The Italian Antitrust Authority (Authority) recently published its Guidelines on calculating fines for serious breaches of national or EU competition law. In line with the decisional practice of the Authority, the Guidelines indicate that the fine will be determined by calculating a starting amount (based on the affected sales) which will then be adjusted according to various criteria, including mitigating and aggravating factors. The Guidelines are broadly in line with the European Commission’s Fining Guidelines, save for a number of features. One striking difference is that the Authority has taken the enlightened step of treating the adoption and enforcement of an adequate compliance program as a mitigating factor. Italy appears to be one of a growing number of antitrust agencies that are taking this approach. To assist companies, the Guidelines set out a number of characteristics that the Authority highlights as of critical importance – and which it would expect to see reflected in a compliance program in order for it to be regarded as ‘adequate’. The new Guidelines also introduce a form of ‘Leniency plus’ whereby a company that is under investigation for one violation can obtain a (further) reduction of up to 50% of the starting amount where it is able to bring another so far undetected cartel to the attention of the Authority and obtain immunity for that additional violation. This type of mechanism has proven to be extremely successful in certain countries, most notably, the United States.

The new Italian Guidelines

(i)   Calculating the starting amount The starting amount of the fine is obtained by multiplying, by the number of years for which the violation lasted, a percentage (maximum 30%) of the value of sales (net of VAT) of the goods or services which are the direct or indirect object of the violation for in the last full year of participation in the latter. For more serious competition restrictions (secret horizontal cartels), the percentage of the value of the sales will be more than 15%. The Authority may also consider including in the starting amount an ‘entry fee’ of between 15 and 25% of the value of sales. Specific rules are provided to determine the value of sales for violations involving collusion in the context of public tender procedures. (ii)  Adjustments to the starting amount Aggravating and mitigating circumstances The starting amount may be increased or decreased in order to take aggravating or mitigating circumstances into account. Each factor can increase/decrease the starting amount by up to 15% (up to a cap of 50%). In case of recidivism, the starting amount may be further increased up to 100%. Examples of aggravating circumstances largely mirror those contained in the European Commission’s Fining Guidelines. However, the Authority takes a narrower approach than the Commission in connection with recidivism: only identical/similar violations that have been sanctioned by the Authority or by the Commission in the previous five years will be taken into account. As mentioned, recidivism may justify an increase of 100% of the starting amount. In relation to mitigating circumstances, the most notable development is that the adoption and enforcement of a specific and adequate compliance program (in line with the best European and national practices) may count as a mitigating factor. The mere existence of a compliance program will of course not be considered as a mitigating factor. The Guidelines explain that an ‘adequate’ compliance program would:

  1. imply full involvement of the management in promoting competition law compliance
  2. identify the personnel responsible for the program
  3. be based on a risk assessment, taking into account the company’s activities
  4. involve training programs taking into account the company’s size
  5. establish incentives to encourage compliance with the program and a system to deter non-compliance
  6. include monitoring and auditing systems.

‘Leniency plus’: Significantly, the Guidelines indicate that the fine can be further reduced up to a 50% of the starting amount if a company provides information and documents relating to another infringement, and is eligible to receive immunity from fines as regards that ‘additional’ infringement. Other adjustments The Authority may increase the fine by up to 50% if: (i)   the infringing company generated a particularly high total worldwide turnover (compared with the value of the affected sales); or (ii)   the infringing company belongs to a group which has a ‘significant economic dimension’ The Authority may also increase the fine (without indication of any maximum percentage) in order to take into account the profits made by the infringer. Concurrent violations Another important difference from the European Commission’s Fining Guidelines relates to the treatment of conduct which breaches both Articles 101 and 102 TFEU (or of the equivalent provisions of Italian Competition Law 287/90) and situations where conduct gives rise to multiple breaches of the same provision. In these scenarios, the Authority will impose a fine for the most serious breach increased up to three times. Inability to pay Companies which have a limited ability to pay the fine may benefit from a reduction provided that comprehensive, reliable and objective evidence is produced showing that the levying of the fine would irreversibly jeopardize the economic viability of the company, causing its actual withdrawal from the market. This approach appears more stringent when compared to the Authority’s decisional practice, and appears in line with Commission’s position. The Authority’s method of setting fines can be summarized as follows: (iii) Possible derogations In the final and transitional provisions, the Guidelines state that the specific circumstances of a given case or the need to achieve a particular deterrent effect may justify derogations from the application of the principles set out in the draft.

Conclusion

In our view, the Guidelines represent a genuine turning point in terms of Italian competition law enforcement. The Authority will now adopt the so called ‘carrot and stick’ approach. On the one hand, the Guidelines indicate that the Authority intends to impose heavy fines on the most serious breaches of competition law. On the other hand, the Authority opens the door to a system whereby the most virtuous companies which invest in a culture of compliance designed to prevent violations of competition law may be rewarded in some way. The Authority’s approach may inspire other enforcement agencies to follow suit.  By Andrea Cicala (Baker & McKenzie Milan) and Grant Murray (Baker & McKenzie London)