With judgment no. 3334 of 24 March 2022, the Rome Administrative Court of 1st instance (TAR Lazio-Roma) has annulled the decision issued by the Italian Competition Authority (“AGCM”) on 22 December 2020, no. 28495.
The above TAR Lazio judgment (“the “Judgment”) is noteworthy because it deals with the possibility of AGCM (and of national competition authorities at large) to apply Article 102 TFEU to conducts consisting in the acquisition of undertakings by a dominant company.
The background
With the aforesaid decision no. 28495/2020 AGCM has sanctioned a unitary and complex exclusionary strategy allegedly put in place by the group belonging to CTS Eventim AG & Co. KGa (“Eventim Group”) on the Italian market of tickets sale for live concerts of pop music.
The AGCM proceedings followed the expiry, in 2017, of previous agreements between Ticketone S.p.A. (Eventim’s subsidiary in Italy) and the main Italian promoters of pop music live events, notified by the parties to AGCM and approved by the latter under the notification regime previously in force in Italy.
The multifaceted exclusionary conduct now sanctioned by AGCM would have been carried out by Eventim Group through:
- Executing (absolute or quasi-absolute) exclusivity agreements with several national promoters of live concerts of pop music.
- Securing exclusivity obligations on any local promoters to which the above “captive” national promoters would have transferred the right to organize specific local live events of pop music.
- Executing exclusivity agreements with minor local ticketing operators, which subsequently acted as mere intermediaries for the sale of tickets marketed by Ticketone S.p.A.
- Boycotting and retaliating against local promoters not agreeing on the exclusivity obligations with Eventim/Ticketone; and finally
- Acquiring four important national promoters of live concerts of pop music.
This latter conduct was not assessed in the context of EU Merger Regulation no. 139/2004 (EUMR) or merger-specific Italian rules (for instance Articles 5 and 16-19 of Italian Law no. 287/1990), but rather pursuant to Article 102 TFEU as part of the above exclusionary strategy aimed at foreclosing competitors from selling the biggest, and most profitable, portion of tickets of pop music live events in Italy. This exclusionary strategy would have also been part of a pre-emption strategy, aimed at countering the entry into the Italian market by the newcomer Ticketmaster.
As a consequence, via, the Eventim Group, through the acquisitions of the four national promoters as well as through the other aforesaid exclusionary conducts, would have exploited its dominance in the Italian market of sale of tickets for live events of pop music in breach of Article 102 TFEU.
The TAR Lazio Judgment
THE AGCM decision was appealed before TAR Lazio-Roma, the ex lege competent court for any appeal against AGCM decisions.
After rejecting a procedural objection raised by the appealing parties on the excessive length of the pre-investigation phase (which, according to the Court, must be calculated starting from the moment AGCM became fully aware of the unlawful conduct and not from the time it received the first information of the facts under scrutiny) and late notification of the antitrust charges by AGCM, the Court in its annulment decision focused on the AGCM findings on the abusive acquisition by Eventim Group of the four national promoters.
In this respect, first of all the Court argued that AGCM did not adequately take into account the justifications by Eventim Group during the proceedings. In particular, the acquisition of the promoters did not have an exclusionary purpose but was justified by the need to counter the expansion of the international group Ticketmaster, which, while being already operating in Italy in the organization of live events, was starting its activity in the ticketing sector as well.
The Court argued that, as such, the acquisition of the national promoters had an objective and business justification and therefore was not part of an exclusionary strategy but a legitimate conduct.
Secondly, the Court dismissed the AGCM’s approach of assessing the acquisition of the four national promoters through the lens of Article 102 TFEU.
To this end, the Court referred to Article 21 of EUMR, which explicitly precludes the applicability to concentrations of Article 101 and 102 TFEU.
The Court acknowledged that, based on the Court of Justice’s case law, an abusive conduct may also consist of a behaviour which is lawful according to other legal rules (Generics (UK)), but, in its opinion, this would only apply insofar as the other legal rules belong to fields other than Competition Law (Astra Zeneca v. EU Commission).
The Judgment also recalled that in the notorious Continental Can case the Court of Justice justified the application of Articles 101 and 102 TFEU (then 81 and 82 of the Treaty establishing the European Community) to concentrations due to the lack, at the time of that judgment, of a legislation on merger control.
According to the Court, the application of Article 102 TFEU to concentrations would give rise to a disapplication of EUMR and would thus breach the principle of legal certainty and the freedom of private business venture set forth by Article 41 of the Italian Constitution, by affecting or potentially jeopardizing mergers even several years after their implementation (in contrast with the strict deadlines and conditions for merger control pursuant to EUMR).
The Court only dealt with these issues, which it considered sufficient to annul the AGCM appealed decision. In other words, the Court did not conduct a sort of “resistance test”, evaluating whether the other exclusionary conducts (e.g., the execution of the exclusivity agreements or the boycott and retaliation conducts) could still suffice for a breach of Article 102 TFEU.
The business justification of the acquisitions
As we have seen, the Court argued that the AGCM decision failed to adequately consider the – supposedly legitimate – justification of the acquisitions brought forward by Eventim Group during the AGCM proceedings, consisting in the business need of Eventim Group to counter the incoming expansion of Ticketmaster in Italy.
Here, the Judgment appears to clash a procedural flaw, in the form of a lack of reasoning, of the AGCM decision, since the latter would not have adequately taken into account the above justification of the promoters’ acquisition. On the substantive viewpoint, however, this justification appears less convincing if we consider that any exclusionary, abusive, conduct is ultimately justified by the need to prevent or succeed against competition. Moreover, this allegation seems to be at odds with the principle of special responsibility of the dominant company and the case law pre-dating EUMR (again see Continental Can), which regarded as an abuse the acquisition of firms by a dominant undertaking, increasing the latter’s dominance. Nowadays the dominance standard is still the most frequent case prompting a merger prohibition (or approval with commitments) on the basis of the current SIEC test. With specific reference to the case at stake, it seems that a conduct by a dominant company aimed at foreclosing the entry of a new competitor in the market hardly falls within the category of “competition on the merits”.
The Court ruling and the debate on killer acquisitions
The most interesting topic of the judgment appears to be the one dealing with the possibility to apply Article 102 TFUE to concentrations.
This issue is linked to the concern around so-called “killer acquisitions” and the possibility for competition agencies to catch acquisitions below the required thresholds, as per the referral mechanism provided by Article 22 of the EUMR, which has been the scope of a recent guidance by the European Commission.
Apart from the principle of legal certainty and the existence of a dedicated set of law on merger control, it does not seem that there is an unequivocal legal basis for rejecting altogether the application of Article 102 TFEU to concentrations. Indeed, Article 21 of EUMR, mentioned by the Judgment, precludes the application of “national legislation on competition to any concentration that has a Community dimension” and, as such, appears to be mainly driven by the need to ensure a uniform application of merger rules to EU-relevant concentrations and does not deal with concentrations having a national dimension, let alone the ones not even meeting these thresholds.
Indeed, we can presume that AGCM did not assess the acquisitions by Eventim Group pursuant to the Italian merger rules because these concentrations escaped the jurisdictional thresholds triggering the compulsory notification to the AGCM (which, for instance, are turnover-based thresholds), let alone the EU notification thresholds, and opted instead to assess these acquisitions as part of the abusive strategy.
As discussed, the possibility for antitrust agencies to increase their tools to scrutinize mergers is part of the current debate on the modernization of antitrust enforcement and shall not be dealt separately at the national level. However, the Judgment, despite concerning a national case, may soon prompt an answer at the European level. Indeed, given the importance of the case, the AGCM will likely appeal the Judgment before the Italian State Council. This, in turn, may (or shall, if prompted by a specific petition of one of the parties, considered its role as national administrative judge of last resort) resolve to submit the matter to the Court of Justice for a preliminary reference under Article 267 TFEU, so that specific guidance at the EU level will be provided.