Enforcement Gap?
While in Sorrento for the first conference of the Associazone Antitrust Italiana, I learned an interesting fact about Italian competition law. For a few years now, the Italian Antitrust Authority has apparently shifted the quasi-entirety of its enforcement resources to the investigation of unfair trading practices. As a result, little, if any, enforcement initiatives are undertaken on the basis of the Italian competition rules. The daily business of Italian competition lawyers has thus changed dramatically, and many have had to learn a new discipline.
Interestingly, the rationale for this strange enforcement prioritization agenda has to do with media exposure. Because unfair trading practices cases require little resources, the competition authority can investigate and decide many of them and thus appears frequently in the press. In contrast, antitrust cases are more costly, lengthy and uncertain. Their political, social, and media benefits are much more limited.
Now, I wonder if the Italian CA, and more generally multi-function CAs, can lawfully decide to renege on competition enforcement, and allocate their resources to other areas (e.g., consumer protection, unfair trading practices, etc.). After all, an enforcement agenda of this kind undermines the principle of effectiveness of Article 101 and 102 TFEU enshrined in Article 35(1) of Regulation 1/2003. Such a practice creates an enforcement gap on Italian territory which to me, is incompatible with the twin logic of decentralized & homogeneous enforcement which blows on the EU competition system. Just think for a minute to the situation of a French firm facing exclusionary tactics from a dominant Italian incumbent. Faced with a CA reluctant to open proceedings, the remedies open to the French firm are drastically limited.
Of course, the next question is: what can firms do to induce the Italian CA to revisit its enforcement agenda? Besides asking DG COMP to put pressure on Italian officials, the most obvious course of action involves a complaint before the Commission against Italy under Article 258 TFEU for failure to comply with EU law.
The first conference of the Associazone Antitrust Italiana was a great success with approximately 150 participants. I attach my slides and the text of my speech.
Oral Intervention – Speaking Notes – N Petit
Slides NP – Judicial Review in European Union Competition Law – Final
Chillin'Competition 
Certainly a justified question (“can lawfully decide to renege on competition enforcement, and allocate their resources to other areas?”), but there is another point, more important to me. A CA seems very likely to allocate their resources where they think they can easily interfere and, at the same time, they have an inclination to interfere, because without intervention, no media exposure. And this raises the question of all too frequent false positives (errors I).
Adrian Raass
24 May 2011 at 1:55 pm
Yeah yeah, guys, it is all down to the stance of the appellate body. In the UK, the Supreme Court has led a big blow to the use of consumer law as an alternative way to to intervene in oligopolies that are out of reach under comp. law – unless we agree on using art. 102 to tackle tight oligopolies/collective dominace. . . In Italy it might be different I don’t know.
In any case, I repeat that the use of the UCPD in particular allows a market watchdog with double jurisdiction to address certain oligopolistic practices in consumer markets that so far have not been tackled under comp. law – you don’t want to call it gap, fair enough, but don’t come up with the false positive trite rhetoric please – there is plenty of evidence that this is not competition on the merits.
Legal tests under consumer law can be equally challenging to enforce – I have to say I detected a slight condescendence in your tone – and in the UK for example, the consumer watchdog has to go to court, which you teach me should further reduce the risk of false positives I suppose.
A market watchdog makes best use of its restrained resources and not taking into account which legal instrument in its toolkit would give the greatest chance of success is foolish.
Paolo Siciliani
24 May 2011 at 2:25 pm
Hi Nicolas, I am afraid that what you are reporting is true only to a limited extent. I guess the lawyers you have been talking to in Sorrento gave you a distorted picture of the current situation in Italy.
If you take a look at the ICA’s latest annual reports you will see that antitrust enforcement in Italy has anything but stopped. There have been quite a few commitment decisions, true, but isn’t the same thing happening in virtually every other European jurisdiction (as well as at the E.U. level)?
On the other hand, no one can deny that as of 2008 many ICA’s officials had to switch from antitrust to UCP enforcement and managed to handle some 300 investigations per year (which, by the way, in 2009 lead to fines whose total amount exceeded the correspondent amount of antitrust fines).
From my personal point of view, the ICA (like any other Authority having the competence to enforce both competition law and the UCP discipline or having a broad consumer protection policy, e.g. the FTC, the OFT etc.) is in a privileged position provided that: (i) it is able to develop a correct synergy between both disciplines; and (ii) has sufficient resources to ensure that its enforcement is effective in both domains. The latter is, hélas, the most relevant problem affecting ICA’s activity nowadays: to put it bluntly, the ICA does not have enough money to hire more (competent) case handlers and to train those already working there.
PS: @Paolo Siciliani: can you please post the reference number of the UK Supreme Court’s decision you are referring to? Thanks!
Italian Insider
24 May 2011 at 7:36 pm
I was referring to the so-called bank test case under the UCCTRs re. unfair overdraft charges. On the other hand, enforcement in the UK under the UCPD (in UK CPRs) is still largely unexplored (but for a recent judgement on a scam with fake lottery tickets).
Paolo Siciliani
25 May 2011 at 12:20 am
Thanks to you all for the clarifications.
I suppose there is a perception issue here. Most of the lawyers I met there were however going in the same direction: there’s allegedly a “small” antitrust programme at the Italian CA, with little cartels, mergers and a few commitments cases.
One of my interlocutors even mentioned – with a sense of incredulity – that a cartel case had been closed with commitments…
One thing on your figure (about the fine for UCP). It confirms that you can also reach nice numbers, which will garner media exposure, outside of antitrust law.
Thanks again, very useful.
Nicolas Petit
25 May 2011 at 12:06 am