The manager of the Italian national rail network liable for infringing the principle of corporate separation by entering into a new market

By a recent decision (SP127 Rete Ferroviaria Italian/Bluferries) the Italian Competition Authority (ICA) finds that when the manager of the national rail network it entered into a new transport market without complying with the principle of corporate separation infringed Article 8 of the Act 287/1990.

Article 8 of the Act 287/1990 refers to undertakings entrusted with the operation of services of general economic interest or operating in the market as a monopolist. It lays down the principle that these undertakings have to incorporate separate companies in order to trade on markets other than those on which they are entrusted with services of general economic interest or are awarded exclusive rights (Article 8.2-bis). Article 8.2 ter imposes on these undertakings the obligation of prior notification of the incorporation of the companies to the Italian Competition Authority. If they fail to comply with this obligation, the Authority shall impose a fine of up to 100 million lire.

Rete Ferroviaria Italiana (RFI) is the manager of the Italian rail network. Thereby, it falls within Article 8 as it is entrusted with the provision of a service of general economic interest.

In January 2010 the Minister for Transport awarded a contract for the provision of passenger and vehicles transport services across the Strait of Messina to Consorzio Metromare, a joint venture set up by a ferry operator, Ustica Lines, and RFI. In November 2010 RFI incorporated a new company Blueferries, to which entrusted the provision of transport services awarded to the Consorzio Metromare. Also in November 2010 RFI notified the ICA the creation of Bluferries.

On the basis of the evidence collected, the ICA found that RFI started directly operating in the market for the provision of passenger and vehicle transport services across the Strait of Messina since the beginning of 2010. Only some months later RFI incorporated the new company Bluferries, through which to carry out its new activity.

This is a straightforward Article 8 case since there is no uncertainty that the market assigned to RFI by means of a concession in 2000 is different from the market into which it entered into 2010. Therefore, the ICA concluded that RFI infringed the prohibition in Article 8.2bis and also failed to comply with the prior notification obligation in Article 8.3-ter of the Act 287/1990. And it decided to open a proceeding to fix the amount of fine to impose on RFI for the above infringements.

Interestingly, the Act 287/1990 empowers the ICA to penalize only the failure to notify the incorporation of the new company. In order to avoid that the violation of the obligation to incorporate a new company in Article 8.2 bis go unpunished, the ICA consistently views the violation of the prior notification obligation as a direct consequence of the violation of the obligation to incorporate a new company. Which means that in this case, in fixing the amount of the fine, the ICA will take into account also the fact that RFI started trading in the new market without setting up a new company as required by Article 8.2 bis.

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