On October 3, 2022, the Regional Administrative Court for Latium (the “TAR Lazio”) annulled the decision of the Italian Competition Authority (the “ICA”) of November 16, 2021 (the “ICA Decision”),[1] by which a fine of €134.5 million was imposed on Apple Inc. and certain of its subsidiaries (“Apple”) and a fine of €68.7 million on Amazon.com Inc. and certain of its subsidiaries (“Amazon”; together with Apple, the “Parties”).[2] The ICA Decision had found that the Parties infringed Article 101(1) (b) and (d) TFEU by restricting competition by certain resellers of Apple products, including those of the Apple-owned brand Beats, which operated on the online marketplace of Amazon (the “Amazon Marketplace”). The ICA found Amazon Marketplace to be a leading online marketplace in Italy, for consumer electronics products.[3]

The complaint

In February 2019, Digitech, a distributor of electronic products, filed a complaint before the ICA, concerning online sales of Apple and Beats branded products (the “Products”) on the Amazon Marketplace. The complainant claimed that, following an alleged agreement between the Parties, Amazon removed from Amazon Marketplace certain retail distributors, which had previously regularly and lawfully offered the Products.

The ICA Decision

The ICA’s investigation focused on the agreement entered into by the Parties on October 31, 2018 (the “Agreement”). According to the ICA, under certain clauses of the Agreement, access to the Amazon Marketplace for the purpose of resale of the Products were limited to retailers specifically identified in the agreement as satisfying the highest standards in terms of investments and quality (the “Apple Premium Resellers”).

The ICA assessed whether, against the background of the evidence in the casefile, the Agreement empowered the Parties to foreclose the resellers excluded from the Amazon Marketplace. It found that, they aimed at putting in place a distribution system based on a purely quantitative restriction (i.e., once the maximum level of resellers set in the Agreement had been reached, no other resellers were admitted regardless of their qualities). The ICA concluded that the Agreement was discriminatory in nature because it favoured Amazon and some official resellers, while it prevented a substantial number of resellers of the Products having the same qualities from accessing a very important distribution channel for online sales, and therefore it constituted a violation of Article 101(1) TFUE.

Additionally, according to the ICA, the Agreement restricted cross-border sales, as it prohibited sales of the Products to resellers established outside a select number of EU Member States.

Lastly, in the ICA’s view, the Agreement affected the discounts available for the Products sold on Amazon Marketplace by restricting the number of resellers allowed to use Amazon Marketplace.

The TAR Lazio’s Ruling

Without assessing the substantive grounds raised by the Parties, the TAR Lazio upheld their pleas relating to the violation of (i) the time limit for opening the investigation, and (ii) the time limit to reply to the statement of objections (the “SO”).

The violation of the time limit for opening the investigation

The Parties claimed that the ICA violated Article 14 of Law No. 689/1981.[4] The TAR Lazio took the view that the case law is inconsistent as to whether Article 14 of Law No. 689/1981 applies to antitrust proceedings. Under the two interpretations put forward to date: (i) Article 14 is a general provision that does not apply when a specific provision applies (such as under the Italian competition statute);[5] alternatively, (ii) Article 14 is a general rule that applies to any proceeding that may lead to an administrative pecuniary penalty, including in antitrust matters.

The Court endorsed the first approach, and assessed the compatibility of the ICA’s behavior in the light of the general principles set out in Article 6 of the European Convention on Human Rights and Article 41 of the EU Charter of Fundamental Rights (concerning the fundamental right to good administration). It held that the time limit established by Article 14 of Law No. 689/1981 is not applicable in antitrust proceedings in relation to the preliminary investigation stage. Nonetheless, according to the TAR Lazio, the non-applicability of the said time limit could not justify an unreasonably prolonged duration of the pre-investigation, given that, as a general rule, “administrative proceedings” – including the antitrust investigations conducted by the ICA – are subject to the general principle of good administration.[6] Therefore, the ICA has an obligation to open formal investigations within a reasonable period of time.

Against this background, the TAR Lazio found that the ICA violated the time limit for opening the investigation since the ICA received Digitech’s complaint on February 22, 2019, but formally decided to initiate the proceedings only approx. one and a half year after, on July 21, 2020. According to the Court, this time lapse could not be justified by the complexity of the case since the ICA failed to carry out any pre-investigation activity, except for the acquisition of the company profiles of some distributors and some statistics on e-commerce that it located on the Internet, starting in June 2020 (i.e., 16 months after the receipt of the complaint). Other than that, the ICA remained idle and abstained from acquiring all the information necessary to define the basic elements of the offence and, therefore, decide whether or not to initiate the investigation in a much shorter time.

The violation of the time limit to reply to the SO

The TAR Lazio also found that the ICA violated the Parties’ rights of defense by granting Apple and Amazon a time limit for submitting their defenses in reply to the SO equal to the statutory minimum (i.e., 30 days),[7] eventually extended to 45 days, whilst in similar proceedings the ICA gave more than 100 days.

The TAR Lazio concluded that the 30-day time limit appeared all the more insufficient given the length of the SO in the case in question (more than 100 pages) and considering that the time for preparing the response included the month of August, when, although no holiday recess is provided for in the procedural rules, it is undoubtedly more difficult to gather the relevant documents and information, and in general for companies and their legal counsel to interact for the preparation of the defenses. Furthermore, access to the economic data gathered by the ICA during its investigation was granted to the Parties only after 24 days from the beginning of the time limit. In the Court’s opinion, the limited amount of time left to analyze the data, prepare and submit the defenses was not only in breach of the Parties’ rights of defense, but also disproportionate given the complexity of the case and unjustified compared to the overall duration of the proceedings.

[1]      See ICA Decision No. 29889 of November 16, 2021, Case I842 – Vendita prodotti Apple e Beats su Amazon Marketplace (discussed in the November 2021 issue of this Newsletter: https://www.clearygottlieb.com/-/media/files/italian-comp reports/italian-competition-law-newsletter—november-2021.pdf). By Decision of December 14, 2021, No. 29947, the ICA re-determined the amount of the fines imposed on the Parties as it found that it had committed clerical errors in its calculation. As a result, the final amount of the said fines was €114,681,657 for Apple and €58,592,754 for Amazon.

[2]      See TAR Lazio Judgment No. 12507 of October 3, 2022.

[3]     ICA Decision, § 57.

[4]      Which reads: “the infringement, to the extent possible, must be contested immediately vis-à-vis both the alleged infringer and the person which is jointly and severally liable for the payment of the penalty, if any. If immediate notification has not been made to all or some of such persons, the details of the infringement must be notified to the persons concerned […] within 90 days […].”

[5]      See Law No. 287 of October 10, 1990 (which, however, contains no provision setting out a time limit for the opening of an investigation by the ICA).

[6]      See Article 97 of the Italian Constitution, as well as Law No. 241 of August 6, 1990, laying down New rules on administrative procedures and the right of access to administrative documents.

[7]      See Presidential Decree No. 217 of April 30, 1998, Art. 14 (which actually sets out a 25-day time limit within which the parties to the investigation and the other persons that are admitted to participate in it may file written briefs and documents).