it claimed that the requested data contained strategic and sensitive information on SAD’s commercial organization which, if disclosed to third parties, could negatively impact its business.
However, the ICA found that SAD’s conduct had no legitimate justification, especially in light of the legislative framework in force, which imposes on companies entrusted with the provision of local public services (and, in particular, local transport public services) to provide, upon request by a local public authority that has decided to issue public tender procedures for the assignment of such services, all information concerning technical characteristics of plants and infrastructures, their book value at the beginning of the financial year as well as any other information necessary to launch the tender.[2]
The effects of SAD’s conduct
In light of the above, the ICA found that SAD’s dilatory tactics (and, ultimately, its refusal to provide the information requested) had significantly delayed the launch by the APB of a public tender procedure for the assignment of the rights to provide suburban public passenger land transport services in the Bolzano area and, thus, the opening of the relevant market to competition. According to the ICA, this delay had the effect of foreclosing the entry on the relevant market by SAD’s potential competitors and, ultimately, of harming consumers. Accordingly, the ICA found that SAD’s conduct amounted to a serious infringement of Article 102 TFEU.
[1] ICA decision of April 10, 2019, No. 27635, Case A516, Gara affidamento servizi TPL Bolzano.
[2] Decree-Law No. 1/2012, Article 25, paragraph 4.