The Italian Competition Authority targets an abusive conduct in the market for jet refueling at the airport of Bergamo

By a decision made on 14 June 2017, the Italian Competition Authority has opened an Article 102 TFEU investigation against the manager of the airport of Bergamo, Sacbo, and a firm operating in the jet fueling sector, Levorato Marcevaggi (LM) in the Sacbo--LM/On plane jet refuelingservices case. The ICA started the investigation upon the receipt of a complaint lodged by a competitor, reporting allegedly foreclosing conducts in the market for ground handling services at the airport of Bergamo-Orio al Serio (BGY airport).

The facts of the case

By a concession contract signed in 2003, Sacbo entrusted JV Orio, in which it had a stake, with the task of tanking and jet refuelling at BGY. Later, Sacbo sold to JV Orio the only tank for jet fuel within the perimeter of BGY. The terms of the concession contracts were such that third parties had no access to the above jet fuel tank. Though in 2004 BGY reached the traffic volume thresholds triggering the obligation in the relevant regulatory framework to open up ground handling services to competition, Sacbo renewed the concession contract with JV Orio until 2018. Subsequently, the contract was further renewed on the same exclusive terms until 2023. In 2013, LM took over JV Orio, becoming the new holder of the concession for the tanking and jet fueling services at BGY. In the meantime, at least since 2013, the complainant, Skytanking, planning to enter the market for jet refueling service at BGY, asked many times, first JV Orio, and then LM, for access to the jet fuel tank. Unfortunately for Skytanking, all its access requests were rejected by the addressees for safety reasons.

The analysis of the ICA

The ICA identified the relevant product markets affected by the abusive conducts of the parties in the market for the management of airport facilities, the market for jet tanking and related services and the market for into plane refueling services. Sacbo have a monopoly position in the market for the management of airport facilities at BGY. Also, JV Orio and then LM enjoy a monopoly position in the market for jet tanking and related services. Finally, LM is, at the moment, the only operator active in the market for into plane refueling services.

The theory of competition harm developed by the ICA, on the basis of evidence collected in the preliminary investigation, is that Sacbo pursued a foreclosing anti-competitive strategy, in the shape of a refusal to supply, in the market for into plane refueling at the airport of Bergamo. What Sacbo intended to do was to reserve to JV Orio not only the exclusive management of the jet fuel tank but also the jet refueling services. In that regard, the ICA made the following points. First, the concessions contracts concluded between Sacbo and with JV Orio hindered competition by providing strict condition for third parties’ access to the jet fuel tank in spite of the liberalization obligations triggered by the growing passenger traffic generated by BGY. Second, the renewal of the concession contract until 2023 following the JV Orio acquisition by LM gave to the latter exclusive access to the only jet fuel tank at BGY. More precisely, once again, only one jet refueling operator was given exclusive access to an indispensable facility as the jet fuel tank was, outside a tender competitive procedure. Third, Sacbo apparently engaged in a dilatory tactic, frustrating the plans of Skytanking to build alternative jet fuel tanks. To show that the conduct of Sacbo was unjustified, the ICA quoted the statement of the Italian civil aviation authority, Enac, according to which, contrary to what was argued by Sacbo, third parties could have access to the jet fuel tank by only adopting risk mitigating measures. In other words, the Enac statement contradicted the defensive argument of Sacbo that third parties’ access to the jet fuel tank had to be rejected on safety grounds.

The ICA had concerns that also Orio JV and LM abused their dominant position by consistently refusing to give Skytanking access to the jet fuel tank with the view of preserving its monopoly in the downstream market for into plane refueling services. Crucially, the ICA qualified the jet fuel tank inside BGY as an essential facility. It based that finding that it in the short time is impossible to duplicate the tank in the question and that neither other tanks outside BGY can be used to refuel aircraft. The refusals of access had objective justification as all the reasons invoked by JV Orio and LM for the denial were, according to the ICA, groundless.

In light of the above, the ICA concluded that Sacbo, on one hand, and JV Orio with LM, on the other hand, had apparently carried out distinct anti-competitive foreclosing practices which led to the monopolization of the market for the into plane refueling services at BGY.    

The theory of competition harm applied by the ICA to the conducts of JV Orio and LM is that of a seemingly aggressive application of the doctrine of essential facilities. For this doctrine to apply, there must exist the conditions of non-duplication and indispensability of the facility. The condition of non-duplication is met when the replication of the facility owned by the dominant firm is either physically or legally impossible or not economically viable in certain cases. From the facts of the case it can be inferred that the building of a new jet fuel tank at BGY was physically possible and economically viable. Indeed, Skytanking had concrete plans to build a new tank or alternative facilities and already took the necessary preliminary steps, though they were met with the opposition of Sacbo. It was, however, unclear whether the construction of a new tank was legally impossible. The administrative proceedings activated by the LM’s competitors to obtain regulatory approval for a new jet fuel tank have been so far frustrated by the dilatory tactics and delays of Sacbo.