On August 5, 2022, the Italian Parliament adopted Law No. 118, the “2021 Annual Competition Law” (the “ACL”). The ACL, which will enter into force on August 27, 2022, amends the Italian Competition Law (Law No. 287/90) in various respects. In particular, it: introduces the possibility for the Italian Competition Authority (the “ICA”) to request the notification of below-threshold mergers; further aligns the Italian merger control regime to well-established EU principles and rules; extends the enforcement powers of the ICA; introduces a settlement procedure; and strengthens the rules against abuse of economic dependence.

I. Review of below-threshold mergers

The ACL introduces the possibility for the ICA to: (i) request the notification of below-threshold mergers; and (ii) substantially review these transactions.

Under the previous system, mergers had to be notified (prior to their implementation) to the ICA only when two cumulative turnover thresholds were met. The ACL now gives the ICA the power to request notification of below-threshold concentrations when three cumulative conditions are met:[1]

i) one of the two turnover thresholds in Law No. 287/1990 (i.e., €517 million for the turnover achieved in Italy by all the undertakings concerned and €31 million for the total turnover achieved individually at national level by at least two of the undertakings concerned) is exceeded or in which the undertakings concerned jointly achieve a worldwide turnover in excess of €5 billion;

ii) the merger raises competition concerns in the national market, or in a substantial part of it, also taking into account possible detrimental effects on the development of small enterprises with innovative strategies; and

iii) the merger can be reviewed ex post, up to six months after its closing.

If these cumulative conditions are met, the ICA can request the notification of the transaction within 30 calendar days.

This amendment aims at strengthening the Italian merger control system, preventing potentially problematic below-threshold transactions from escaping the ICA’s scrutiny, particularly in the digital economy and pharmaceutical sector, where so-called “killer acquisitions” may occur, as well as in traditional sectors where mergers may have a significant impact on local markets, despite falling below notification thresholds.

II. Amendments to merger control rules

The ACL replaces the substantive test which has been applied so far by the ICA (i.e., the traditional “dominance test”) with the so-called SIEC test (“significant impediment to effective competition”), as set out in Article 2(2) and (3) of the EUMR.[2] The adoption of the new test is a welcome amendment as it reduces the risk of diverging merger control decisions adopted by competition authorities applying different substantive tests.

The ACL also provides for a further alignment of Italian merger control rules with EU standards. Indeed, all full-function joint ventures (“JVs”) will be subject to merger control rules, regardless of their ‘concentrative’ and ‘cooperative’ nature.[3] This amendment aims at eliminating the disparities in treatment between the different types of full-function JVs.

Finally, the ACL introduces new criteria for the calculation of the turnover of credit and other financial institutions for merger control purposes. These new criteria are fully aligned to the ones set out in the EUMR.[4] Concerning insurance companies, the ACL clarifies the previous calculation criterion and explicitly provides that the turnover is replaced by the value of gross written premiums, comprising all amounts received and receivable in respect of insurance contracts issued by or on behalf of the insurance undertakings, including also outgoing reinsurance premiums.[5]

III. Power to request information outside of formal investigations

The ACL provides that the ICA may “at any moment” request information and documents.[6] The ICA can do so both for the purposes of the application of the rules on restrictive practices and abuse of dominant position, as well as for the control of concentrations.

The ICA must provide the addressee of its request with a reasonable period of time to reply, also considering the complexity of the information requested. In any case, this period shall not exceed sixty days, renewable upon a motivated request.[7]

Article 14(5) of Law No. 287/1990 allows the ICA to issue fines in the case of refusal to provide or delay in providing information. The same applies in the case of incorrect, partial or misleading information being provided. Following the amendment introduced by Legislative Decree No. 185/2021 (implementing Directive (EU) 2019/1),[8] these fines may be up to 1% of the turnover of the company concerned.[9]

This is a significant change because, under the previous regime, the ICA could request information only after serving the decision to initiate a proceeding.

IV. Introduction of a settlement procedure

The ACL introduces a settlement procedure which can be used in cases concerning restrictive agreements and abuse of dominant position.

The ICA, during the investigation and until the notification of the statement of objections, may set a deadline within which the companies involved may express in writing their willingness to participate in discussions in order to reach a settlement agreement with the ICA.[10] If the outcome of these discussions is favorable, the ICA may set a time limit within which the undertakings concerned may submit settlement proposals that reflect the results of the discussions held and in which they acknowledge the infringement and their respective liability.[11]

The ACL entrusts the ICA with the task of defining through internal provisions (to be adopted in the upcoming months) the procedural rules and the extent of the fine reduction in the event of successful conclusion of the settlement procedure.[12]

V. Strengthening action against abuse of economic dependence

The ACL also amends Law No. 192/1998 on abuse of economic dependence.[13] In particular, the ACL:

  • introduces a rebuttable presumption of economic dependence when dealing with digital platforms that play a “key role” in reaching end-users and/or suppliers (so-called “gatekeeper” platforms);[14]
  • amends the non-exhaustive list contained in Law No. 192/1998 of relevant practices that amount to abuses of economic dependence.[15]

The purpose of this amendment is to modernize the Italian rules on abuse of economic dependence in order to catch abusive practices in the digital sphere.[16]

VI. Conclusions

The ACL amends several areas of competition law by further aligning national competition law to EU rules. It also introduces other significant changes, particularly in the field of merger control.

Overall, it is expected that the ACL will have a significant impact on the enforcement activity of the ICA.

[1] ACL, Art. 32(1)(b).

[2] ACL, Art. 32(1)(a).

[3] ACL, Art. 32(1)(c). The national rules reflect the original approach of the former Regulation No. 4064/1989/EU, pursuant to which JVs (even full-function ones), if they were ‘cooperative’ in nature (i.e., when both parents remained actual or potential competitors in the same geographical and product market as the JV, or in a market upstream, downstream or neighboring with respect to that of the JV) were appraised under the (substantive and procedural) rules on restrictive agreements.

[4] Id., Art. 32(1)(b)(2).

[5] Id., Art. 32(1)(b)(2).

[6] Id., Art. 35(1)(a)-(b).

[7] Id., Art. 35(1)(a)-(b).

[8] Directive (EU) 2019/1 of the European Parliament and of the Council of December 11, 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, PE/42/2018/REV/1, OJ L 11, January 14, 2019 (“ECN+ Directive”), pp. 3-33.

[9] ACL, Art. 35(1)(a)-(b). The ICA must set out the legal basis of the requests for information and/or documents. Such requests must also be proportionate and not oblige the addressees to admit an infringement of Articles 101 or 102 TFEU or Articles 2 or 3 of Law No. 287/1990 (Id., Art. 35(1)(a)-(b)).

[10] Id., Art. 34(1).

[11] Id., Art. 34(3).

[12] Id., Art. 34(5).

[13] Id., Art. 33.

[14] Id., Art. 33(1)(a).

[15] Id., Art. 33(1)(b).

[16] The effect of this change is to pre-empt one of the points of the DMA, which aims to ensure fair competition within the market in which digital service providers, defined as “gatekeepers”, operate.