The Italian Competition Authority opens an Article 102 TFEU investigation on a foreclosing practice in the daily newspapers market
Recently, the Italian Competition Authority (ICA) has opened an Article
102 TFEU investigation in the SIE
case (decision no. 26312 of 21 December 2016, Case A503 Società Iniziative Editoriali/Servizi di rassegna stampa della
Provincia di Trento- SIE), which focuses on the interaction between intellectual
property rights and competition.
Società Iniziative Editoriali Spa (SIE) publishes the daily newspapers
‘L’Adige’. Euregio Srl GmbH (Euregio) provides a service of review of the news
published on the local press to clients in the province of Trento (PAT). Typically,
clients required Euregio to review the articles published, in particular, on
‘L’Adige’. Until the end of December 2016 ‘L’Adige’ was included in the
Repertorio Promopress (RP) system. The RP system managed on behalf of the
publishers, which joined it, the rights to reproduce articles published on
dailies and periodicals. The RP system offered to undertakings providing news
review services licences for the use the articles protected by copyright. In
September 2016 SIE sent a letter to the customers of Euregio to inform them
that starting from January 2017 it would withdraw from the RP system and that
the right to use the articles published on ‘L’Adige’ would directly managed by
SIE. Later, the agents of SIE contacted the customers of Euregio to introduce
to them the SIE news service review. Euregio was then asked by its customers
about its capability to still provide the news review service. Euregio reacted
by fruitlessly trying to obtain from SIE the necessary copyright licence to
lawfully provide the news review service.
By a complaint lodged with the ICA on 29 November 2016, Euregio reported
the conduct of SIE to the ICA that opened an antitrust investigation against
the latter on the basis of Article 3 of the Italian Competition Act no.
287/1990, which corresponds to Article 102 TFEU.
The ICA identified the relevant product markets in the market for the
daily newspapers in the PAT and in the downstream market for the provision of
news review services in the PAT. SIE had a dominant position in the upstream
market where ‘L’Adige’ had a 63,6% share. The ICA considered the access to the
articles published in the daily newspapers as an essential facility for the
undertakings providing news review services. The LCA also noted that SIE
previously supplied access to this input and refused to supply it starting from
1st January 2017. Having access to this input was then indispensable
to provide the news review services. The LCA had concerns that the SIE conducts
could be a refusal to supply with a foreclosing intent. The three conditions
for establishing a refusal to supply as an abusive practice were considered to
be met in this case: i) access to the right to review the articles published on
‘L’Adige’ constituted an essential input to carry out an economic activity in
the downstream market; ii) the SIE refusal to supply was conducive to the
elimination or a substantial reduction of competition in the downstream market;
iii) the SIE refusal to supply was liable to harm the PAT-based customers of
new review service that may face less competition amongst suppliers with the
ensuing risks of higher prices and a lower quality of the services. Additionally,
the ICA believed that the ICA access denial had no rational justification.
In addition to start an antitrust investigation, the ICA also opened a
procedure pursuant to Article 14-bis of the Italian Competition Act no.
287/1990 to impose interim measures on SIE. The ICA believed that the statutory
conditions (the fumus boni iuris and the periculum in mora) for
the adoption of such measures were met in SIE.
First, there was a prima facie case that SIE carried out a foreclosing conduct
that might significantly restrain competition in the downstream market. Second,
the conduct of SIE under scrutiny might had such a negative impact on competition
since January 2017. Therefore, in absence of a regulatory intervention of the
ICA, market competition would suffer from a serious and irreparable damage.
The SIE case is about the
interference between competition law and copyright law. The question here is
whether the holder of copyright on articles published on a newspaper could
legitimately deny to providers of news review services access to those copyright-protected
works that for them it is necessary in order to exercise their economic
activities in the downstream market. In other words, the question was whether
by refusing to grant a licence for the use of the copyrighted articles SIE
abused its dominant position. Relying on the doctrine of essential facilities, the
ICA took the preliminary view that the conduct of copyright owner was unlawful
as it infringed competition. The ICA also pointed out that the foreclosing
conduct aimed at Euregio was closely linked to the SIE decision to enter into
the downstream market for the provision of news review service as reflected by the
partnership agreement SIE concluded with Volocom in June 2016.
Finally, what the complainant Euregio unsuccessfully asked for to SIE was
the access to an intangible input, the licence to use the copyrighted articles
published on L’Adige’. In order to ascertain whether SIE had to grant Euregio
the requested licence, the ICA employed the three-limb test set out in the
European Commission’s Guidance on Article 102 TFEU Enforcement Priorities. That
test applies both to cases of refusal to licence intellectual property rights and
to cases in which the dominant undertaking denies access to a tangible
facility. It should be noted, however, that in case of licence refusal, the EU
courts has developed a slightly different test for the application of the
doctrine of essential facilities, which includes the requirement that the
refusal prevents the appearance of a new product (Case C-418/01, IMS Health v NDC Health; Case T-201/04, Microsoft v Commission).
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