On April 29, 2019, the Regional Administrative Tribunal of Latium (“TAR Lazio”) upheld[1] the appeals submitted by five radio taxi companies against infringement decisions issued by the ICA in the context of two parallel proceedings for alleged vertical restraints (“Decisions”).[2]
The judgments are remarkable not only because they deal with a topic (i.e., vertical anticompetitive agreements) that has been relatively neglected in the last years (even though the wind is changing, at both the EU and national level),[3] but also because they include some interesting (albeit not always entirely convincing) lines of reasoning.
Factual background
On June 27, 2018, the ICA found that six major companies managing radio taxi services in, respectively, Rome and Milan had infringed Article 101 TFEU by imposing on the taxi drivers affiliated to their networks certain exclusivity and non-compete obligations, provided for by the companies’ by-laws or in the contracts entered into with the drivers.
Both investigations were opened following a complaint submitted by a competitor, Mytaxi, which operated a mobile app aimed at connecting taxi drivers and consumers. Mytaxi claimed that the exclusivity and non-compete clauses (which governed the contractual relationship between the radio taxi companies and the affiliated taxi drivers) hindered the development of new innovative tools for the management of taxi demand (such as the Mytaxi app), thus preventing new competitors from entering the market for taxi demand management services.
The ICA found that the clauses at issue, forcing each taxi driver affiliated to the radio taxi companies to allocate all his/her capacity solely to one radio taxi company, resulted in a parallel network of anticompetitive vertical agreements between each radio taxi company and the affiliated drivers, which created a cumulative foreclosure effect vis-à-vis open platforms (such as the MyTaxi app), thereby hindering entry by actual and potential competitors on the local markets for taxi demand management services. This harmed both taxi drivers and consumers. However, the ICA found that the anticompetitive conduct did not amount to a “serious” violation of competition law, and therefore did not impose any fine on the radio taxi companies.
Judgments
On appeal, the TAR Lazio held that the Decisions were vitiated on a number of grounds, including: (i) failure by the ICA to meet the standard of proof required to find an infringement of Article 101 TFEU; (ii) errors in the definition of the relevant product market; (iii) failure to establish the anticompetitive effects of the alleged vertical restraints; and, overall, (iv) internal logical inconsistencies, lack of proper investigation and failure to state reasons. As a consequence, the TAR Lazio upheld the appeals lodged by the radio taxi companies and annulled the Decisions.
The alleged parallel network of anticompetitive vertical agreements
First, the TAR Lazio upheld the radio taxi companies’ argument that the ICA failed to meet the required standard of proof for establishing the existence of a parallel network of anticompetitive vertical agreements. According to the TAR Lazio, the ICA inferred the existence of such parallel agreements on the mere basis of the presence of non-compete obligations in the radio taxi companies’ by-laws and the contracts entered into with the affiliated drivers. However, the ICA did not carry out any analysis regarding the actual existence of a parallel network of agreements, limiting itself to “describing it rather than investigating it”. Moreover, it did not prove that the radio taxi companies and the taxi drivers shared a “common interest”, which – in the TAR Lazio’s view – would represent a key element in the context of any findings of anticompetitive agreements between companies operating at different levels of the production or supply chain.
An interesting (albeit controversial) point of the TAR Lazio’s reasoning concerns the role of the taxi drivers in the alleged anticompetitive agreements. The TAR Lazio held that the decisions were vitiated by patent internal inconsistencies, in that the ICA on the one hand found that the taxi drivers were part of the anticompetitive agreements, while on the other hand it found that the latter (along with open radio taxi platforms and consumers) were also harmed by those agreements (given that the non-compete clauses prevented them from using their entire capacity). According to the TAR Lazio, such finding could have been warranted in the context of an abuse of dominance case, but is “radically antithetic to the concept of anticompetitive agreement”. From this perspective, the judgments seem difficult to reconcile with a well-established principle of the EU case-law, according to which a company that is party to an anticompetitive agreement may in principle also be harmed by that same agreement (and, accordingly, may claim the damages suffered in this capacity).[4]
The definition of the relevant product market
The TAR Lazio also upheld the companies’ argument that the ICA had erred in defining the relevant product market. More specifically, according to the TAR Lazio, the ICA alleged that there was substitutability between the services provided by radio taxi companies and those offered by mobile apps without engaging in any empirical analysis, in particular with respect to the nature (cumulative or alternative) of the demand for taxis. Moreover, the TAR Lazio held that, in defining the relevant product market, the ICA had not adequately taken into account the fact that the market for taxi management services is characterized by a double source of demand (i.e., passengers and taxi drivers), and that the demand coming from passengers has an impact on the demand coming from taxi drivers.
The anticompetitive effects of the agreements
Finally, the TAR Lazio upheld the companies’ claims that the ICA had failed to state reasons as to the anticompetitive impact of the alleged vertical restraints. While recognizing that the agreements did not amount to “by object” restrictions of competition law, the ICA had not analyzed the actual anticompetitive effects of the relevant clauses. Moreover, according to the TAR Lazio, the ICA based its findings almost exclusively on data put forward by the parties (and, particularly, on the complainant’s allegations), especially regarding the possible anticompetitive harm allegedly caused by the functioning of the “closed” platforms (as opposed to open platforms, such as Mytaxi) and the causal link between the companies’ behavior and the foreclosure of the relevant market.
[1] TAR Lazio, judgments Nos. 5358, 5359, 5417, 5418 and 5419/2019.
[2] ICA decisions of June 27, 2018, No. 27244, Case I801A, Servizio di prenotazione del trasporto mediante taxi – Roma; June 27, 2018, No. 27245, Case I801B, Servizio di prenotazione del trasporto mediante taxi – Milano.
[3] Commission decisions of March 25, 2019, Case AT.40436, Ancillary Sports Merchandise; December 17, 2018, Case AT.40428, Guess; July 24, 2018, Case AT.40182, Pioneer; July 24, 2018, Case AT.40181, Philips; July 24, 2018, Case AT.40469, Denon & Marantz; July 24, 2018, Case AT.40465, Asus; ICA decisions of April 18, 2014, No. 27142, Case I813, Restrizioni alle vendite on line di stufe; March 23, 2016, No. 25940, and April 21, 2015, No. 25422, Case I779, Mercato dei servizi turistici-Prenotazioni alberghiere on line; December 11, 2014, No. 25229, Case I757, Ostacoli all’accesso al mercato di un nuovo operatore di telefonia mobile; July 9, 2014, No. 25021, Case I718, Enervit-Contratti di distribuzione; July 2, 2014, No. 25013, Case I766, Inverter solari ed eolici; May 20, 2014, No. 24935, Case I702, Agenti monomandatari.
[4] Courage v. Crehan, Case C-453/99, EU:C:2001:465, § 36