Italian Competition Law Update - Going after gatekeepers

The 2021 Annual Law on Market and Competition (Law No 118/2022) has made significant changes to the Italian Competition Law (Law No 287/1990, the "ICL"). In this post, we focus on the new provisions designed to limit the market power of online platforms which could be considered as so-called "gatekeepers".

Italy has taken a different approach to the EU and Germany which have created separate legal instruments (such as the Digital Markets Act ("DMA") in the EU) with their own procedural rules. Instead, Italy has amended its existing competition law, meaning that the usual procedural rules will apply. Another important difference is that Italy has introduced new rules based on existing rules concerning the abuse of economic dependence. 

Key takeaways

• There will be a rebuttable presumption that business users are economically dependent on the operators of digital platforms where certain conditions are met.
• The amendments introduce a non-exhaustive list of practices which may be considered to be abusive if implemented by a platform vis-à-vis its "dependent" users.
• The amended provisions will enter into force on 22 October 2022.

What you need to know

The abuse of a situation economic dependence has been prohibited under Italian competition rules for many years now. Economic dependence arises when one party to a contract is in a position of strength compared to the other party, because the latter has no real possibility of finding alternative commercial partners and is therefore "dependent" on the other party to ensure the continuity of its business.

The amendments have introduced two key changes: (i) a rebuttable presumption that business users are economically dependent on the operators of digital platforms where certain conditions are met and (ii) a non-exhaustive list of practices which may be considered to be abusive if implemented by a platform vis-à-vis its "dependent" users. 

The new provisions do not provide clear guidance on when a digital platform will be deemed to act as a gatekeeper enabling smaller business users to reach their customers or suppliers (e.g., in terms of network effects and data availability) and therefore will be in a position of economic strength vis-à-vis such users. To date, a strict approach has been taken to when economic dependence will be considered to arise. The dependent party must realise a significant part of its turnover with the dominant counterparty and cannot have alternative providers for maintaining its business in the short to medium term. As these are "qualitative" rather than "quantitative" criteria, it may be difficult to discern when the new rules are likely to apply to a particular digital platform.

The President of the Council of Ministries, jointly with the Ministry of Justice and in cooperation with the ICA, may adopt specific guidelines to facilitate the application of the new rules, in order to prevent litigation and to promote best practices. This would help businesses analyse whether they may be considered to be a "gatekeeper" for these purposes.

As mentioned above, the amendments also contain a non-exhaustive list of practices that may be considered to be abusive if adopted by digital platforms which are considered to be gatekeepers, including: 

• providing insufficient information or data on the scope or quality of the service offered through the platform;
• requesting undue unilateral services that are not justified by the nature or content of the activity performed; and
• adopting practices that inhibit or impede the user from using a different provider for the same service, including through the application of unilaterally defined conditions or additional costs not provided for in the contractual agreements or existing licenses.

Comment

The new rules appear to be an attempt to prevent large digital platforms abusing their market power vis-à-vis the business users which are dependent on these platforms to maintain their business. While the objective of these new rules is similar to that of the DMA, the scope of the Italian rules is more limited. 

In its 2021 report to the Italian Parliament, the ICA requested powers similar to those of the German Bundeskartellamt (i.e., the power to designate certain digital platforms as gatekeepers and to apply specific rules to such digital platforms). Instead, the Italian Parliament has chosen to "leverage" the existing concept of abuse of economic dependence by applying a rebuttable presumption of abuse when certain practices are adopted by "gatekeeper" platforms. The characteristics of such platforms will hopefully be more precisely defined in the future. This solution appears to strike a balance between providing companies with greater legal certainty to companies (by avoiding a network of multiple national "DMAs") and providing the ICA with more agile enforcement tools to tackle any potentially abusive behaviour by digital platforms.

The amended provisions will enter into force on 22 October 2022, which means that digital platform operators still have time to amend their contracts with commercial partners operating on their platforms.