Italian Competition Authority Research Articles

Interplay between Amazon store and logistics

ABSTRACT This paper examines the antitrust investigations by the European Commission (AT.40703 – Amazon Buy Box) and Italian Competition Authority (A528-FBA AMAZON), and the regulatory proceeding by the Italian Authority for Communications and Postal Services (AGCom’s resolution 94/22/CONS), surrounding Amazon's Store, and the interplay with its logistics and delivery services. While these authorities have raised concerns about Amazon's alleged “self-preferencing”, rapid growth, and its alleged ability to leverage its (upstream) e-commerce market power to strengthen its position in (downstream) logistics services, this paper highlights alternative perspectives that are often overlooked or neglected. To achieve a comprehensive understanding of Amazon's conduct related to the above-mentioned investigations, we consider its business model, monetisation strategy, and underlying incentives. By delving deeper into the Amazon Store and its connection to logistics services, we argue that the allegations do not fully capture the evidence surrounding Amazon's practices.

Hidden Advertising and Firm size: the Symmetry Effect

Abstract Economists and marketing scholars have devoted considerable attention to studying the underlying factors, diverse forms, and potential consequences of embedded advertising, which involves blending marketing communications with media content in a way that appears non-promotional. In most countries, the disclosure of embedded advertising to consumers is required by law. However, instances of inadequate disclosure are frequent. Our study examines the factors that influence hidden advertising, which refers to embedded advertising without proper disclosure, by analysing the characteristics of cases handled by the Italian Competition Authority between 1993 and 2022. Among the factors considered, firm size emerges as the sole consistent determinant affecting the likelihood of non-compliance. When the media outlet and the advertiser possess similar sizes, the probability of infringement tends to be higher. JEL classification numbers: D18, L51, L82, M37. Keywords: Embedded advertising, Hidden advertising, Mass Media, Media regulation, Consumer protection, Empirical analysis.

A Steady Course Towards the Effects-Based Approach: Case C-377/20 Servizio Elettrico Nazionale

In response to abstract preliminary reference questions, the Court grapples with foundational issues of Article 102 TFEU, especially the meaning of abuse and how it is established. This is a preliminary reference from Italy’s Supreme Administrative Court, the Consiglio di Stato. During the course of the gradual liberalisation of the energy market, the former state monopoly—Enel—was structurally separated into Enel Energia (EE), supplier for the deregulated market, and Servizio Elettrico Nazionale (SEN), supplier of the temporarily protected market, made up of private individuals and small businesses, in view of the further liberalisation that would follow soon. The Italian Competition Authority (ICA) opened proceedings against the Enel Group for using commercially sensitive information in advance of the further liberalisation in order to transfer customers from SEN to EE. In particular, SEN obtained the consent of users to receive commercial proposals in a discriminatory manner, involving a request for initial authorisation for the processing of personal data by companies within the Enel Group and a second request in favour of third-party operators. The customers usually gave the initial consent, believing that this was necessary for managing their existing relationship, while 70 per cent refused the second consent intended for other operators. The ICA considered this as a ‘sui generis abuse’ and imposed fines on EE, SEN, and the parent undertaking. After the appellate court upheld the decision, the parties appealed to the Consiglio di Stato, which submitted a number of preliminary reference questions to the Court of Justice.

The Amazon Case in Light of Cooperation Between the EU Commission and the Italian Competition Authority

The Amazon Case in Light of Cooperation Between the EU Commission and the Italian Competition Authority

Is it unlawful to favour oneself?

Abstract The leveraging of market power by digital ecosystems and self-preferencing have become fashionable topics nowadays at national, European, and international levels. However, they are not novel issues. This paper argues that we can find the underlying concepts in a number of practices previously identified as abusive, such as tying and bundling, margin squeeze, and refusal to deal. This paper points out that these abuses have certain similarities with self-preferencing. This supports the claim that self-preferencing is likely to be conceivable under EU competition law as a new abuse. The investigations launched by the Commission after the adoption of the Google Shopping decision – such as against Amazon and Apple, the Amazon case of the Italian Competition Authority, as well as the various expert reports, and the legislative proposals that have been put forward in this regard also point in this direction. However, many questions remain when it comes to the legal standards that are applicable to the assessment of whether self-preferencing is abusive in a given situation.

National Development Antitrust Enforcement against Tech Companies in Italy: Novel Developments and Implications

Tech companies have lately become the target of vigorous antitrust enforcement in Italy. In the course of 2021 alone, the Italian Competition Authority (‘ICA’) conducted four antitrust investigations, three of which ended up with findings of anticompetitive behaviour and heavy fines (i.e. Google/Enel, Amazon/Apple, Amazon Logistics)1, and one with a referral to the European Commission (‘EC’) (i.e. Google Advertising). In this article, we briefly review these decisions and the underlying theories of harm as well as discuss the wider implications. We argue that these decisions may have far-reaching implications going beyond the local regulatory risk, for they further stretch the fashionable theories of harm the Commission has been lately enforcing against tech companies and lower the threshold for intervention in the IT space; they are inspiring other national competition agencies (‘NCA’) across the European Union (‘EU’), and, last but not least, they contribute to a worrisome, ever increasing fragmentation trend in the enforcement of competition rules against tech companies.

Business Models and Incentives: For an Effects-Based Approach of Self-Preferencing?

Self-preferencing can be defined as an envelopment strategy in which ‘the enveloper might enter the target market and, at the same time, bend the origin platform’s rules to provide a better outcome for its own products or services’.1 The relevance of the concept of self-preferencing is particularly controversial in competition law and economics. Although not referred to in the Google Shopping judgment,2 the notion of self-preferencing appears to play a significant role in the ruling, which justifies examining it in the light of Industrial Organisation (IO) literature. Conceived as a theory of competitive damage, self-preferencing may be emphasised in many cases related to the digital sector. These are ones of EU Commission Google Shopping3 and Google Android4 decisions, the proceedings against Amazon,5 the ones initiated against Apple,6 the decision of the Italian competition authority against the same company in...

The Italian Competition Authority’s Decision in the Amazon Logistics Case: A Summary

The Italian Competition Authority’s Decision in the Amazon Logistics Case: A Summary

You Waited for Too Long and Were so Late! An Administrative Court Overturns An Article 101 TFEU Infringement Decision of the Italian Competition Authority against Apple and Amazon

You Waited for Too Long and Were so Late! An Administrative Court Overturns An Article 101 TFEU Infringement Decision of the Italian Competition Authority against Apple and Amazon

L' autorità garante della concorrenza e del mercato nel giudizio di Costituzionalità

The judgment no. 13 of 2019, by which the Constitutional Court ruled on the legitimacy of the Antitrust Authority to raise issues of constitutionality, turned the attention of the doctrine on the issue of the nature of the functions exercised by the Independent Administrative Authorities. The issue takes a particular interest, as it reveals the image that the Guarantor has of himself, as opposed to the Constitutional Judge. In the opinion of the Constitutional Court, the Italian Competition Authority, like all the administrations, is the bearer of a specific public interest, consisting in the defense of the competition and the market and, therefore, it is not in a position of indifference and neutrality with respect to the interests and to the subjective positions that are found in the execution of its institutional activity. With the consequence that it is not entitled to raise questions of constitutionality. The Italian Competition Authority, for its part, qualifies itself as a judge, even if «for the limited purposes» of the question of constitutionality, which performs functions similar to those of jurisdiction, consisting in pointing back of acts and facts to the abstract cases provided for by the antitrust law, with the exclusion of any appreciation that is not of a purely legal nature. So it would be entitled to raise questions of constitutionality. On closer inspection, behind the raised question of constitutionality, hides the will of the Italian Competition Authority to accredit itself to the Constitutional Court as a third and impartial authority and, at the same time, to undertake with it a “virtuous” dialogue on competition issues. The Court's solution if, on one side, precludes this possibility, on the other one it kees open to the Italian Competition Authority other hypotheses to contribute to the legal evolution on competition issues. In particular, the hypothesis that the Guarantor may try, in the future, to “accredit itself” as a judicial authority to the Court of Justice does not seem to be excluded. Furthermore, as a part of the process, the Italian Competition Authority will be able to offer its own valuable argumentative contribution, making itself the bearer not of a personal and concrete interest, as generally happens for private parties, but of a general interest in the constitutional legitimacy of the legislation. This interest - of a publicistic nature - can be asserted both in the course of the main proceedings, in the form of the objection of constitutionality addressed to the judicial authority, and in the course of the constitutional legitimacy process, through the incorporation in judgment and/or the intervention of a third such as amicus curiae. In particular, this figure, recently introduced in the Supplementary Rules for judgments before the Constitutional Court, seems to be suitable for an institutional subject, such as the Italian Competition Authority, bearer of a super individual interest of a publicistic nature, such as the protection of the competition and the market. In this role, the Guarantor will be able to send his authoritative contribution to the Judge of the Laws in the form of synthetic writings, suitable for widening the knowledge of the Judging Panel. This is a particularly desirable hypothesis, since, in this way, the Court could avail itself of a highly qualified opinion, since it comes from a body which is specialized in the protection of the principle of competition, with all that could ensue in the interest in the evolution of the law.

AMMINISTRAZIONE SOGGETTIVAMENTE PUBBLICA PER FINI PUBBLICI E AMMINISTRAZIONI INDIPENDENTI E AGENZIE

The essay aims analysing the defining features of the organisational models of Agencies and of Independent Administrative Authorities thought the comparison between AIFA (Italian Medicines Agency) and AGCM (Italian Competition Authority), two structures traditionally traced back to each of those models. The analysis focus on the interest institutionally protected by each structure and on their relationships with Government. The comparison seems to be particularly relevant because of the recent case law putting into question the defining characters of the two public entities analysed.

Excessive Pharmaceutical Pricing as an Abuse of Dominant Position – The Case of CD Pharma (Denmark)

Abstract On 31 January 2018, the Danish Competition and Consumer Authority adopted a decision1 finding the Swedish company generic distributor CD Pharma in breach of Art. 102(a) Treaty on the Functioning of the European Union (TFEU) by abusing its dominant position and having imposed excessive and unfair prices for the drug Syntocinon. The company increased the price of the drug by 2000% in the period April-October 2014 in the Danish pharmaceutical market. CD Pharma appealed to the Danish Competition Appeals Board,2 which on 29 November 2018 upheld the decision by the Authority. On subsequent appeal to the Danish Maritime and Commercial Court,3 the judgment by the previous court was upheld in a 3-2 decision on 2 March 2020, thus finding CD Pharma liable for infringement of Danish competition law as well as Art. 102(a) TFEU. The decision is final and not subject to further appeal. The case raises outstanding legal-economic issues regarding excessive pricing such as relevant market definition in pharmaceutical cases, the length of abuse, competitive price benchmarks, definition of economic value and the matter of dominance in public procurement and tenders. The case is rather unusual in that the alleged abusive period amounted to a six-month period, CD Pharma was the ‘losing’ party in the bidding process for the supply of the medicine in question, and CD Pharma subsequently had reduced prices through negotiations with the Danish central medicine procurer, Amgros. Similar to the Aspen Pharma decision4 by the Italian Competition Authority, where the Italian Medicine Agency (AIFA) reported the case to the Competition Authority, it was the Danish medicine procurer Amgros who had notified the Danish Competition and Consumer Authority about allegedly abusive practices. This subsequently led to an investigation and the adoption of the Decision. Following an introduction describing the Danish pharmaceutical market and specifics of the case, section two of this contribution details the proceedings at Danish Competition Authority. Section three depicts the proceedings at Competition Appeals Tribunal, and section four deals with the proceedings at the Maritime and Commercial Court. Section five concludes.

Punishing Vices or Rewarding Virtues? The Motivations for and Benefits of Ethical Ratings for Private Italian Companies

In A Treatise on Virtues and Rewards, Dragonetti (1769) advances a theory of action based on rewards for virtues. The idea of rewards, especially of awards, relies on the hypothesis that intrinsic motivations drive the actions of good or virtuous citizens. We apply this theory to virtuous entrepreneurs who voluntarily adopt ethical principles as promoted by a recent Italian law. These firms receive an ethical rating (ER) by the Italian Competition Authority (ICA) and can access a set of economic and non-economic benefits (i.e. rewards). We survey a sample of 152 private companies with an ER and examine their views on the economic and social motivations and benefits as well as the perceived usefulness of the ER for improving ethical behaviour. An exploratory factor analysis detects four categories of motivation (economic, competitive, social, and responsiveness) and two categories of benefits (economic and competitive), which we use in regression models to test Dragonetti’s theory. Overall, respondents see the ER as an effective tool, except in terms of improving economic performance. We also find that entrepreneurs with lower economic and higher responsiveness motivations attain higher ERs. However, in the respondents’ opinions, the ER is (still) not producing any concrete benefits since we find no relationship between the ER and economic or competitive rewards. These findings have implications for the ICA as well as for private companies.

A Case Study on Bid Rigging in Centralized Procurement of Audit Consulting Services in Italy

Public procurement is plagued by bidding rings almost everywhere. While the reasons as to why cartels are active in public procurement markets are well understood, little evidence is available about the subtleties of the anticompetitive mechanisms adopted by cartels members to game procurement procedures. This paper borrows from an in-depth (and successful) investigation carried out in 2016 by the Italian Competition Authority (Autorita Garante della Concorrenza e del Mercato - AGCM) on a nation-wide (multi-lot) framework agreement for consulting services. The AGCM’s findings are noteworthy since the “conjectured logic” of the cartel’s behavior (endogenous evidence) did coincide with those pieces of evidence seized by police forces for criminal crimes at the cartel members’ premises (exogeneous evidence). As the investigation was triggered by a confidential report sent by the awarding authority (Consip, the Italian national central purchasing body), the paper also emphasizes the importance of informal as well as formal co-operation between awarding authorities, especially central purchasing bodies, and competition authorities.

Exploring the Impact of Firm‐level Legality on Tax Avoidance

Although the topic of legality is receiving increasing interest in academic and policy debates, examining its economic effects at the firm level remains a relatively underexplored line of research. This study offers further advances to the existing literature by performing an examination of the relationship between corporate legality and tax avoidance. Based on a unique dataset of 1,168 private Italian companies and by exploiting a novel measure of corporate legality developed by the Italian Competition Authority, we provide evidence that firm‐level legality is positively associated with effective tax rates ..(i.e., lower tax avoidance practices). These findings are robust to a battery of additional tests and are informative for local policymakers and international investors since they suggest that legality is an important factor to which attention should be paid in scrutinizing corporate tax strategies.

The Italian Veneto Rail Transport Case: The National Rail Incumbent Found Guilty of An Abusive Practice but only Penalized with a Symbolic Fine

The Italian Competition Authority (ICA) has found the Italian incumbent railway undertaking (FS) to have abused its dominant position in connection to the procedure initiated by the Region of Veneto (RV) to award of a public contract for the provision of regional and local rail transport passenger services. FS breached competition by convincing the contracting authority to directly award the contract to its subsidiary train operator TI, instead of choosing the service provider through a competitive tender procedure as originally planned by RV. In that regard, FS linked the provision of the passenger rail services in the public contract, falling within the exclusive competence of TI, with the commitment to upgrade the rail network, which was the exclusive task of the rail network manager RFI, equally owned by FS. This was reflected by the fact that RFI and TI jointly negotiated with RV the terms and conditions of the public service contract together with the electrification works of the rail network. Interestingly, though the FS conduct was qualified as a serious competition restraint, lessening the competition for the market for regional passenger rail transport services for several years, the ICA imposed on the dominant firm a symbolic competition fine of € 1,000 in light of the upgrade of the rail network with the electrification works that RV would obtain.

Family-related antecedents of business legality: An empirical investigation among Italian family owned SMEs

We investigate the relationship between family-related factors in family owned businesses and the level of business legality, which is a key dimension of corporate social responsibility, surprisingly neglected despite its business and social relevance. By adopting the ability and willingness perspective, and merging it with signaling theory, we consider family involvement in management and generational stage as key antecedents of legal behavior in family owned businesses. We utilize an official legality rating recently developed by the Italian Competition Authority to build a unique dataset of 161 Italian family owned SMEs. Results from a regression analysis confirm our hypotheses: business legality increases with higher levels of family involvement in management, and at later generational stages.

The Italian Guidelines on Antitrust Compliance Programs and the Difficult Goal of Matching Deterrence, Education, and Business Ethics

In 2018, the Italian Competition Authority issued the “Guidelines on antitrust compliance programs”. The Guidelines identify the adoption and implementation of a robust and effective compliance program as a mitigating circumstance in the calculation of fines for anti-competitive violations. Specifically, the Guidelines allow for a reduction of up to 15% of the fine in the event the antitrust compliance program is adopted before the beginning of an investigation (so-called ex ante facto programs) and a more limited reduction, up to 5% of the fine, for compliance programs implemented during the investigation (so-called ex post facto programs). These reductions are applicable to fines imposed as a result of anticompetitive arrangements and abuses of a dominant position under both the European and Italian competition provisions. In this paper we argue that while the decision to incentivize compliance programs is justified by the lack of competition culture and the structure of the Italian industrial sector, the design of the incentive provided for in the Guidelines is wrong. In particular, the Guideines try to protect its most important enforcement tool, i.e. the leniency program, by conditioning the reward for successful compliance programs to the self-reporting to the competition authority. We suggest a different set of incentives that should protect the leniency program while maintaining the interest in adopting a compliance program. We furthermore suggest a change in the Italian fining Guidelines in order to make the incentives for the adoption of ex ante compliance programs more effective, especially for small and medium sized enterprises.

The Trenitalia Bid Rigging Judgment and the Use of Criminal Evidence in Antitrust Cases

A recent judgment of the Italian Council of State (No. 4211, published on 10 July 2018) has put a final word to a complex antitrust case,1 started by the Italian Competition Authority (‘ICA’) in February 2014 against several companies active in the supply of goods and services in the rail traction sector.2 The Council of State has upheld the decision of the ICA, which found that the parties engaged in bid rigging in breach of Article 101 of the Treaty on the Functioning of the European Union (‘TFEU’) in a number of tenders called by Trenitalia, the leading Italian railway operator. The decision of the Council of State touches upon a number of thorny substantive and procedural issues, including the use by the ICA of evidence provided to it by public prosecutors in connection to a criminal case. This topic has become increasingly relevant in recent times, as confirmed by the fact that in January 2018 the ICA entered into specific protocols with the public prosecutors of Rome and Milan to regulate the process for exchanging documents and information and ease cooperation to promote the successful enforcement of both competition law and criminal law.

Sublicense and cartel enforcement mechanism in first price auction

ABSTRACTIn 2017, the Italian Competition Authority opened a cartel investigation regarding the auction of international television sport rights. In particular, prior to several auctions, bidders have agreed to sublicense the audio-visual football rights in a reciprocal way. Without any reference and evaluation on the specific case, this paper aims at showing that a sublicense agreements can modify the outcome of an auction, even in a first price sealed bid version. This is because the sublicense agreement can be used to indirectly implement a “bid submission mechanism” [RC Marshall and LM Marx, ‘Bidder Collusion’ [2007] 133(1) JET 374]. This result strongly supports the idea that such an agreement should be considered as restriction by object under European antitrust law.