The Italian Competition Authority fines Trambus for the second time for not notifying new ventures in competitive markets

In the space of the same year this is the second time the Italian Competition Authority or ICA had to ascertain whether Trambus, the Rome local bus operator incumbent, complied with Article 8 of the Act 287/90 (AGCM, case SP114-Trambus Engineering-Trambus Electric). Article 8 stipulates that monopolist undertakings or undertakings by law entrusted with the provision of services of general economic interest shall set up separate companies to carry out economic activities on markets other than those on which they trade within the monopoly situation or to provide the above services. They have to priory notify the ICA the incorporation of undertakings and the acquisition of controlling interests in undertakings trading on the different markets referred. In case of non notification the ICA shall impose a fine of up to Euro 51,645.

In this case Trambus created two fully owned subsidiaries, Trambus Engineering and Trambus Electric, trading in markets other than the provision of local bus services. Trambus Engineering develops and commercializes on board electro-mechanical equipments for road vehicle; develops management software; and buys, sells, leases and repairs industrial equipment. Trambus Electric, in turn, has as object to research and develop eco-friendly systems of transport.

Trambus argued that the two subsidiaries did not trade in other markets than the provision of local bus services, given that the activities of Trambus Engineering and Trambus Electric were supporting the parent company’s core activity. Trambus incorporated them with the view to develop a in house know-how on technology regarding local transport to sustain its core business in the local transport field.

The ICA dismissed Trambus’s argument for two reasons:

  1. Trambus Engineering and Trambus Electric generated part of their revenues, ranging from about 30% (Trambus Engineering in 2004 and Trambus Electric in 2007) to 1% (both of them in 2008) by trading with third parties;
  2. No link between the local transport services supplied by Trambus, on one hand, and the activities of Trambus Engineering and Trambus Electric, on the other hand, can be found. The latter operate in market which are quite different from that in which Trambus provides services of general economic interest.

Considering that both Trambus Engineering and Trambus Electric have carried out small economic activities, the Trambus infringement of Article 8 was not considered as serious and he ICA imposes on it a penalty of Euro 10,000.

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