On July 24, 2020, the Council of State upheld three judgments issued by the Regional Administrative Court of Lazio (the “TAR Lazio”) in 2017,[1] which reduced by 60% the amount of the fines imposed by the Italian Competition Authority (the “ICA”)[2] in 2015 on three firms operating in the area of Belluno, in the Veneto Region (namely, Superbeton S.p.A., F.lli Romor S.r.l. and F.lli De Pra S.p.A., together the “Companies”). In contrast, the Council of State dismissed the cross-appeals submitted by the Companies that aimed to challenge the ICA’s finding of infringement.[3]
Background
The ICA’s findings
In December 2015, the ICA found that seven companies active in the production of ready-mix concrete entered into two distinct anticompetitive agreements by object, aimed at fixing prices and allocating customers among them, and imposed on those companies total fines of approximately €3 million (the “Decision”). The parties to the first collusive agreement, which was implemented since 2010 through 2013 in the area of Venezia Mare, were SuperBeton S.p.A., General Beton Triveneta S.p.A., Mosole S.p.A., Ilsa Pacifici Remo S.p.A., Jesolo Calcestruzzi S.p.A. and Intermodale S.r.l.. The second anticompetitive agreement established in the Decision was carried out between 2013 and 2014 by the Companies and consultancy firm Intermodale in the province of Belluno.
According to the ICA, the two agreements were aimed at allocating construction sites and fixing the sale prices of concrete in the two abovementioned geographical markets. In both cases, the coordination was designed by the participating firms to maintain their own historical clients and market shares.
According to the ICA, the companies involved coordinated their behavior through the activity carried out by Intermodale. Generally on a weekly- basis, each company informed Intermodale about all the construction sites about to be opened and the related quantities of concrete to be supplied. Intermodale collected and processed all this information in summary charts, which were then shared and discussed by the suppliers during regular meetings, held separately for the two agreements.
The TAR Lazio’s judgments
In its judgments of December 2017, the TAR Lazio partially granted the Companies’ applications for annulment, and ordered the ICA to reduce the amount of the original fines by 60%.[4]
In their applications to the TAR Lazio, the Companies took issue, inter alia, with: (i) the definition of the relevant market; (ii) the lack of evidence that the Companies took part in the second collusive agreement; and (iii) the calculation of the amount of the fines, which in their view was vitiated by the ICA’s erroneous determination of the duration of the cartel, and its erroneous categorization of the infringement as “very serious”.
The TAR Lazio dismissed all the claims submitted by the Companies, except for the last one. In particular, the Court held that the ICA failed to assess the detrimental effects of the parties’ conduct on the relevant market, all the more so since the Companies represented only approximately 50% of the Belluno area market. Therefore, contrary to what the ICA established in the Decision, the unlawful conduct was capable of affecting the market “only in part”. As a result, the TAR Lazio reduced the original amount of the fines.
The rulings of the Council of State
The Council of State upheld the TAR Lazio judgments in their entirety.
In their cross-appeals, the Companies claimed that the ICA had violated their fundamental right to a fair trial pursuant to Article 6 of the European Convention on Human Rights (the “ECHR”). In particular, they took issue with an alleged undue interference between the investigative and the decision-making functions of the ICA. The Court, however, relied on the distinction drawn by the European Court of Human Rights (the “ECtHR”) between “hardcore” criminal cases and cases not strictly belonging to traditional categories of criminal law, such as antitrust cases.[5] For cases falling within the second category, it is not required that all the guarantees in Article 6 ECHR be offered at the administrative procedural stage, as long as they are ensured during a subsequent judicial stage. As a consequence, the Council of State held that the right to a fair trial may be deemed to be fully guaranteed when an administrative authority, such as the ICA, imposes criminal fines, even at the end of a procedure that does not satisfy all the procedural guarantees enshrined in Article 6 of the ECHR, provided that the possibility of a “full jurisdiction” review – i.e., a review characterized by the court’s power to examine all questions of fact and law relevant to the dispute before it., as well as to quash in all respects, on questions of fact and law, the decision under review – is later ensured. Please note that the Court did not analyze the issue of whether the TAR Lazio’s review of the Decision did satisfy the full jurisdiction criterion, so as to exclude the violation of the Companies’ right to a fair trial, and noted that their pleas were formulated in abstract and theoretical terms, rather than with regard to the special features of the case in point.
As to the merits of the cross appeals, the Council of State found that the ICA’s finding of the anticompetitive agreement to which the Companies were parties was supported by numerous pieces of evidence: in particular, the documentation found at Intermodale’s premises clearly showed the unlawful intent of the Companies and their attendance at the cartel’s periodic meetings.
Moreover, the Court confirmed that the ICA correctly identified two different markets – one for the Venezia Mare area and one for the Belluno area – due to the special characteristics of the cartelized product, including the perishability of concrete. Moreover, the Council of State pointed out that the activity of defining the product and geographic markets falls within the ICA’s power to carry out technical assessments, which may be challenged by the parties only where the ICA manifestly breaches the principle of reasonableness. Finally, the Council of State upheld the TAR Lazio’s judgments also with respect to the reduction in the amount of the original fines.[6] The Court held that, pursuant to the ICA Guidelines on the method of setting pecuniary administrative fines, although an anticompetitive agreement by object is likely to be considered as serious, a case-by-case assessment is always required to establish the gravity of the infringement.
In particular, where it is possible to estimate the effects stemming from an infringement, such effects must be taken into account to determine the gravity of the conduct.
[1] TAR Lazio, Judgment Nos. 11885, 11886 and 11887 of December 1, 2017.
[2] ICA, Decision of December 22, 2015, No. 25801, Case I780 – Mercato del calcestruzzo in Veneto.
[3] Council of State, Judgment Nos. 4735, 4736 and 4737 of July 24, 2020.
[4] ICA, Decision of April 11, 2018, No. 27123, Case I780B – Mercato del calcestruzzo in Veneto-Rideterminazione sanzione.
[5] European Court of Human Rights, Judgment of November 23, 2006, Case No. 73053/01, Jussila v. Finland.
[6] ICA Resolution No. 25152 of October 22, 2014 – Guidelines on the method of setting pecuniary administrative fines pursuant to Article 15, paragraph 1, of Law No. 287/90.