The implementation of the ECN+ Directive in Italy: new investigation and enforcement powers in the Antitrust authority’s armoury

On 14 December 2021, Legislative Decree No. 185/2021 (the Decree), implementing EU Directive no. 2019/1 (ECN Plus) entered into force, expanding the Italian Antitrust Authority investigative and sanctioning tools, including:

• dawn raids at private premises;
• higher and new fines (now also against individuals); and
• exclusion of criminal liability (where applicable, e.g. in case of bid rigging) in case of leniency.

Wide-ranging investigative powers – beware who’s knocking the door!

The Decree expands the range of investigative tools at the IAA’s disposal during an investigation. The main novelty is the IAA’s power to carry out unannounced inspections not only in companies’ headquarters, buildings or company cars, but also at private premises. The impact of such a provision should not be underestimated in light of the “wave of dawn raids” recently announced by EU Commissioner Vestager, which might signal more appetite for dawn raids also on the national front, requiring companies’ employees and staff to be duly prepared.

In addition, largely codifying existing practices, the Decree provides that IAA may:

• use and accept all types of evidence. This includes not only “classic” documents and oral declarations, but also electronic messages and voice records (e.g. WhatsApp conversations). This reinforces the need for companies to include them in their compliance programmes as well as guidelines for document production.
• at any point in time during an investigation, request information or schedule a hearing.
• inspect and seize documents, “on whatever medium” during dawn raids, confirming that IAA’s inspection powers during dawn raids capture all types of electronically stored information.

Lastly, the Decree is formally introducing the option for the IAA to extend the duration of interim measures that it may decide to adopt in urgent cases where there is a risk of serious and irreparable damage to competition, with potential disrupting impacts for the companies’ business pending the investigation.

New sanctioning powers and higher fines

The Decree introduced fines aimed at incentivizing companies, associations of undertakings and individuals to cooperate with the IAA.

First, the IAA may impose a fine up to 1 per cent of the undertaking’ worldwide turnover realized in the previous financial year in case of failure to:

• cooperate during dawn raids;
• provide complete and accurate response to a request for information; or
• appear at a hearing.

Second, the IAA can impose a daily penalty up to 5 per cent of the undertaking’s average worldwide daily turnover for each day of delay in complying with the information/hearing request, or inspection. This is a step-change, as the IAA could only impose lump-sumps of immaterial amount under the previous regime in such circumstances.

Most importantly, a set of administrative fines for individuals has been introduced – the IAA can now impose either lump sums or daily penalties for each day of delay on individuals who, intentionally or negligently, obstruct inspections, provide incorrect, incomplete or misleading information in response to a request for information or fail to appear at a hearing.

Lastly, the Decree formalizes the (until now, somewhat debated, outside merger control) IAA’s power to impose structural or behavioural remedies deemed necessary and proportional to bring an infringement to an end.

Leniency programme – a real game changer?

The Decree provides a set of detailed provisions for companies that reports the existence of illegal cartels by submitting evidence and cooperating with the IAA in a qualified manner (i.e. leniency applications). These rules largely mirror the existing IAA’s soft law notice on the national leniency programme.

However, the real novelty is that actual or former directors or other employees involved in the anticompetitive conduct – when the conduct may also amount to a crime, e.g. bid rigging – will not be liable under criminal law in case the conditions for immunity under the leniency programme are satisfied.

In order to incentivize companies to apply for leniency, the Decree sets a limit to access information related to a leniency application. Also, information accessed to by third parties can be only used in the context of the IAA’s investigation or during related appeal proceedings; this aims at ensuring a balanced trade-off between the leniency and private enforcement frameworks.

In conclusion… it’s not over yet

The Decree increases the importance for companies to have effective compliance programmes as well as to foster internal antitrust culture and training among employees, as they may now be personally exposed to greater risk under Italian antitrust law. In addition, particular attention will need to be taken as to comply accurately with information requests, attend IAA hearings and obstruct dawn raids.

And it’s not over yet. The IAA’s powers are expected to be further strengthened by the forthcoming Annual Competition Law (currently still a draft). This currently provides inter alia for (i) the extension of the IAA’s power to request information also outside of a formal investigation; (ii) the introduction of a settlement procedure; and (iii) a reform to the Italian merger control regime (enabling the IAA to request a filing below mandatory thresholds, to extend the phase II review and which is replacing the existing test for assessing concentrations with the EU “SIEC” test, as discussed in our previous post here.