CN13 - Poste Italiane fined for abuse of economic dependence

On 20 July, the Italian competition authority ("AGCM") fined Poste Italiane ("Poste"), the main postal operator in Italy, EUR 11.3 million for abusing its position of economic strength in its relationship with Soluzioni, the company's mail distributor and collector in Naples. This decision confirms the recent trend of increased enforcement of the rules prohibiting the abuse of economic dependence in Italy. 

Key takeaways

• Article 9 of the Italian Law n. 192/1998 prohibits the abuse of the relative economic dependence of another company (a customer or supplier).
• The AGCM has found that Poste held a strong commercial position and imposed unjustifiably burdensome clauses in its contracts with Soluzioni, its longstanding mail distributor and collector in the city of Naples.
• When dealing with their business partners, companies should be aware that the AGCM is increasingly enforcing rules on abuse of economic dependence.

Background

The legal concept of "abuse of economic dependence", which exists only in the national laws of certain EU member states (e.g. Germany, France and Belgium) but not at the EU level, is inherently different from that of an "abuse of dominant position".

Indeed, for a company to abuse a situation of economic dependence, it does not need to have a dominant position on the market. The company only needs to have a position of "relative strength" to its counterparty in a transaction and to abuse that position.

Under Article 9 of Italian Law n. 192/1998, economic dependence exists where a company can impose an "excessive imbalance of rights and obligations" in its commercial relationship with another company, taking into account "the effective possibility for the party suffering the abuse to find satisfactory alternatives on the market.”

The AGCM's findings

In its decision, the AGCM found that, over the course of their commercial relationship (1999-2017), Poste and Soluzioni were in a position of asymmetrical bargaining power, where Poste enjoyed relative market power vis-à-vis Soluzioni. Poste is the incumbent Postal operator in Italy, whereas Soluzioni has always operated locally (in the city of Naples), mainly providing delivery services for Poste. 

In particular, due also to the structural characteristics of the market, over time Soluzioni had become de facto integrated into the internal processes of Poste, in order to meet the company's specific requirements. Moreover, Poste had been able to unilaterally decide (often, retroactively) on the extension of its contract with Soluzioni. As a result, it was impossible for Soluzioni to find satisfactory alternatives to Poste.

The AGCM found that the contractual conditions imposed by Poste were unjustifiably burdensome. In particular, Poste prohibited the transport and delivery of mail or parcels from other companies with its own and could unilaterally and significantly reduce or increase the quantity and type of products to be delivered by Soluzioni. Moreover, Soluzioni was forced to provide additional services which were either unpaid and/or fell outside the scope of its agreements with Poste.

According to the AGCM, Poste's conduct hindered competition on the market for mail distribution and collection in the city of Naples. In particular, Poste's conduct excluded a company that could have provided services to alternative postal operators from the market and eliminated a potential competitor to Poste. Indeed, although Soluzioni was operating on a smaller scale than Poste and only at local level, it had the potential to profitably expand its activities and become a competitor of Poste.

The AGCM's increased enforcement of abuse of economic dependence

The AGCM's decision against Poste is the third ever abuse of economic dependence decision adopted by the authority and the one in which the highest fines have been imposed. Recent cases show that the AGCM is increasingly relying on all of the enforcement tools available to it to tackle conduct that may not fall squarely within Article 102 TFEU, which prohibits the abuse of a dominant position.

Right after the decision against Poste, the AGCM announced the opening of a formal investigation into McDonald's for a possible similar infringement concerning conditions imposed on franchisees. In November 2020, Benetton Group S.r.l. was also investigated for an alleged abuse of economic dependence in the clothing market. 

This shows increasing enforcement in this area by the AGCM, a trend companies enjoying relative economic strength in their commercial relationships should be aware of when dealing with their customers or suppliers.

With thanks to Cecilia Borelli of Ashurst for her contribution.