On May 22, 2019, the Regional Administrative Court for Latium (the “TAR”) accepted in part the application for annulment of an ICA decision addressed to maritime carriers Moby and CIN, finding a violation of Article 102 TFEU (the “Decision”).[1]
Factual background
The Decision, adopted on February 28, 2018, found that Moby and its wholly-owned subsidiary CIN abused their dominant position on certain maritime freight transport routes connecting Sardinia and North-Central Italy, by engaging in an exclusionary strategy targeting certain of their competitors.
In particular, the ICA found that Moby and CIN boycotted logistics operators that entered into business relations with rival ferry operators (“disloyal logistics operators”) by applying to them retaliation measures and unfavorable economic and commercial conditions against them (e.g., refusals of boarding and early termination of contracts; so-called “direct boycott”); whereas they applied, at the same time, more favorable economic and commercial conditions to logistics operators that abstained from entering into business relations with rival ferry operators (“indirect boycott”).
The ICA thus issued a cease and desist order, and fined Moby and CIN jointly and severally in the amount of approx. €29 million.
Judgments
The TAR agreed with the ICA on the existence of the direct boycott, but annulled the parts of the Decision relating, respectively, to the indirect boycott, and the anticompetitive effects of the contested conduct. The judgment emphasizes that the ICA has a duty to rebut in its final decision the arguments raised by the parties in the course of its investigation, and must support its allegations with strong evidence and empirical analysis.
Indirect boycott
The applicants submitted that the ICA did neither find that Moby’s and CIN’s indirect boycott conducts amounted to unlawful fidelity rebates, nor demonstrate that it could realistically prevent logistics companies from switching to rivals. Accordingly, the Decision could not establish that these actions amounted to abusive conduct within the meaning of Article 102 TFEU.
The TAR took the view that indirect boycott amounted to fidelity rebates. In line with the principles established by the EU Court of Justice in Intel,[2] the TAR stated that the ICA was required to analyze the conditions and arrangements for granting the rebates, their duration and their amount, and to assess the possible existence of a strategy aiming to exclude from the market competitors that were at least as efficient as Moby and CIN. However, in the TAR’s view, the ICA failed to assess whether the rebates were defensive in nature, and were replicable by rivals (i.e., were not lower than the average cost of the service). The TAR concluded that, in the absence of this necessary factual analysis, the ICA could not substantiate its allegations as to the existence of an abusive exclusionary strategy merely by reference to its own interpretation of certain documents.
Absence of anticompetitive effects
In the same vein, the TAR held that the ICA failed to carry out an adequate investigation and to provide a convincing statement of reasons for its conclusion that the unlawful conduct affected logistics operators as well as Grendi, a competing maritime freight carrier.
According to the TAR, the ICA: (i) did not properly rebut the fact that the disloyal logistics operators increased their combined profit more than the loyal logistics companies; and (ii) did not base on any empirical analysis its finding that Grendi’s bad economic performance was the result of the alleged boycotting conduct.
Reduction of the fine
Based on the above, the TAR disagreed with the ICA’s calculation of the fine in that:
the 9% percentage of the value of the relevant services used by the ICA as a basis for the calculation of the basic amount of the fine must be reduced; and
since the ICA did not characterize the alleged infringement as one of the most serious types of restrictive conduct, it was wrong to apply a 15% entry fee.
Moreover, the TAR found that the Decision overestimated the duration of the infringement because the ICA erroneously considered that the unlawful conduct was still ongoing when it adopted the Decision, whereas it had stopped in January 2017 (according to the Decision, the infringement thus lasted 2 years and 5 months, from September 2015 to February 2018).
Instead of re-determining the amount of the fine, the TAR ordered the ICA to carry out a new calculation in compliance with the principles established in the judgment. In all likelihood, the final amount of the new fine will be significantly lower.
[1] Maritime transport of goods from and to Sardinia (Case A487), ICA Decision of February 28, 2018.
[2] Intel, C-413/14 P, ECLI:EU:C:2017:632, § 139.