On July 17, 2019, the Italian Competition Authority (the “ICA”) imposed fines in excess of €287 million on 23 companies for two distinct anticompetitive agreements in breach of Article 101 TFEU (the “Decision” and the “Infringements”, respectively).[1] According to the ICA, the two cartels were implemented in two different markets which were vertically related to each other, namely the upstream market for corrugated cardboard sheets (the “Sheets Cartel”) and the downstream market for corrugated cardboard cases (the “Cases Cartel”). The Infringements allegedly also involved the relevant trade association Gruppo Italiano Fabbricanti Cartone Ondulato (“GIFCO”).

Background: four leniency applications

The ICA’s investigation was initiated on the basis of the complaint filed in October 2016 by a trade association of non-vertically integrated box manufacturers (Associazione di categoria degli scatolifici non verticalmente integrati, “ACIS”), concerning an anticompetitive agreement on the prices of and sale conditions for corrugated cardboard sheets, to the detriment of the companies that used this product as an input to manufacture cases for final consumers.

Furthermore, four companies submitted leniency applications, acknowledging their participation in the Infringements. While the first applicant applied for leniency shortly after ACIS’s complaint, the other applicants did so between July and August 2018, i.e., more than a year after the commencement of the procedure.

Two distinct infringements

In the Decision, the ICA concluded that the parties’ conduct amounted to two separate single, complex and continuous infringements, i.e., the Sheets Cartel and the Cases Cartel, which took place from 2004 and from 2005 until 2017, respectively.

The ICA found that 20 companies (i.e., the main national operators active in the production and marketing of corrugated cardboard sheets, accounting for approximately 90% of the domestic market), as well as GIFCO, took part in the Sheets Cartel. The Sheets Cartel was aimed at: (i) fixing the price for the sale of corrugated cardboard sheets to non-integrated manufacturers of corrugated cardboard cases; and (ii) fixing and coordinating the volume of production, as well as production plant downtime and shut-downs, in order to reduce the output so as to support the increase in the price of the sheets and preserve profitability.

Regarding the Cases Cartel, the ICA took the view that it involved 24 companies (i.e., the main national operators active in the production and marketing of corrugated cardboard cases), as well as GIFCO, and was aimed at: (i) fixing the level of general increases in the prices of corrugated cardboard cases to all customers; (ii) partitioning clients (so-called “non-aggression pact”) and supply contracts (so-called “non-belligerency pact”); and (iii) defining other relevant contractual terms, such as payment terms.

According to the ICA, both cartels had a two-tier structure: (i) summit meetings organized on a nationwide basis, attended by a limited number of undertakings, where general indications on what ought to be done were agreed; and (ii) regional meetings organized on a narrower territorial basis, which followed and implemented at a local level the indications of the summit meetings. The parties’ top management attended the summit meetings, whereas the regional meetings were attended by local managers or plant directors of the parties. The Cases Cartel also included: (i) more specific triangular meetings and interactions between competitors, in which specific shared customers (and their tenders) were discussed; and (ii) sector-specific meetings, dedicated to discussions on cases for specific industries (such as ceramics, and fruits and vegetables). GIFCO allegedly played a primary role in monitoring the cartels, as it distributed monthly and half- yearly production data among the participants. According to the ICA, the Sheets Cartel was implemented in a more frequent and regular manner than the Cases Cartel.

The ICA found that the Infringements were “clearly distinguished from the product, subjective, structural and temporal points of view, as well as by the aim that each of them pursued”.[2] Moreover, the Infringements: (i) were allegedly implemented in two different (albeit vertically related) product markets; (ii) mostly involved different parties, given that only nine companies took part in both the Sheets and the Cases Cartel; and (iii) diverged also from the point of view of their respective content and functioning.

Calculation of the fines

In view of the duration and gravity of the Infringements, the ICA imposed on the members of the two cartels an overall fine of more than €287 million. In particular: (i) a total fine of approximately €110 million was imposed on the companies that participated in the Sheets Cartel; and (ii) a total fine of approximately €178 million was imposed on the members of the Cases Cartel.

Some of the companies were found to have played a particularly active role in the Infringements. Accordingly, the ICA applied a 15% aggravating circumstance in the calculation of their fines.

Interestingly, one of these companies was the first leniency applicant in connection with the Sheets Cartel. Moreover, a 15% aggravating circumstance was applied in the calculation of the fines imposed on other companies that refused to cooperate with the ICA’s investigation.

The ICA also applied mitigating circumstances to reward the implementation of effective compliance programs and the marginal role played by some companies in the Infringements. In addition, in light of the specific circumstances of the case, the ICA granted additional discounts by departing from the general methodology for the setting of fines, as set out in its Fining Guidelines (the “Guidelines”).[3] In particular, the ICA granted: (i) a 20% reduction to the companies which (also in light of their smaller size) played a minor role in the Infringements; and (ii) a 15% reduction in the fine for the Sheets Cartel imposed on those companies which, being vertically integrated and active in both markets, were also involved and fined for their participation in the Cases Cartel.

[1]              ICA decision No. 27849, Case I805, Prezzi del cartone ondulato.

[2]              Id., § 373.

[3]              Guidelines on the method of setting pecuniary administrative fines pursuant to Article 15, paragraph 1, of Law No. 287/90, §34.