Acquisition of retail trade licences does not amount to concentrations

The Consiglio di Stato, the Italian higher administrative court, has reverted the approach until recently embraced by administrative judges and the national competition regulator (ICA) with regard to the qualification of mere acquisition of retail trade licences as a concentration (case n.1894/2009, Lidl/Autorità Garante della Concorrenza e del Mercato). This approach was based on a structural criterion, according to which to have a concentration is necessary that through the consummation of the transaction a modification of the competitive market structure is likely, be a reduction in the size of an undertaking or its exit from the market. According to the ICA and the administrative court of first instance (Tar), the mere acquisition of retail trade licences made by Lidl in order to combine them and obtain a licence to open mid-size shops, as allowed by the Italian law, met this requirement. Such licences are finite assets because with their acquisitions Lidl impeded competitors from using them. Therefore, the transactions were qualified as concentrations and Lidl was fined for not having notified them to the ICA.

This position appears to be in contrast with the EC approach. Under EC law, the decisive elements to find a concentration is that to the transferred assets are capable to generate a turnover, which through the transaction shift from the vendor to the purchaser. This criterion was finally embraced by the Consiglio di Stato before which Lidl had impugned the decisions of ICA and Tar. The Consiglio di Stato made it clear that no turnover imputable to the transferred licences has been shifted from vendors to Lidl because:

· Lidl has always purchased trade licences plus assets of modest values, being however interested in the acquisition of licences only to obtain a licence for mid-size retail business;

· The vendor continues trading because as smaller retailer it does not need ant licence following the liberalization of retailing activities with the decree 114/98;

This judgment is welcomed as a positive development for retailers as it abolishes the obligation to notify the acquisition of a retailing licence to the ICA. It also allows the ICA to focus its resources on transactions which are thought to pose more serious threats to competition given that none of the acquisitions made by Lidl was found to give rise to a dominant position. Finally, by this judgments Italy aligns with the EC position.

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