On October 6, 2020,[1] the Council of State upheld the appeals filed by the Italian Competition Authority (the “ICA”) against judgments issued by the Regional Administrative Court of Lazio (the “TAR Lazio”) in 2018 and rejected the cross- appeals lodged by Ernst & Young S.p.A., Deloitte & Touche S.p.A., PricewaterhouseCoopers S.p.A., PricewaterhouseCoopers Advisory S.p.A. and KPMG S.p.A. (the “Big Four”).[2] The Council of State’s rulings concern a decision delivered by  the ICA in 2017, which fined the Big Four and the consulting companies belonging to the Big Four networks[3] for rigging a tender for the provision of technical assistance services to public authorities.[4]


The ICA’s findings

On October 18, 2017, the ICA found that the Italian branches of the Big Four had coordinated their participation in a tender procedure for the procurement of support and technical assistance services for audit authorities in the framework of programs co-financed by the European Union.

The nine-lot tender, launched in March 2015 by the Italian government procurement body Consip S.p.A. (“Consip”), was worth Euro 66.5 million. The Big Four were assigned five of the nine lots; other bidders won the remaining four.

The investigation was prompted by a complaint lodged by Consip, which reported an anomalous chessboard pattern in the Big Four’s bidding behavior. In particular, Consip noted that the most competitive bids submitted by the Big Four concerned always different lots, without any overlap.

In its investigation, the ICA found evidence of contacts between the Big Four, including e-mail correspondence and meetings. These contacts occurred before the publication of the call for tender (i.e., before the Big Four knew the number of lots and their value). The Big Four explicitly acknowledged their participation in these meetings but claimed that they had a legitimate purpose.

The ICA was not convinced by any of the alternative explanations put forward by the Big Four to justify their allegedly anomalous bidding behavior. Accordingly, it imposed fines amounting overall to Euro 23 million. The ICA fined not only the companies that had directly participated in  the tender,[5] but also the consulting companies belonging to the same international network, which were considered part of the same economic entity.[6] In particular, the ICA found that these companies shared professional and structural resources, adopted joint communication strategies and presented themselves to the market as a single player, including with respect to the Consip tender.

The TAR Lazio’s judgments

On November 14, 2018, the TAR Lazio decided on the appeals brought by the companies fined by the ICA. In two sets of rulings, the TAR Lazio distinguished between: (i) companies that had participated in the tender; and (ii) companies that, even if part of the same network, had not participated in the tender.

  • Judgments regarding the bidding companies

The plaintiffs claimed that the ICA had not provided any convincing evidence of a concerted practice, and that they had determined their behavior autonomously from competitors as well as the related companies. Furthermore, they questioned whether the alleged anticompetitive practice could be defined  as secret and particularly serious.

The TAR Lazio was not convinced by the explanations provided by the parties, since the offers submitted followed the same pattern, and there was no overlap of competitive bids  for the same lot. The TAR Lazio restated well- established case law according to which individual conduct must be evaluated taking into account the overall picture and not in an “atomistic” way. This means that the ICA must look at all the types of conduct as if they were “pieces of a mosaic”. If the ICA finds elements showing a possible coordination (such as contacts and anomalous  market  conduct), and the parties do not provide plausible explanations for their course of action, this suffices for the finding of an unlawful concerted practice.

Nonetheless, the TAR Lazio shared the companies’ view that the infringement was not particularly serious, and could not justify the imposition of fines calculated on the basis of a 25% entry fee and a 30% value of sales, especially because the ICA had not even looked at the effects of the concerted practice. Furthermore, the administrative court held that the ICA had not provided sufficient evidence to justify the finding of secrecy, notwithstanding the secrecy of the meetings and the attempt to keep to a minimum any written evidence of the existence of the cartel. Therefore, the TAR Lazio partially annulled the ICA decision, and ordered the ICA to recalculate the fine.

  • Judgments regarding the consulting companies that had not participated in the tender

Regarding the actions for annulment lodged by the non-bidding companies, the TAR Lazio agreed with the plaintiffs that the ICA did not provide any evidence of the existence of a control or coordination relationship between them and the companies that participated in the tender. According to the TAR Lazio, this element is essential to infer the existence of a single economic entity. In addition, the TAR Lazio found no evidence of any communications between the bidding companies and the non- bidding companies belonging to the same Big Four network capable of showing the existence of a common strategy.

For these reasons, the TAR Lazio held that the non-bidding companies were not involved in the concerted practice and could not be found jointly and severally liable with the bidding companies for the infringement. Accordingly, it annulled the ICA decisions with respect to the findings of liability of the related companies.

The rulings of the Council of State

On appeal, the Council of State partially overturned the TAR Lazio judgments with respect to the companies that participated in the tender, while it fully quashed the judgments adopted vis-à-vis the related companies.

  1. Judgments regarding the bidding companies

The Council of State concurred with the TAR Lazio that the parallelism of the companies’ conduct could not be justified in the light of  the explanations submitted by the parties. The lack of overlap in the most competitive bids, the fact that the economic offers submitted by the operators concerned in different tenders seemed to follow a common scheme (the most competitive bids were based on discounts up  to 30-35%, while the non-competitive bids provided for discounts only up  to  10-15%), the evidence of the meetings and the emails retrieved by the ICA were all elements that, considered as a whole, were sufficient to prove the anticompetitive explanation for the parallel behavior and shift the burden of proof to the companies. Eventually, according to the Council of State the companies did not provide credible alternative explanations for their conduct.

Moreover, with respect to the  quantification of the fines, the Council of State upheld the appeal brought by the ICA against the TAR Lazio’s judgments. In the Council of State’s view, the secrecy of the collusive behavior was demonstrated by the fact that the concerted practice was not disclosed to  the  public,  and in order to gather evidence of it the ICA had to seize the correspondence of the companies involved, which would have normally been kept confidential. Furthermore, the Court stated that, in light of the nature and the secrecy of the conduct, the ICA had correctly categorized the infringement as particularly serious, since bid rigging is considered one of the most anticompetitive practices under antitrust law. For these reasons, the Council of State partially annulled the TAR Lazio judgments with respect to the redetermination of the fine, and thus confirmed in its entirety the ICA decision.

  • Judgments regarding the consulting companies that had not participated in the tender

With regard to the appeals lodged by the ICA against the judgments involving the non-bidding companies, the Council of State agreed with the ICA that – although not having directly participated in the Consip tender – these companies were to be held liable for the infringement. In particular, in the Council of State’s view, the ICA correctly found that also the non-bidding companies were nonetheless parties to the anticompetitive practice, since they had the opportunity to understand and follow the anticompetitive strategy pursued by the parties. Indeed, as already found by the ICA, the Council of State emphasized that the companies belonging to the same network: (i) are identified by the same mark, share professional and structural resources, implement common communication strategies, and present themselves to the market as a single entity; (ii) share some business functions  (such as the tender office); and (iii) share some employees. In addition, the ICA found evidence linking the non-bidding companies to the infringement, e.g., because they either organized meetings or participated in meetings on behalf of their respective sister company. The fact that some of the related companies did not directly submit any bids was considered by the Council of State to be compatible with the existence of an overall anticompetitive concerted practice, since – within each network – the companies decided which of them was the best placed to submit a bid. For all these reasons, the Council of State found that all the companies involved in the proceedings had taken part in the anticompetitive scheme, regardless of whether they participated in the tender. Accordingly, the Court held that the TAR Lazio’s findings on the concepts of “group” and “single economic entity” were unfounded, since each undertaking was individually and directly liable for the infringement.

The Council of State then followed the same line of reasoning adopted  with  respect to the companies that had directly participated in the tender, holding that even the related companies had not provided any alternative explanations capable of justifying their parallel behavior. Again, the Council of State categorized the concerted practice as secret and very serious. For these reasons, the  Court quashed the TAR Lazio’s second set of judgments and confirmed in full the findings of the ICA.

[1] Council of State, Judgment Nos. 5883, 5884, 5885, 5897, 5898, 5899 and 5900 of October 6, 2020.

[2] TAR Lazio, Judgment Nos. 10966, 10977, 10999, 11000, 1002, 1003 and 1004 of November 14, 2018.

[3] Deloitte Consulting S.r.l., Ernst & Young Financial Business Advisors S.p.A., KPMG Advisory S.p.A. and PricewaterhouseCoopers Advisory S.p.A.

[4] ICA, decision of October 18, 2017, No. 26815, Case I796 – Servizi di Supporto e Assistenza Tecnica alla PA nei Programmi Cofinanziati dall’UE.

[5] Deloitte & Touche S.p.A., Ernst & Young S.p.A., KPMG S.p.A., PricewaterhouseCoopers Advisory S.p.A. and PricewaterhouseCoopers SpA.

[6] Deloitte Consulting S.r.l., Ernst & Young Financial Business Advisors S.p.A. and KPMG Advisory S.p.A.