On February 9, the Court of Justice of the European Union made public its January 28, 2015 order rejecting the appeal of Mr. Romano Pisciotti, an Italian national who was extradited from Germany to the United States in April 2014 for his role in the marine hose price-fixing conspiracy.
On July 2, 2014, the General Court of the European Union rejected Pisciotti’s appeal as manifestly inadmissible because, under Article 258 of the Treaty on the Functioning of the European Union, individuals do not have power to appeal European Commission’s decisions to not start infringement proceedings. Pisciotti had appealed the European Commission’s April 11, 2014 decision rejecting his complaint against Germany for having granted the extradition to the United States, allegedly in breach of EU law on the freedom to provide services.
Mr. Pisciotti is the first foreign national to be successfully extradited to the United States for a price-fixing violation.
On 27 November, the Italian Competition Authority dawn raided a major South African company for alleged excessive pricing of its oncology products in Italy. According to a complaint by one of the most active consumer associations in Italy, the group would have required the Italian Medicines Agency (AIFA) to align the price of its products, which are covered by the National Health Service (NHS), with the higher prices applied in other European countries, threatening the withdrawal of the products from the Italian market.
This new investigation is just the latest of many dawn raids that have taken place in Italy throughout 2014 relating to alleged bid rigging and other antitrust and criminal law infringements by pharmaceutical companies, including their participation in public tenders for the supply of products to the NHS. The significant number of dawn raids this year shows increased antitrust and criminal law enforcement in Italy in the pharmaceutical sector.
Two good examples of this trend are the €182.5 million in fines imposed in February 2014 on two major international groups for alleged collusive conduct concerning the sale of drugs for treating eye illnesses, and the investigation started by the Authority in January 2014 into alleged infringements in the sale of octreotide acetate in Italy. In the first case, the NHS would have suffered an overall cost increase of over €45 million in 2012 and likely damages of approximately €540 million in 2013 and €615 million in 2014. The second case relates, as do many of the investigations started this year, to alleged collusive conduct in public tenders for the supply of products to the NHS.
As soon as a proceeding is started in one Member State, international groups should brace themselves for potential complaints and investigations in all other countries where they have a presence or do business. As a recent example, the February 2014 fines were followed in April 2014 by unannounced inspections by the French Competition Authority at the premises of the same two pharmaceutical groups. In May 2014, former EU Competition Commissioner Joaquín Almunia reportedly indicated that the European Commission was gathering more information on the conduct of the two companies and was in contact with the national competition authorities of several EU Member States to assess whether or not further action would be needed. On 25 November 2014, a Belgian consumer association filed a complaint before the Belgian Competition Authority against the two pharmaceutical companies concerning the same alleged conduct.
Closer Cooperation Between the Commission and National Competition Authorities
Since the entry into force of Regulation No 1/2003 and the European Commission Notice on Cooperation within the Network of Competition Authorities of 27 April 2004, the Commission and the national competition authorities within the European Economic Area can cooperate more easily and more closely. They can now
Inform each other about pending cases, even during informal proceedings
Exchange and use information, including documents, statements and digital information, collected by other national competition authorities
At the latest, 30 days before the adoption of [...]
McDermott has contributed to the Italian chapter of the 2014 edition of “Pharmaceutical Antitrust” published by Getting the Deal Through, a valuable work tool for legal practitioners dealing with antitrust rules in the pharmaceutical sector. The chapter addresses the most significant regulatory and antitrust issues affecting the marketing, authorization and pricing of pharmaceutical products in Italy.
On 4 July 2014, the new regulation on legality rating certification by the Italian Competition Authority entered into force. The legality rating is designed to facilitate companies’ access to credit from banks and public financial support.
Certification is expressed in a score of between one and three stars and is issued by the Italian Competition Authority at the request of companies that have
An operating office in the Italian territory
A minimum turnover of €2 million in the year preceding the request
Been registered in the Italian Business Register for at least two years.
As part of the procedure for the awarding of public finance, companies that have been granted the legality rating certification will benefit from either a preferential ranking, a higher score or a specifically reserved share of the financing available.
Banks and financial institutions are obliged to take the legality rating certification into account in their loan granting procedures. The Bank of Italy will monitor and enforce this obligation.
In order to obtain legality rating certification, the applicant company (and its management) must demonstrate that they have not been found to have committed certain specific violations including tax and criminal offences and serious breaches of antitrust and unfair commercial practice rules.
Certification is confirmed within 60 days of application and is valid for two years, subject to renewals.
The recent investigations into two pharmaceutical companies active in the ophthalmic drugs market in Italy and France serve as a reminder of the cooperation that takes place between national competition authorities. International groups should therefore take into account all the jurisdictions where they have a presence or do business when developing their antitrust audit and compliance programmes.
The Italian Competition Authority has updated its merger control turnover thresholds. Effective from 10 March 2014, Section 16 (1) of Law No 287 of 10 October 1990 requires prior notification of all mergers and acquisitions where:
Aggregate turnover in Italy of all undertakings involved is above EUR 489million, and
Aggregate turnover in Italy of the target company is above EUR 49 million.
Italy’s merger control thresholds are adjusted annually to take into account increases in the gross domestic product deflator index. The updated thresholds are published in the Authority’s Bulletin once the index is announced officially.
Recently, the Authority launched a consultation on its proposed amendments to the Italian merger control thresholds, namely:
The reduction of the current second merger control threshold
The amendment to the second threshold, whereby it would refer to the turnover of each of at least two of the parties to the transaction (rather than the target’s turnover)
For more information, please contact your regular McDermott Will & Emery lawyer or an author.
On 3 March 2014, the Milan Court of Appeal overturned a previous decision issued by the Milan Tribunal, declaring a class action brought by an Italian consumers association, Altroconsumo, against local railway operator Trenord as non-admissible.
On 8 November 2013, the Milan Tribunal had dismissed the class action started by Altroconsumo on the grounds inter alia, that passengers had not suffered homogeneous damages.
Following the appeal against the order of the Milan Tribunal, in its judgment of 3 March 2014, the Milan Court of Appeal found that, while assessing the admissibility of a class action, the judge cannot pretend that the damages suffered by consumers shall be exactly the same, otherwise, the chances of filing a class action would be reduced to zero.
Therefore, according to the Milan Court of Appeal, it would be sufficient that the rights of customers are homogeneous, while different damages suffered by consumers are at the basis of the quantification of the compensation.
If confirmed, such wider interpretation of the admissibility requirements might make it easier for consumer associations to file class actions against companies active in Italy.
For more information, please contact your regular McDermott Will & Emery lawyer or an author.
On October 26, 2013, the Italian Competition Authority (the Authority) published its new guidelines on competitive bids. The guidelines are intended to help contracting entities to recognize and inform the Authority of potentially anti-competitive behavior during the awarding procedure.
According to the guidelines, potential anti-competitive behavior is more likely in markets with few competitors (or companies that are similar in efficiency and size), homogeneous products, the same companies repeatedly tendering for work or where bids are subdivided into several contracts of similar economic value.
The guidelines note that breaches of competition laws tend to be associated with the following behavior:
Boycotts of competitive bids, e.g., companies presenting offers below those required by the award procedure, or presenting offers of the same value, aimed at prolonging the existing agreement or forcing the awarding party to award the contract pro quota.
Offers that are intended to be refused, e.g., excessive offers that have conditions attached that are clearly unacceptable to the awarding party.
Misuse of subcontracts or temporary associations of companies aimed at market-sharing between the participants or foreclosure of potential new entrants.
Market sharing and bid rotation, which can usually be spotted by analyzing the patterns of wins across a number of awarding procedures.
Other activities, such as simultaneous presentation of offers, the same errors appearing in bids and the same handwriting on documents.
In the first phase of the application of the guidelines, the Authority has invited the contracting parties to only report suspicious matters related to competitive bids above the community threshold.
The guidelines show that the public works sector continues to be one of the main priorities for the Authority, which has imposed over 500 million euros in fines since the early 1990s on companies found to have allegedly co-ordinated their behavior in public bids.
Italian and international organizations active in Italy are advised to carefully monitor their conduct during awarding procedures to avoid the risk of unmotivated involvement in potential proceedings before the Authority.
On 24 October 2013, Chair of the Italian Competition Authority, Giovanni Pitruzzella, and Italy’s Minister of Justice, Anna Maria Cancellieri, spoke in favour of effective ad hoc antitrust compliance programs and their value as a mitigating factor in investigations. Mr Pitruzzella underlined the importance of an effective compliance program because “imposing fines is not appreciated by anyone”. According to Ms Cancellieri, “it’s useful to adopt effective compliance programs”, which should be taken into account as mitigating factors in determining the amount of the fine. The Italian Competition Authority will soon launch a consultation on the adoption of guidelines for the setting of fines, and there is great interest in the assessment of compliance programs.
The Italian Antitrust & Competition team at McDermott Will & Emery Studio Legale Associato has vast experience in structuring ad hoc compliance programs for Italian and international clients that are active in Italy, in order to maximise the chances of obtaining a reduction of any potential fine.
The Italian Competition Authority has decided that the 2014 mandatory annual fee due by limited companies based in Italy, that have total revenues exceeding EUR 50 million, will have to be paid by July 31, 2014, while for the current year no payment is due.
Entities Subject to the Fee
Limited liability companies (e.g., S.p.A. or S.r.l.) with total revenues—according to the latest financial statements (item A1 of the income statement)—exceeding EUR 50 million are subject to the fee.
For banks and financial institutions, the amount of revenue for the purposes of calculating the fee is one-tenth of the institution’s assets on its balance sheet.
The revenues of insurance companies are equal to the amount of premiums collected. Subsidiaries and associate companies belonging to a group must each pay the fee separately on the basis of the revenues set out in their financial statements.
Fee Amount
For 2014, the amount of the fee is equal to 0.06 percent of the revenues set out in the latest financial statements. The fee cannot exceed EUR 300,000.
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