Competition Policy In A Global Perspective

A View from the Italian Competition Authority

Legal framework

The Italian Competition Authority is an independent institution established by law in 1990 as a collegiate body, composed of members who take their decisions by majority vote. It has a Chairman, four Members, and two speakers from the Parliament, all remaining in office for a seven year non-renewable term.
Being an independent Authority it has the status of a public agency whose decisions are taken on the basis of the Competition and Fair Trading Act without any possibility of interference by the Government.
As it was born relatively later than the other national European authorities, because of historical and political reasons, it has been possible to base it on the existing regulations.
Actually, Italian Competition Authority is refering very closely to the European Union Law, in fact Art 1 mirrors Art.81 TEU and Art.82 TEU, keeping the focus on consumers’ welfare. In addition, competition act referes to the Law No. 287(1990) and implementing regulation refers to DPR No. 217(1998).
It has responsibilities both about consumers protection and competition protection.
It also has responsibility for ruling on misleading and comparative advertising and on conflicts of interests.
A new power of the Authority is linked to the institution of a leniency policy since 2 years. This programm turned out to be very succesfull expecially for Cartesl, which are very difficult to discovere by the Authority itself.Moreover, it is important to say that firms are more aware of the role of competition policy and are more willing to collaborate. The leniency program is considered to be a crucial area of cooperation not only between the Authority and firms but also among Authority of different countries.

Institutional design:
As it is already stated above the Italian Competition Authority is an independent administrative authority and this give it the possibility to act freely in all its activities. The Authority has to write an annual report in which the most important cases must be written and it must be addressed to the prime minister and to the Parliament. All decision took by the Authotity must be motivated and based on competition consideration and publicly available on its web site.Then these decision are only subjected to review by amministrative courts.
Two peculiarity of the Authority are: high institutional profile and professional reputation requirement.

Main powers

Here the list of activities implemented against Merger and Anticompetitive behaviour:

  • Make inspections (only in legal domicile of the firm)
  • Cease and desist orders
  • Prescript preventive remedial measures
  • Administrative fines (very common in cartel cases)
  • Give opinions to the Chambers (Advocacy intervention)
  • Sectoral inquiries, which aim is to enable the Authority to know better the market and collect more information about a specific industry, how it works, expecially in those sectors, that have been characterized by liberalization but no diminishing in price took place.

It has to be said that even if the Authority can only give its opinion and suggestion to the Governament, it can be shown that the intervention made by the Authority were more succesfull and effective in those areas in which the Law is not approuved yet and when its opinion were in line with the European level. Otherwise there is generally a lot of resistence (example: taxi driver licency).

Areas of intervention

  • Agreements and concerted practices (Art.2 247/90 referred to Art.81 of European Treaty)
  • Abuses of dominant position (Art.3 247/90 referred to Art.82 of European Treaty)
  • Mergers (Art.5 and 6 Law 247/90)

Among these three areas, Cartel can be probably considered to be the most important one bacause the Authority in this case can be very effective. In fact, in case of Cartel it is very clear the harm for consumer welfare while in the other two areas is often more difficult to prove it.
Regarding merger policy, the Authority has 30 days after the notification of the merger to investigate. This is called "phase 1" that is very superficial and for this reason almost all merges are considered to be compatible. However, if a merger result not compatible with "phase1", the Authority can go on with "phase 2". It has to collect all available information by 45 days to evaluete the possibile effects of the merger. It is a very difficult task because the Authority have to look at the current situation in the market and then try to immagin what will happen in the future after the merger take palce. Despite these difficulties, the general approach of the merger policy does not consider efficiencies themselves enough to balance distortive effects of the merger: approval with remedies.

Challenges coming from the globalization of markets

  • Proliferation of competition laws (national, bilateral or multilateral cooperation approaches)
  • Business are more and more conducted across national borders (prevent anti competitive practices and effects among different countries)
  • Protect benefit of trade libralization
  • Minimizing conflicts among different anitrust Law and policy
  • promoting sound antitrust enforcement

The national approach is applied by the Italian Competition Authority whenever the effects of a cartel are in Italy.
The bilateral approach refers to some cooperative agreements for example among European Commission and Us and/or Japan. They consist in voluntary exchange of information or in investigation jointly conduct.
Finally, the multilateral approach refers always to voluntary action (more or less formal and integreted) by the Authority.

The relationships between the Commission (European Authority) and the national Authorities are based on the subsidiarity principle. In fact European Athority and National Authority work in parallel and it is very important to have coordination among them. Usually, "the division of labour" depend on where the final effects manifest themselves. However, even if National law can be applied it have to refer always to Art 81 and 82 of TEU whenever the effects are into European member states.
In order to better coordinate the national policies an information network has been established: the European Competition Network (ECN), which represents the main international institutions, together with the International Competition Network (ICN), focused specifically on competition.
In fact, other organizations as the OECD, the WTO, or the UNCTAD, care about competition only indirectly, and don’t have special concerns about it.
The goal of ECN and ICN is to reach soft convergence on competition policy issues, through inclusiveness and openness.
Both of them have the aim to promote cooperation and collaboration among antitrust agenicies all around the world.

The European Competition Network

  • ECN aim is to collect information of the general behaviour of all National Authorities and make them available. This could be helpfull for an improvement of a open comunication and cooperation among Authorities of different countries.
  • It is not an institution and it does not have legal personality. For that reason It has not auntonomous power of competencies.
  • It can be seen as a discussion forum about all possible aspects of specif industry interests.
  • One of ECN activities is the possible re-allocation of the case: its pourpose is to make the application of the system more efficient because the cases are in this way "well place".

The International Competition Network

  • It is a network entirely dedicated to competition policy and it is open to all contries even if they have totally different approaches.
  • Its aim consist in reducing the cost of parallel trade and enhance cooperation among antitrust agencies by assessing some general principles that could be shared among countries. The first priciple is the inclusiveness that refers to the fact that there are different agencies from all around the world. The second prinicple is openness, which state that the ICN is open to everybody also to non-governative members ( NGAs)
  • It is an informal network and it is not financed by governament, so for this reason most of the work has be done by email or telephone.
  • It is generally focused on small number of projects each years. In this way the result of its activitiy shoul be: clear, concise and a pragmatic guidance for both developed and developing countries. It also focused on identifying best practices from around the world, rather than protecting existing domestinc system.

Finally, even if ICN is not rule-making body and members have no obbligation to follow ICN practices, in reality this network works very well in many important areas. In fact, it is possibile to say that it can help to built a GLOBAL COMPETITION CULTURE!

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