On 21 January 2020, the Council of State (Italy's Administrative Highest Court) handed down its judgment upholding the annulment of the Italian Competition Authority's ("ICA") decision of 19 July 2017 which had fined eight Italian steel producers for an alleged price-fixing cartel, based on the excessive duration of the ICA's pre-investigation activities, as well as the lack of sufficient evidence of the infringement.
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- The importance of complying with the reasonable duration of proceedings: The pre-investigation phase was found to be excessively long when account was taken of the extension of the investigation that had to be carried out and the actual usefulness of the documents and information gathered.
- The competition authority has to show why an exchange of information must be considered illegal: The Court confirmed that the ICA did not prove the alleged anticompetitive nature of information exchanges between the parties, notably how the resulting transparency would allow the parties to foresee competitors' future prices.
- Companies can provide alternative plausible explanations of their conduct: When an alleged infringement is found simply on the basis that the established facts cannot be explained other than by the existence of an anticompetitive behaviour, the parties can provide an alternative plausible explanation of their conduct, which shall prevail.
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According to the ICA, eight leading Italian steel manufacturers allegedly put in place a continuous and complex infringement between 2010 and 2016, by coordinating their commercial policies in the national market of reinforcing steel bars and electro-welded wire mesh, imposing total fines amounting to EUR 140 million.
In its judgment, the Council of State upheld the annulment of the ICA decision by the court of first instance, notably:
- confirming the excessive duration of the pre-investigation carried out by the ICA; and
- finding that the decision was manifestly unfounded and unreasonable, insofar as the ICA failed to prove, among other things, the anticompetitive nature of the exchange of information that would have allowed the parties to coordinate their commercial policies.
This judgment undoubtedly establishes an important principle as regards the parties' right to a reasonable duration of the proceedings. Indeed, according to the Council of State, irrespective of the national provisions regulating the authority's activity and its duration, "a pre-investigation phase carried out for an excessive period of time cannot be justified, since otherwise the general principles… on the certainty and efficiency of the administrative action set in the interest of both the public administration and the party concerned by the proceedings would be violated".
Such an assessment will very likely have an impact on future pre-investigation phases in Italy, namely forcing the ICA to speed up its activity of gathering documents and information before adopting a decision to open proceedings.
With thanks to Sabina Pacifico of Ashurst for her contribution.
