On April 30, 2020,[1] the Council of State confirmed the annulment of a decision issued by the ICA in 2016,[2] which had fined the Italian National Lawyers’ Council (Consiglio Nazionale Forense, the “CNF”) for failure to comply with a 2014 infringement decision.[3]
The Judgment sheds light on the procedural rules the ICA should follow in proceedings regarding alleged failure to comply with previous infringement decisions.
Background
The 2014 infringement decision
In October 2014, the ICA imposed a fine of almost €1 million on the CNF, for having limited its members’ freedom to set fees and economic terms for their legal services, by means of two decisions of association of undertakings under Article 101 TFEU.
The first decision was a memorandum (the “Memorandum”) issued by the CNF in 2006 on its website and database (which was managed by IPSOA and accessible from the CNF’s homepage). The Memorandum provided that the application of legal fees below the minimum fee plan, even if lawful under civil law, was contrary to the Code of Conduct for Lawyers and subject to disciplinary measures by competent bodies. Following a sector inquiry opened by the ICA in 2007 into professional organizations,[4] in which the ICA found inter alia possible antitrust concerns raised by the Memorandum, the CNF removed it from its website. However, in 2012, the ICA found that the Memorandum was still available on the CNF’s website and the IPSOA database. According to the ICA, the Memorandum was anticompetitive by object, since it de facto reintroduced the obligation to set minimum fees, abolished as a result of the “Bersani reform” in 2006 and Law Decree No. 1/2012 (subsequently converted into Law No. 27/2012), which had fully repealed professional fees.
The second allegedly anticompetitive decision was a resolution issued by the CNF in 2012 (the “Resolution”), in reply to a request from the Verbania Bar Association on the interpretation of Article 19 of the Code of Conduct for Lawyers. In the Resolution, the CNF declared that offering professional services at discounted prices through third-party platforms did not pursue a mere promotional aim but was rather a means to acquire new clients through agencies or intermediaries, which was not consistent with Article 19 of the Code of Conduct for Lawyers. In the ICA’s view, the Resolution hindered lawyers’ freedom to advertise their legal services on digital platforms, thus limiting competition among them.
In addition to imposing a fine, the ICA ordered the CNF to: (i) adopt appropriate measures to stop the infringements; (ii) give due notice to its members; and (iii) submit a written report on these initiatives by the end of February 2015.
The judicial review of the 2014 decision
Following an appeal filed by the CNF, in 2015 the TAR Lazio annulled the part of the decision finding that the publication of the Memorandum amounted to a restriction of competition, and ordered the ICA to re-determine the fine accordingly.[5] In the TAR’s view, the fact that the Memorandum remained available on the IPSOA database (and, as a consequence, on the CNF’s website) following the 2007 ICA investigation could not be considered evidence “of anticompetitive intent by the CNF”. Actually, the CNF neither wanted nor commissioned the republishing of the Memorandum.[6]
On appeal, however, the Council of State confirmed the ICA decision, stating that the Memorandum had a “clear anticompetitive content” and, thus, amounted to a restriction by object.[7] Differently from the TAR Lazio, the Council of State held that, in this context, the parties’ intent is not a necessary factor in determining whether an agreement is restrictive, and the fact that the database was managed by a third party was irrelevant.
The ICA’s non-compliance decision
In September 2015, pending the proceedings before the TAR Lazio, the ICA opened a new investigation against the CNF to ascertain possible non-compliance with its 2014 decision, pursuant to Article 15(2) of Law No. 287 of October 10, 1990.
At the end of the investigation, the ICA imposed a fine on the CNF of almost €1 million, equal to the first fine imposed in 2014.[8] In the ICA’s view, the CNF failed to comply with its 2014 infringement decision because: (i) it did not delete the Resolution containing the alleged restriction from its servers and database within the deadline set by the 2014 decision; and (ii) on October 23, 2015, the CNF issued an opinion on how the Resolution should be interpreted, which in substance reaffirmed the alleged restriction. Accordingly, the ICA found that the CNF did not put an end to the restriction resulting from the Resolution.
The Judgment
The CNF challenged the ICA’s non-compliance decision before the TAR Lazio, which annulled it in 2016.[9] In April 2020 the Council of State confirmed the annulment of the decision.
First, the Council of State argued that the 2014 infringement decision and the 2016 non-compliance decision fined the CNF essentially for the same facts, i.e., the failure by the CNF “to cease the anticompetitive infringement” stemming from the issuance of the Resolution, by removing it from its servers and website.
The Council of State also noted that the ICA non-compliance decision was issued in February 2016, i.e., before the Council of State’s final judgment that in March 2016 confirmed the CNF’s anticompetitive behavior. The CNF revoked the Resolution during the first CNF meeting scheduled after the judgment, in April 2016.
As a result, in the Council of State’s view, the CNF complied with the 2016 ICA decision without undue delay, in light of the fact that only the ruling issued by the Council of State had definitively confirmed the obligation to remove the Resolution.
Second, based on established EU case law, the Council of State held that the ICA breached the ne bis in idem principle. The administrative court applied, mutatis mutandis, the principles established by the recent judgment of the Court of Justice of the European Union in case C-617/17,[10] according to which national competition authorities may impose simultaneous fines for the infringement of EU and national competition rules, but must ensure that they are proportionate to the nature of the violation. In the case at hand, according to the Council of State, the ICA failed to ensure that the two fines imposed on the CNF were proportionate to the nature of the infringements. Indeed, while the 2014 decision fined the CNF for two different anticompetitive decisions (i.e., the Memorandum and the Resolution), the 2016 non-compliance decision only focused on the Resolution. And yet, the two fines were identical amounts.
Lastly, the Council of State agreed with the TAR Lazio that the ICA had breached the CNF’s rights of defense. This was so because the ICA did not issue a statement of objections and the representatives of the CNF were heard only by the ICA’s officials charged with the investigation, instead of being given the chance to be heard during a final hearing before the Board of the ICA.
In this respect, the Council of State held that proceedings for failure to comply with infringement decisions constitute, in essence, proceedings to ascertain the existence of antitrust infringements. Accordingly, they require the same enhanced procedural protection and guarantees necessary in ordinary infringement proceedings. Indeed, “in the context of antitrust proceedings, as it is in the present case, it is necessary to guarantee safeguards equal to those applicable in criminal proceedings”. In the Council of State’s view, by applying the so-called Engel criteria set out in the case law of the European Court of Human Rights, the fine imposed on the CNF did not have a merely compensatory nature, but an “evidently punitive” nature.
[1] Council of State, Judgment No. 2764 of April 30, 2020.
[2] ICA, Decision of February 10, 2016, No. 25868, Case I748B – Condotte restrittive del CNF – Inottemperanza.
[3] ICA, Decision of October 22, 2014, No. 25154, Case I748 – Condotte restrittive del CNF.
[4] ICA, Decision of January 15, 2009, IC34 – Sectoral inquiry on the professional organizations sector.
[5] TAR Lazio, Judgment No. 8778 of July 1, 2015.
[6] Following the TAR Lazio’s ruling, in 2015 the ICA re-determined the fine imposed on the CNF as €513,914.17. See ICA, Decision of November 11, 2015, No. 25705, Case I748C – Condotte restrittive del CNF-Rideterminazione sanzione.
[7] Council of State, Judgment No. 1164 of March 22, 2016.
[8] Fines for non-compliance with a previous fining decision must not be lower than twice the fine already imposed, within the limit of 10% of the overall annual turnover of the firm concerned. In the case at issue, the fine imposed in 2014 was already equal to the 10% statutory ceiling.
[9] TAR Lazio, Judgment No. 11169 of November 11, 2016.
[10] Court of Justice of the European Union, Judgment of April 3, 2019, C-617/17, Powszechny Zakład Ubezpieczeń na Życie, ECLI:EU:C:2019:283.