Until recently, Italy was one of the jurisdictions in which antitrust violations tended to attract relatively low fines. At one stage, Italian Competition Authority ("ICA") officials professed the view that it was difficult to impose fines in excess of 1% of the relevant companies' turnover, even in relation to "hard core" infringements, in view of the case-law of the administrative courts. However, the situation has evolved rapidly in recent years, following the adoption of new fining guidelines by the ICA,1 which are modelled on the fining guidelines of the European Commission.2
The ICA's implementation of these new fining guidelines has resulted in the systematic application of very high fines when viewed as a percentage of the relevant companies' total turnover (albeit not in absolute terms, since the companies involved in recent antitrust investigations have been mainly SMEs). Indeed, on numerous recent occasions the fines imposed by the ICA have reached the maximum amount permitted under the Italian Competition Act (Law no. 287/1990), i.e. 10% of the worldwide turnover of the companies concerned.
This is due, inter alia, to the fact that the ICA, when calculating the fine to be imposed in a given case, starts from a basic amount representing at least 15% of the turnover generated by the relevant company's sales of the products/services concerned for each year of the infringement (this basic amount may also be increased by a so-called "entry fee"). Where the infringing company is active in a limited range of activities, or even the manufacture of only one category of products (as is often the case for Italian SMEs), this may lead to a situation where the fine which the ICA would theoretically impose in accordance with its fining guidelines already exceeds the 10% ceiling imposed by Law no. 287/1990, even when calculated solely on the basis of the first year of the infringement. As a result, once the ICA has calculated the fine that it would impose on the companies concerned on the basis of its fining guidelines, it must often "scale back" such fine so that it respects the prescribed ceiling of 10% of the company's worldwide turnover.
In such a situation, the fact that a company may theoretically benefit from a fine reduction to reflect mitigating circumstances (for example due to its more limited participation in the illegal conduct) is often not reflected in the final fine imposed, since any reduction reflecting the mitigating circumstances is applied to the theoretical amount of the fine calculated on the basis of the fining guidelines, prior to the application of the 10% cap.
Companies and their lawyers have challenged the indiscriminate application of the 10% cap to more or less all companies involved in a cartel, claiming that this practice is contrary to the the individual nature of criminal sanctions. This has resulted in the Italian Council of State requesting a preliminary ruling from the European Court of Justice ("ECJ") on the question of whether the general principle of proportionality (enshrined in Article 49, par. 3, of the Charter of Fundamental Rights) requires that the fine imposed on each company is calculated with regard to its particular individual position. If the ECJ answers this question in the affirmative, this will require some modifications to the approach followed by the ICA until now.
To date, the case-law of the ECJ has been rather unhelpful on this question. The Court has endorsed the approach taken in the European Commission's fining guidelines (which are very similar to the ICA's fining guidelines), but in the meantime the European Commission has begun to modify its fining policy to adapt it to situations in which the companies sanctioned are so-called "mono-product". More importantly, both the German and Spanish Supreme Courts have decided that national fining guidelines similar to those followed by the European Commission and the ICA are unconstitutional and contrary to the European Convention on Human Rights, in particular as regards the principles of proportionality and the individual nature of criminal sanctions.
Having said this, until such time as the Italian or EU courts clarify this issue, companies should be aware of the fact that antitrust fines are on the rise in Italy. By way of recent example, the ICA imposed a total fine of more than EUR 100 million in respect of bid rigging concerning a public tender for the provision of cleaning services in schools, by companies whose turnover was well below EUR 1 billion. It is clear that, after a period of relatively low levels of enforcement, the ICA intends to enforce competition rules much more vigorously.
Increased compliance efforts are therefore strongly advised in Italy, especially since years of low levels of enforcement (compared to the rest of Europe) might have led to a culture of complacency or at least a lack of awareness of the risks attached to certain behaviours. This is especially so since the ICA's fining guidelines recognize as a potential mitigating circumstance the fact that a company has adopted a "best in its class" compliance programme. The possibility of a fine reduction in such circumstances is not merely theoretical: the ICA recently granted a 5% fine reduction to reflect the fact that a company had adopted a compliance programme following the opening of a cartel investigation.
To conclude, the ICA's fining policy has become considerably harsher in recent times. It may have even become excessive in some respects, with the systematic application of the maximum level of fine set by law in many cases. It remains to be seen what the verdict of the courts will be as to whether this is acceptable under the human rights principles enshrined in the European Convention on Human Rights. However, whatever the outcome of that interesting on-going legal battle, there is a clear risk of very high fines now being applied in Italy. Compliance efforts appear therefore more warranted than ever, particularly given that they may actually be rewarded through the reduction of any fine imposed in the event that the company faces an antitrust investigation.
- ICA decision of 22 October 2014 “Linee Guida sulla modalità di applicazione dei criteri di quantificazione delle sanzioni amministrative pecuniarie irrogate dall’Autorità in applicazione dell’articolo 15, comma 1, della legge n. 287/90”, in Bull. no. 42/2014 of 3 November 2014.
- European Commission “Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003” (2006/C 210/02), Official Journal C 210 of 1 September 2006.