New market investigation powers of the Italian Antitrust Authority - Council of State confirms they apply to all economic sectors

In its opinion of 29 January 2024, the Italian Council of State (CdS) published its views on the scope of application of the new market investigation powers recently granted to the Italian Antitrust Authority (IAA), clarifying that they apply to all economic sectors.

New IAA market investigation powers

The IAA already had the power to carry out sector inquiries aimed at identifying competition issues in specific industries (in order to recommend the adoption of legislation to address these issues and/or to direct its enforcement priorities). However, the new powers are much more than a stepping up of its traditional investigation and sector inquiry tools, consisting in a real paradigm shift in competition policy enforcement in Italy.

The IAA now has the power to:

1. identify ‘structural risks’ for competition in a given market or sector which, in its assessment, can neither be remedied by competitive forces nor by traditional competition law enforcement under articles 101 or 102 of the TFEU (and their counterparts in Italian competition law) or merger control; as well as
2. even in the absence of any competition law infringement, impose structural or behavioural remedies that the IAA deems fit to address the concerns for the future.

Such intervention could be extremely far-reaching. Structural remedies could include mandated de-mergers or divestitures, and behavioural remedies could involve anything from changes to pricing and distribution policies to internal separation orders.

The IAA can also accept commitments, as well as impose fines up to 10% of the global turnover of the undertakings in the event of non-compliance. 

Background: high prices in air passenger transport 

The opinion followed a request for clarification from the IAA on the scope of its new market investigation powers. The request was made because it was unclear whether they applied to any economic sector or only in relation to air passenger transport services.

The new powers were introduced, inter alia, to tackle the perceived issue of excessive price increases on certain Italian air routes during the holiday season. To this end, the Italian Government had initially introduced price regulation, which was later replaced by a provision declaring certain algorithmic price-setting practices to amount to unfair commercial practices in violation of the Consumer Code and, at the same time, introducing the new market investigation and remedy powers. 

Notably, the paragraph granting the new powers did not specify whether they only related to the air passenger sector, although one might expect this to be the case considering that the header and all other paragraphs of the relevant provision clearly referred to that specific sector. 

The opinion of the Council of State 

In its opinion, the CdS, taking the antitrust community by surprise, indicates that the provision:

•  despite being included in an article focusing on air transport services, does not contain a specific limitation to the air passenger sector and only refers to ‘…competitive issues which impede or distort the proper functioning of the market with consequent harm to consumers’ (conv. transl.);
• is hence designed to allow the IAA to intervene in all circumstances where harm to competition and consumers does not arise from a specific illegal conduct, but rather from the structure of the market; 
• sets forth a competence similar to that already comprised in the competition law toolkits of the UK CMA and the German competition authority, both having similarly far-reaching powers to intervene on the market structure.

It therefore confirms that there is no sector limitation to the IAA’s new powers. 

Conclusions

The opinion, although not fully convincing in its reasoning, seems bound to have a fundamental impact on the IAA’s powers: subject to any further new laws, and to judicial review of decisions adopted on the basis the new powers, it is reasonable to expect that the IAA will embrace the interpretation of the law endorsed by the opinion, according to which they apply across industries. 

Consequently the IAA could use them to investigate market failures or concerns in markets without dominant players, challenging for example oligopolistic market structures. This would significantly broaden the IAA’s scope for intervention.

At the same time, in relation to regulatory intervention in conventional sectors of the economy, the IAA could find itself taking on the responsibilities of a sectoral regulator across all industries.

In light of the above, it is quite striking that such a powerful tool has been adopted without any public discussion. In this respect, it stands in stark contrast to the way in which the European Commission considered the introduction of a similar power (the so-called New Competition Tool) in 2020, launching an extensive prior consultation, and eventually deciding not to proceed further. 

It is now crucial that legal clarity be provided, either through further legislation or soft law, on both the procedural aspects of how the new market investigations will work in practice and on the substantive criteria that will be applied. 

To learn more about our thoughts on antitrust investigation trends in the coming year, read our Global antitrust in 2024: 10 key themes publication.