The Italian Competition Authority conditionally clears the Moby acquisition of a Toremar, a regional ferry operator

By a recent decision (Case C11072, Moby/Toremar) the Italian Competition Authority (ICA) has conditionally cleared the Moby acquisition of the ferry operator Toremar. Toremar, a ferry operator controlled by the Region of Tuscany, was entrusted to provide maritime links from Tuscany to the Island of Elba and other minor islands off the Tuscany coast under a regime of public service obligation. Moby submitted the winning bid in a public tender procedure organized by the Region of Tuscany to select to whom sell Toremar. The ICA opened an investigation into the Moby acquisition of Toremar, because also Moby was active in the maritime routes between Tuscany and Elba, and some of its routes overlapped with those of Toremar.

In particular, the ICA found competition problems with the Piombino-Portoferraio route. Post-merger, Moby would have a quasi monopoly position on this route, the only other competitor, Blu Navy, having a very small market share. Furthermore, Moby and Toremar together would have about 80% of the slots at the port of Piombino. Therefore, only a few slots would be available for the competitors of the merging parties. The scarcity of slots at the port of Piombino was then considered by the ICA as a high entry barrier. Moby would have also access to Toremar sensitive data regarding capacity and occupancy rate and, accordingly, it would have the incentive and ability to coordinate its commercial policy with that of Toremar. The fear of the ICA was that Moby could shift passengers from the Toremar vessels to theirs with the ensuing risk of an increase in fares. Indeed, Toremar, unlike Moby, was subject to public service obligation regime under which it had to apply lower regulated fares. To fix these competition problems, the ICA imposed on Moby to divest up to 6 slots at the port of Piombino and to exchange its slots with those of competitors that the latter could not use because of technical reasons. The duration of these remedies is 5 years.

In short, the ICA cleared a quasi-monopoly merger by relying on an access remedy, such slots divestiture, which imposed only behavioural commitments on the parties with only a temporary effect on the competitive structure of markets. The question now is whether the above slot remedy will be enough effective to attract new competitors. The ICA believes this may be the case as indicated by the fact that it has received declarations of interests from some ferry operators. That said, an element that should strengthen the effectiveness of the slot remedies imposed in Moby/Toremar is the prospect for slot transferees that would make use of the slots freed by Moby to have a priority over the use of them also for the successive seasons. Such possibility should strengthen the interest of Moby’ competitors to apply for the slot despite of the considerable pot merger market power of Moby on the Piombino-Portoferraio route.