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Italian Competition Law Update - Focus on killer acquisitions

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    The 2021 Annual Law on Market and Competition (Law No 118/2022) has made significant changes to the Italian Competition Law (Law No 287/1990, the "ICL"). In this post, we discuss the Italian Competition Authority's ("ICA") new powers to call in transactions which do not meet the thresholds for notification. This reform is designed to capture so-called "killer acquisitions".

    Key takeaways
    • The ICA has the ability to require parties to notify transactions which do not meet the thresholds but which are likely to raise competition issues.
    • The power is designed to capture acquisitions of small, innovative companies (particularly in tech markets) by much larger market players, so-called "killer acquisitions". However, the ICA may choose to exercise its new power in relation to other transactions which it considers may restrict competition.

    What you need to know 

    The ICA now has the ability to require parties to notify concentrations which do not meet the two statutory (cumulative) thresholds for compulsory notification but which are likely to raise competition issues. In particular, the ICA may require the notification of a concentration when the transaction:

    • meets one of the turnover thresholds set out below; and
    • may restrict competition in the national market (or in a substantial part of it); and
    • has been closed in the preceding six months.

    The relevant turnover thresholds are: 

    • the parties' aggregate turnover in Italy is at least EUR 517 million; or
    • each of at least two parties to the transaction has turnover of at least EUR 31 million in Italy; or
    • the parties' aggregate worldwide turnover exceeds EUR 5 billion.

    In view of the above, parties to potentially problematic transactions which meet the criteria for being called in may decide to proactively notify their transaction to the ICA or check whether the ICA intends to review their deal.

    The amendments are primarily designed to capture acquisitions of control of small companies characterised by innovative strategies and those active in new technologies by much larger competitors. This explains why acquisitions by large companies (which have a turnover of more than EUR 5 billion) can potentially be reviewed regardless of the target's turnover. While EUR 5 billion seems like a high threshold, it will easily be satisfied by large companies including, for example, private equity houses. 

    However, it should be noted that the power to call in transactions is not limited to those involving new technologies and it is possible that the ICA will use its new powers to review any mergers which it considers may have anticompetitive mergers irrespective of the relevant sector.

    The ICA will adopt procedural guidelines concerning this type of merger control review which will hopefully reduce the uncertainty about the types of transactions which are more likely to be affected by the new power. 


    This new power must be considered in the context of the increasing focus globally on so-called "killer acquisitions": the European Commission and national competition authorities are particularly worried about large companies acquiring SMEs or start-ups in sectors characterised by high innovation, as the tech or pharma sectors since these acquisitions will generally not fall within the scope of the EU, or indeed any national, merger control legislation yet these transactions may hinder competition and jeopardise the positive innovative effects generated by these small companies. The very recent Illumina/Grail case has shown the increasing interest of competition authorities in this type of transactions. 

    The new provision will inevitably entail a degree of uncertainty for certain transactions falling "below the thresholds". It will be important, when negotiating the SPAs, to consider provisions dealing with the possibility of an ex post notification requirement and potential consequences should the ICA decide to impose remedies, particularly if the remedies are structural in nature. As indicated above, the parties to a potentially problematic transaction may decide to proactively approach the ICA to understand whether there is a risk that it will call in the transaction. If this is the case, the parties may decide to proactively notify the transaction and to make closing conditional on approval from the ICA. 

    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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