Implications of the end of the first antitrust class action in Italy

Written on 7 Nov 2016

The first antitrust class action, brought by two consumer associations, has been watched closely in Italy.  However, it came to an end recently, before getting to trial, when the Supreme Court overturned the underlying infringement decision, causing the claimants to abandon their damages case. This case demonstrates the importance of infringement decisions – and the complex strategic decisions that claimants have to take when they are appealed.

The context of the case

The events in this case date back to November 2011, when Associazione Altroconsumo and La Casa del Consumatore, two of the main Italian consumers’ associations, started an antitrust class action against four maritime companies (Moby Spa, Grandi Navi Veloci Spa, Snav Spa and Forship Spa), on the basis of the investigation proceedings launched a few months before (in May 2011) by the Italian Antitrust Authority (IAA).

The investigation was started by the IAA after receiving several complaints from private citizens, consumer associations and the Regions of Sardinia and Liguria. The complaints concerned a significant price increase of around 60% in the cost of passengers’ transport services for the 2011 summer season on the routes to and from Sardinia. According to the IAA, such increase could have been the result of an anti-competitive agreement and/or concerted practice between the maritime companies.

Relying on this decision, the two consumers’ associations started a class action, which was then stayed upon the plaintiffs’ express request until the end of the IAA’s proceedings.

IAA decisions as evidence

The Italian civil courts are under no obligation to stay judicial proceedings until the IAA issues its decision, as such decisions have no binding effect on national courts.  However, it is now established under case law that the facts assessed in an IAA decision are “privileged evidence”, which means that they can be presumed to be true. Even though such a presumption is always rebuttable by the defendant, the national civil courts have progressively assigned a high probative value to the assessments and findings contained in the IAA’s decisions.

The EU Damages Directive has not yet been implemented in Italy, but the draft legislative proposal confirms that IAA decisions will be formally binding on the national courts in follow-on damages actions, which should make the position clearer in future.

The infringement decision

In June 2013, the IAA issued a decision imposing fines on three of the four parties to the proceedings (Moby Spa, Grandi Navi Veloci Spa and Snav Spa) on the basis of a breach of EU competition law.

According to the IAA, the parallel increase of prices, which took place in the summer season of 2011, was clearly the result of a concerted practice between the three companies. Neither demand elasticity, nor the increase of fuel costs, nor market transparency, nor the financial losses registered by the parties in the previous years could justify the simultaneous price increase of the prices for transport services. Only Forship Spa was spared, on the basis that it was a “mere follower” of the leading maritime transport company, Moby, so it was not guilty of any infringement.

The action for damages

Following the IAA’s decision, the consumers’ associations reinstated the action for damages.

Less than one year later, following the appeal by three of the maritime companies, the Regional Administrative Court (TAR per il Lazio) annulled the prohibition decision, declaring that the IAA had not proven that the price increases were the result of a concerted practice.

The TAR’s judgment was then challenged before the Supreme Administrative Court by the IAA, supported by the consumers’ associations.

In September 2015, the Supreme Court finally dismissed the appeal, confirming the conclusion reached by TAR.

This lead the consumer associations to abandon the trial, which was closed in March 2016.

Commentary

This case demonstrates the challenges of follow-on damages actions, which rely on underlying competition authority decisions to prove the competition law breach.  We await the implementation of the Damages Directive into Italian law and will report further on whether this will facilitate follow-on actions, including class actions of this kind.