The highest Italian administrative court finds that anti-competitive impact must be shown for abuse of dominance

In its judgment of 1 December 2022 (the Judgement), the Council of State (CdS) – which is the Supreme administrative court in Italy – upheld the appeal by Servizio Elettrico Nazionale S.p.A. (SEN), Enel Energia S.p.A. (EE) and Enel S.p.A. (collectively, the Enel Group) annulling the decision of the Italian Antitrust Authority (IAA) of December 2018 (the Decision). The Decision had ascertained an abuse of dominant position and had imposed a fine on the Enel Group for a total of approx. € 93 million.

This Judgement has followed a widely commented preliminary ruling by the Court of Justice of the European Union (CJEU) on many aspects relating to the interpretation of Art. 102 TFEU. 

The IAA’s probe 

In the Decision, the IAA found that the Enel Group implemented an exclusionary strategy for the purpose of transferring the client base of SEN (served under the “enhanced protection service” regime (the SMT – “servizio di maggior tutela”)) to EE (operating in the liberalized “free market”), in view of the approaching repeal of the SMT regime. In doing so, the Enel Group allegedly prevented the large-scale (potential) switch of SEN’s customers to third-party competing retail suppliers of electricity.

More specifically, the investigated conduct was carried out during the liberalization process of the energy market. In that context, SEN gathered users’ consents to receive commercial offers by requesting separate consents: one for the offers made by the companies of the Enel Group and one for the offers made by third-party operators. The IAA found that clients tended to give their consent to the Enel Group, refusing it for other companies. On that basis, the Enel Group was able to compile the so-called “SEN lists” which – in the IAA’s view – had a strategic and non-replicable value. The SEN lists were subsequently used by EE to launch commercial offers targeted exclusively to the SMT’s end-users.

The case before the CJEU

The Enel Group appealed the Decision before the first instance administrative court (Tar Lazio), which in October 2019 confirmed the ascertainment of an abusive conduct but ordered to reduce the fine (then redetermined to approx. € 27.5 million).

The Enel Group challenged Tar Lazio’s ruling and the CdS referred the case to the CJEU for preliminary ruling, raising a few general questions about Art. 102 TFEU, including about very rationale and purpose, the role of intent, and the room for objective justifications.

Following a fairly extensive (and widely commented upon) opinion by the AG Rantos, the CJEU, delivered its judgment in May 2022. Its key takeaway – as described in more detail in our previous post – is that a dominant undertaking, throughout a liberalisation process, must refrain from entrenching its dominant position by using means available to it on account of its former monopoly and which, for that reason, are not available to its competitors. Thus, the conduct of a dominant undertaking will be “abusive” where it is capable to produce exclusionary effects and when engaging in such conduct results in a departure from competition on the merits (instead, it is not necessary to demonstrate actual anti-competitive effects).

Having more specific regard to the proceedings pending before the CdS, the CJEU stressed that based on the information in its files it was unable to understand the exact nature of the discriminatory treatment ascertained by the IAA. Therefore, it invited the CdS to verify whether the IAA had sufficiently established that the procedure used by SEN to collect consent from its customers for the transfer of their data was in fact capable to unduly advantage EE vis à vis its competitors, this interfering with competition on the merits.

The Council of State’s judgement

The CdS focused on the burden of the proof (and content of the evidence) that the IAA had to satisfy to ascertain an infringement of Art. 102 TFEU.

The CdS preliminarily noted, from a factual perspective, that: (i) SEN had not violated privacy rules and had offered the SEN lists to both EE and its competitors, on the same terms; (ii) similar lists were available on the market; (iii) the number of contacts included in the SEN lists was negligible; (iv) only a few hundred clients were acquired by EE in the relevant period.

As a result, the CdS found that the IAA had not proven that SEN “discriminated” competitors when requesting separate privacy consents. On that basis, the CdS annulled the Decision in full.

Some final thoughts

The Judgment, despite the specific and decisive factual circumstances of the case, provides interesting indications about the application of Art. 102 TFEU in Italy (and, potentially, beyond).

In particular, whilst not as extensive and detailed as the indications come from the AG and the CJUE, the Judgement has been widely hailed as a powerful reminder that Art. 102 TFEU requires a quid pluris upon the IAA, i.e. it is not sufficient to simply ascertain a dominant position and the abstract discriminatory or exclusionary nature of the conduct; the IAA has to prove that, and explain how, a concrete anticompetitive impact was produced or may have been (even potentially) caused by the allegedly unlawful conduct.

For businesses considering the impact of this ruling, please get in touch with our antitrust team: we will be happy to discuss this with you.