This country-specific Q&A provides an overview to competition litigation laws and regulations that may occur in Italy.
This Q&A is part of the global guide to Competition Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/competition-litigation/
What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
All infringements of Italian or EU competition law can be relied upon as the basis of a competition damages claim. In this respect, the following are the main relevant provisions on this subject-matter:
- Articles 2595 - 2601 of the Italian Civil Code (ICC) concerning unfair competition acts;
- Law 10 October 1990, No. 287 which constitutes the Competition and Fair Trading Act (Law 287/90);
- Articles 101 - 102 of the Treaty on the Functioning of the European Union (TFEU).
In a nutshell, the above provisions punish whoever uses means which do not comply with the principles of professional correctness and which may damage the business of others and whoever through the abuse of dominance or through concerted practices and agreements with other undertakings affect the fair trade.
Here are some examples of anticompetitive or unfair competition conducts provided by Italian law:
- direct or indirect fixing or imposition of purchase or selling prices or of any other trading conditions;
- application of dissimilar conditions to equivalent transactions with other trading parties;
- make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which have no connection with the subject of such contracts;
- use of names or of distinguishing marks likely to cause confusion among the clients;
- spread information and appreciations on the products and activities of a competitor likely to cause discredit;
- misleading and unlawful advertisement.
Furthermore, Legislative Decree No. 3/2017 (L.D. 3/2017) - which implemented EU Directive 2014/104 and which concerns in particulars violations of Law 287/90 and of Articles 101 - 102 of the TFEU - sets forth that conducts in breach of the provisions of another EU Member State which pursue principally the same objective as Articles 101 and 102 of the TFEU are also punishable in Italy.
What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
No specific formalities are required as competition damages claims shall be brought before the competent civil court through ordinary civil proceedings or civil class actions according to their general procedural rules. In particular, it is not necessary for the claimant to obtain a favourable decision by the Italian Competition Authority beforehand.
To get compensation the claimant must allege and prove:
- the anticompetitive conduct;
- the amount of damage suffered; and
- that the damages suffered were a direct consequence of the anticompetitive conduct.
What remedies are available to claimants in competition damages claims?
There are two main categories of available remedies:
- award of damages; and
- declaration of nullity of anticompetitive agreements.
Furthermore, interim measures are also available to immediately stop the anticompetitive conduct and in order to avoid irreparable damages or their worsening. In such case, the claimant shall prove that its claim is reasonable (fumus boni iuris) and that it will suffer further damages if the inhibitory is delayed (periculum in mora). It shall lastly be noted that if the infringer violates this interim measures, penalties can be applied by the court for every day of violation.
What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
Italian courts award only compensatory damages as punitive damages are not regulated by law and therefore are not awarded by them.
Generally speaking, co-infringers are jointly and severally liable for their anticompetitive conduct and therefore shall compensate damages accordingly.
However there are two exceptions to the above principle that were set out by L.D. 3/2017:
- unless they played a leading role in the anticompetitive conduct, small and medium-sized enterprises as defined in Recommendation 2003/361/CE (SMEs) will be jointly and severally liable only towards their direct and indirect purchasers if their market share were less than 5% while the violation persisted and if a joint and several liability standard will cause irreparable damage to their economic strength and the loss of their assets value;
- beneficiaries of a leniency programme will be jointly and severally liable only where full compensation for their damages cannot be obtained from the other businesses involved in the same anticompetitive conduct.
What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
The statute of limitation term for competition damages claims is five years, which is the ordinary term provided under the ICC for torts.
Moreover, pursuant to L.D. 3/2017, the abovementioned term:
- starts running from the date on which the anticompetitive conduct has ended and the harmed party has reasonably become aware of the existence of such conduct and of its anticompetitive nature, of whom carried it out and of the damages that it has caused;
- is suspended when the Italian Competition Authority starts an investigation or a proceedings and remains suspended for all the duration thereof plus one additional year after the decision has become final or after that the proceedings has ended in any other way;
- interrupted when (i) a judicial claim is brought before the competent Court, (ii) a formal notice is served to the infringer, (iii) a mediation petition is notified, (iv) the communication of the invitation to conclude an assisted negotiation agreement or when the agreement is signed, (v) a petition is filed to commence an ADR procedure according to the Consumers Code.
Which local courts and/or tribunals deal with competition damages claims?
Article 4 of Legislative Decree No. 168 dated 27 June 2003 (as subsequently amended) provides that claims arising out from violations of EU competition laws and those indicated under Article 33(2) of Law 287/90 (i.e. nullity and damages actions, as well as actions for interim measures in relation to the infringement of the provisions of Titles I to IV of the same Law) fall under the mandatory jurisdiction of the Special Section for Enterprises of the Civil Courts of Milan, Rome or Naples, depending on the place where the offence occurred and including when one of the parties is a company with its registered office outside of Italy.
On the other hand, competition damages claims brought on different grounds than those above indicated (e.g. violation of Articles 2595 - 2601 of the ICC) are usually dealt with by the ordinary sections of civil courts (unless there is some interference with intellectual property issues then in that case it is dealt by the Special Section for Enterprises). However, some courts, such for example Milan, nonetheless devolve them to the Special Section for Enterprises for subject matter purposes.
How does the court determine whether it has jurisdiction over a competition damages claim?
The Court will determine whether or not it has jurisdiction by applying the criteria set out under EU Regulation No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Bruxelles I-bis) and in the Italian Statute on Private International Law of 31 May 1995, No. 218.
Both provide that in matters relating to tort, delict or quasi-delict, the courts of the place of residence, domicile or registered office of the defendant or, alternatively, of the place where the harmful event occurred or may occur have jurisdiction.
Furthermore, besides the specific rule illustrated under answer 6 above, the same criteria are applied also for the determination of the competent forum pursuant to the provisions on the subject-matter contained in the Italian Code of Civil Procedure (ICCP), as interpreted by the Italian courts.
How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
The Court will determine which is the applicable law by applying the criteria set out under EU Regulation No. 864/2007 on the law applicable to non-contractual obligations (Rome II) and in the Italian Statute on Private International Law of 31 May 1995, No. 218.
In both cases, the general rule is that the applicable law shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred.
That being said, the proceeding - if started in a jurisdiction other than the one of the applicable law - is regulated by the procedural rules of the summoned court which will also apply the rules on the burden of proof of its own jurisdiction.
To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
According to Article 7 of the L.D. 3/2017, for the purposes of an action for damages, the final decision of the Italian Competition Authority (i.e. no longer subject to challenges) concerning the infringement of the competition law shall be deemed definitely ascertained with regard to the nature of the violation and its material, personal temporal and territorial scope, but not with regard to the existence of damages and of a causal link between such damages and the anticompetitive conduct.
Therefore the court is left to ascertain the above and to determine the quantification of damages (if any).
Moreover, it is provided that if the decision is issued by a competition authority or administrative court of another EU member state, then the above circumstances (i.e. nature of the violation and its material, personal temporal and territorial scope) shall be considered as evidence against the infringer and can be evaluated together with other evidences.
In this respect, it shall be noted that even before the entry into force of L.D. 3/2017 which has reinforced the binding nature of the Italian Competition Authority, the Supreme Court had for years recognized the value of this kind of decisions as a 'privileged proof' of antitrust tort, in the sense that those decisions give rise to a presumption of the existence of the infringement, which can be overcome by the defendant only by providing evidence to the contrary which was not already assessed by the authority.
To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
There is no mandatory suspension of stand-alone private claims before civil courts in the case that a proceedings or an investigation by the Italian Competition Authority or a proceedings by administrative courts are underway (i.e. those relating to the challenge of the Italian Competition Authority decisions).
What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
Class actions are available to harmed parties in the case of competition damages claims.
As at today, only ‘consumers’ or ‘users’ can file a class actions whereas undertakings (individual undertakings too) acting within the scope of their trade, business or profession cannot benefit of this peculiar instrument. However, starting from 19 April 2020 this will change as a consequence of a very recent reform of class actions brought by Law No. 92 of 12 April 2019 that provides that to be admitted to the class action claimants need to be holders of ‘homogeneous individual rights’, either individually or through organisations or associations, provided that they are registered in a public register to be set up at the Ministry of Justice.
General rules on class actions apply with no specific provisions for the subject-matter at issue.
Moreover, apart from class action, the so-called ‘collective actions’, which entail a plurality of claimants and defendants, are possible too. It shall also be noted that, as a general principle, voluntary joinder of third parties in ordinary civil proceedings is always possible under general rules of ICCP.
Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
The rules on the burden of proof are the same as any other civil proceedings: the burden lies with the claimant who shall prove the facts on which its claim is grounded whereas the defendant shall provide evidence supporting its objections and/or counterclaims.
The passing-on defence is used in this kind of claims and there are a few court’s decision on this specific objection (especially by the Court of Milan).
Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
As in any other ordinary civil proceedings, the court can appoint one or more experts, whose task is to answer specific questions raised by the court on strictly technical issues.
Experts must be independent and impartial and they answer exclusively to the court.
The parties can appoint their own experts, who will interact with the court-appointed expert(s) throughout the technical investigation and reply to their findings.
In competition litigation, usually, experts are appointed to investigate passing-on issues and to determine the quantification of damages suffered by claimants.
Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
Even though the ICCP sets forth different mandatory hearings (e.g., for the appearance of the parties, for the discussions on the requests for evidence, for the final submission of the claims and counterclaims), typically, the main steps of the civil proceedings are dealt with in writing.
As for the taking of evidence, all the means of proof set under the ICCP are admitted.
Save for the exceptions indicated below, the court shall examine exclusively the means of proof offered by the parties (e.g. documents, witnesses, etc.). Thereafter, the judge can decide whether to admit or reject oral evidence proposed by the parties and, in general, can freely evaluate the meaning of the evidence provided by the parties (documentary evidence included), save for some peculiar type of evidence the value of which is established by law (e.g. confessions).
As said, the parties can request the court to hear witnesses on specific circumstances. However, if the hearing of such witnesses is admitted by the court, the parties are not allowed to cross-examine them, as the judge is the only person entitled to ask questions and request clarifications to them.
The judge is also the only decision-maker as trials are not envisaged in civil litigation.
Provided that the main rule is that the parties shall provide evidence to support their claims, in some cases the court is vested with some investigatory powers. For example, the court can:
- carry out inspections;
- order the exhibition of documents to third parties or to parties at the latter’s request, provided that certain requirements are met;
- appoint experts for technical investigations, as stated above.
How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
The trial starts immediately with the service of the writ of summons by the claimant to the defendant. Indeed, there is no preliminary or discovery phase preceding the actual trial. The average duration of a proceedings can be estimated in two to four years depending on the complexity of the taking of evidence phase and on the workload of the court.
Challenges against first instance judgments issued by the courts of first instance can be filed with the court of appeal.
The decision by the court of appeal can in turn be challenged before the Supreme Court. However, whereas there is no limit on the grounds for appeal that a party can raise against a first instance judgment, appeal judgments can be challenged strictly on the basis of an improper application of the law as the Supreme Court cannot overrule the interpretation of facts and evidence given by the court of appeal.
Do leniency recipients receive any benefit in the damages litigation context?
See answer 4.
How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
As explained under answer 13 above, usually courts appoint technical experts to be assisted on economic issues and on the quantification of damages and we do not have count of any particular favoured economic methodology.
Generally speaking, the rules provided by the ICC on the compensation of damages apply (Articles 1223, 1226 and 1227):
- damages to be compensated shall be proven as the immediate and direct consequence of the unlawful conduct;
- the main elements are emerging damages and loss of profits.
L.D. 3/2017 provides that:
- the existence of damages caused by a cartel is presumed, except evidence of the contrary by the infringer;
- the judge may request assistance from the Italian Competition Authority by formulating specific requests for guidelines which relate to the quantification of the damage.
As for interests, they start accruing from the date of commencement of the civil proceedings at the legal rate.
Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
In the case of many defendants in a competition damages claim each of them can request the court to:
- be indemnified and held harmless by the other co-defendants or third parties summoned in the proceedings;
- asses the individual share of liability with respect to the disputed anticompetitive conduct; and
- order the compensation of damages accordingly.
The allocation of liability by the court will be based on the general civil liability principles. This means that the court will evaluate - possibly with the assistance of an expert - the degree of actual contribution of each defendant to the anticompetitive conduct.
If this is not possible, the liability will be split equally.
In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
Besides alternative dispute resolution instruments available to the parties (e.g. arbitration, mediation, assisted negotiation, etc.) and private out-of-court settlements, in no other circumstance damages can be disposed of.
What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
Private settlements are always available to the parties with no specific requirements or mechanism that need to be complied with therefore they can involve also parties outside of the jurisdiction.
What procedures, if any, are available to protect confidential or proprietary information disclosed during the court process? What are the rules for disclosure of documents (including documents from the competition authority file or from other third parties)? Are there any exceptions (e.g. on grounds of privilege or confidentiality, or in respect of leniency or settlement materials)?
The confidentiality of the case file enjoys a certain degree of protection, according to the following rules:
- According to a specific provision of ICCP, in civil proceedings the parties to the proceedings and their counsels are the sole persons entitled to have access to the briefs and documents filed within the proceedings. For the sake of completeness, there is also a specific procedure allowing third parties, on the basis of a specific interest, to apply for having access to the documents of the public administration, but this procedure does not apply to the documents filed in a civil proceedings, according to the case law;
- If the documents are particularly sensitive, the parties can request the use of specific storage methods;
- If intellectual properties rights are involved further protection could be requested and granted.
Moreover, the parties are allowed to file those documents partially redacted (i.e., with omissis), to the extent of course that the delated information are not necessary for the decision.
In general, documents are filed on a voluntary basis by the parties.
However, upon the party’s request, the court can order to the other party to the proceedings or to third parties to file documents. This faculty of the court is provided both under Article 210 of the ICCP and Article 3 of L.D. 3/2017. The latter provides wider powers to courts which, for example, can order the exhibition of a whole category of evidence and not only of specific pre-identified documents.
Provided that courts take all the necessary measures to make sure that confidentiality is preserved (e.g. redaction of documents, restriction to access the evidence, etc.), the request is granted if the disclosure:
- is relevant to the final decision of the dispute and the claim appears to be reasonable;
- is proportionate, taking into account the interests of all parties involved in the proceedings;
- does not concern correspondence covered by the attorney-to-client privilege.
As for exhibition orders addressed to the Italian Competition Authority, Article 4 of the L.D. 3/2017 sets forth that the court:
- can order the exhibition of evidence contained in the file of a competition authority when neither the parties nor the third parties are reasonably able to provide such evidence;
- assesses the proportionality of the order to whether the request has been specifically formulated with regard to the nature, subject matter or content of the documents;
- after the conclusion of the proceedings by the authority, can order the exhibition of information provided in that context or of settlement submissions which have been revoked;
- cannot order a party or a third party to produce evidence relating to declarations linked to a programme of leniency or settlement submissions, where specifically regulated.
Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
As a general rule, claimants and defendants in their respective prayers for relief request the court to condemn the other party to pay legal costs.
According to the procedural rules provided under the ICCP the unsuccessful party must pay all or most of the costs. However, the court can decide to equally allocate the costs in cases of partially adverse outcome or where the proceedings involved disputed legal issues.
Costs are awarded by the court in compliance with the criteria provided by a ministerial regulation on the basis of the value of the dispute.
Furthermore, the court can order the losing party to pay additional costs in the case of procedural misconduct or vexatious litigation.
Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
Third-party funding of litigation is not regulated in Italy and it is not a common practice yet. It is however allowed, even though there are current discussions among scholars as to the enforceability of third party funding agreements depending on their structure.
Lawyers can enter into success-fee agreements with their clients and can agree to various fee structures, provided that their agreement is concluded in writing.
For example, contingency fees can be agreed by the parties, however they cannot concern the disputed asset or right.
On the other hand, considering that as general principle lawyers shall be paid on the basis of their work and not of its outcome, fee agreements that provide the successful outcome of the dispute as a condition precedent for the payment of the fee are considered invalid.
If no fee agreement has been executed, mandatory fixed tariff are provided by law.
What, in your opinion, are the main obstacles to litigating competition damages claims?
The main obstacle lies in providing actual evidence of the competition damages suffered.
Even though recent reforms have tried to overcome this limit by providing wider disclosure powers to courts, for example by facilitating the access to the investigation or proceedings file of the Italian Competition Authority, harmed parties of anticompetitive infringements still have hard difficulties in proving their claims with documents or other solid means of proof.
What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
As happened recently with L.D. 3/2017, the most significant developments will probably take place at a EU level and concern the role of competition authorities with an ever-increasing integration and interaction between the proceedings carried out by them and civil follow-on actions before ordinary courts.