Legal development

Italian Competition Law Update - Bringing Italian merger control in line with EU principles

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    The 2021 Annual Law on Market and Competition (Law No 118/2022) has brought significant changes to the Italian Competition Law (Law No 287/1990, the "ICL"). In this post, we discuss the amendments to the ICL in relation to merger control.

    Key takeaways
    • SIEC test also adopted in Italy: the ICL has been amended so that the Italian Competition Authority ("ICA") can now prohibit a merger when it results in a significant impediment of effective competition ("SIEC").
    • All full-function joint ventures will constitute concentrations: the definition of joint ventures ("JVs") which constitute a concentration for the purposes of the ICL has been aligned to the existing definition at the EU level. As a result, all (but only) full-function joint ventures will qualify as concentrations which need to be filed with the ICA (provided the relevant thresholds are met).

    What you need to know

    The formal introduction of the SIEC test

    In 2004, the EU Merger Regulation was amended to enable the review (and potential prohibition) of mergers which resulted in a SIEC, as well as those which create or strengthen an existing dominant position. At the time, it was considered that there were situations where a merger could bring about significant anticompetitive effects without resulting in the creation or reinforcement of an existing dominant position: for example, when one of the leading market players in a tight oligopoly merged with a maverick market player.

    Following the changes to the EU Merger Regulation, the ICL was not amended and continued to provide that mergers could only be prohibited if they resulted in the creation or reinforcement of a dominant position. The ICL has now been brought in line with the EU Merger Regulation.

    It is not anticipated that this change will result in a significant increase in the cases in which the ICA will conduct a detailed review or impose remedies / prohibit the merger, as the dominance test was capable of catching most mergers which would be considered to be anticompetitive. In addition, the ICA has been construing the ICL in light of EU competition rules and was therefore making extensive use of the dominance test.

    However, the ICA will feel safer from a legal perspective when challenging mergers whose anticompetitive effects are difficult to categorize as fitting with the dominance test: for example, transactions in tight oligopolies involving mavericks but no dominant companies. The adoption of the SIEC in the ICL may also help the ICA when challenging killer acquisitions, which may not always  clearly reinforce an existing dominant position (see our separate post on the ICA's approach to killer acquisitions tomorrow).

    A revised definition of JVs which need to be notified to the ICA

    As early as 1997, the EU Merger Regulation was revised to ensure that all "full-function" joint ventures would constitute concentrations, potentially reportable to the European Commission provided the relevant thresholds were met. Prior to this revision, joint ventures whose creation could have resulted in potential coordination of the competitive conduct of their parent companies did not qualify as concentrations. This would typically be the case where the JV's parents continued to be active on the same market(s), or on market(s) closely connected) to the one, where the JV operated after the JV had been created.

    As noted above, the ICL was not amended after the 1997 reform of the EU Merger Regulation therefore full-function joint ventures which entail a risk of coordination within the meaning of the revised EU Merger Regulation may not have been considered to amount to a concentration for the purposes of the ICL.

    As a result, the ICA was in a difficult position when it wanted to request the referral of a full-function joint venture which had been notified to the European Commission but which mostly or exclusively had effects in Italy because the JV in question would not have constituted a concentration under the provisions of the ICL. Following a referral from the European Commission, the ICA had to conclude that the full-function joint venture in question did not constitute a concentration and assess the transaction as cooperation under Article 101 of the Treaty on the Functioning of the European Union. This was an unsatisfactory position from a legal standpoint as, in principle, the referral provisions of the EU Merger Control only apply to concentrations.

    The ICL has now been amended to ensure that it is fully aligned to the definition of concentration set out in the EU Merger Regulation. This is a welcome change as it will allow companies to assess whether a transaction is notifiable under the ICL by reference to the case law and decisional practice of the European Commission in relation to full functionality criteria. Companies will no longer need to refer to the European Commission's 1994 guidelines on the distinction between concentrative and cooperative joint ventures.

    Consistent with the EU Merger Regulation, the amended ICL provides that the potential risk of coordination resulting from the creation of a full-function joint venture will have to be analysed and reviewed within the ambit of the analysis of the transaction as a concentration, thus ensuring a full and quick review of the transaction (if unproblematic) within a single authorization proceeding.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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