On 21 October 2020 the Italian Administrative Court of First Instance ("TAR Lazio") annulled the decision issued by the Italian Competition Authority ("ICA") on 20 December 2018 sanctioning a number of car manufacturers and their "captive banks" in relation to an alleged cartel concerning car financing products. The fines totalling €678 million in this case were previously the highest fines ever imposed by the ICA.
| what you need to know - key takeaways |
- The ICA must comply with the principle of reasonable duration of proceedings and therefore promptly open the investigation once it has gathered all the supporting information and documentation.
- The characterization of an infringement as a "by object" restriction requires the precise assessment of the economic and legal context of the market concerned as well as the objectives underlying the conduct at issue.
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The ICA's decision, which followed a leniency application, had sanctioned Daimler, Volkswagen, Toyota, Renault, General Motors, Ford and BMW jointly with their respective "captive banks" (i.e. the subsidiaries of each of those car manufacturers providing banking services) for having fixed the conditions for the financing and leasing of new cars in Italy between 2003 and 2017 in breach of Article 101 TFEU (see our comment on the ICA's decision here). The TAR Lazio annulled the ICA's decision on both procedural and substantive grounds (the FCE Bank judgment can be found here).
In line with recent national case-law, the TAR Lazio held that the ICA breached the parties' right to a reasonable duration of the proceedings. This was insofar as the ICA unreasonably delayed the launching of the proceedings for three years, despite all relevant information already being provided in the context of the leniency applications received in this case.
On the merits of the case, the TAR Lazio criticized the ICA for having failed to demonstrate how the exchange of information which formed the object of the ICA's investigation could affect the competitive dynamics on the relevant market, as defined by the ICA in the decision.
In this regard, the TAR Lazio noted that the ICA had identified the market concerned by the exchange of information as the market for the "sale/leasing of cars through financial products, namely car financing (in the strict sense) and leasing".
However, in the market so defined, it was not clear, according to the TAR Lazio, that the conditions of the financing offered to customers was the main or even an important driver of competition, as the price and/or characteristics of the car could also influence customers' choice significantly. The ICA had failed to investigate this issue and thus had failed to demonstrate that the captive banks' conduct was capable of distorting competition in the relevant market.
The TAR Lazio also indicated that even if one were to consider only the market for car financing (which was not the relevant market considered by the ICA in its decision), it was still unclear that the exchange of information at stake could affect competition. Indeed, on such a market, the captive banks faced competition from universal banks, which were strong competitors.
Thus, the ICA had not provided sufficient evidence that the conduct concerned was inherently capable of significantly affecting competition and thus could not be viewed as a restriction "by object" (as the ICA had done). The ICA should have assessed the economic and legal context of the market in which the alleged infringement occurred in order to establish evidence of the potential negative effects of the conduct on competition.
The TAR Lazio's ruling adds to the current (welcome) trend of the Italian courts requiring the ICA to provide convincing grounds before concluding that conduct constitutes a restriction by "object". In this regard, the courts are aligned with similar recent developments at the EU level (see, for example, our summary of the ECJ's judgment in Budapest Bank).
With thanks to Sabina Pacifico of Ashurst for her contribution.
