The Italian Supreme Adminstrative Court rules on limitation period in cases of anticompetitive codes of professional ethicsdi Giovanni Scoccini e Antonio Campitiello pubblicato in e-Competitions Bulletin January 2016, Art. N° 82395 disponibile in www.cuncurrences.com. Commento alla sentenza del Consiglio di Stato n. 167/2016
The Italian Supreme Adminstrative Court rules on limitation period in cases of anticompetitive codes of professional ethics
On the 19th of January 2016 the Italian Supreme Administrative Court (Consiglio di Stato), overturned a decision of the National Competition Authority concerning competition in the medical profession.
The NCA’s decision.
On the 4th of September 2014 Italian National Competition Authority found that the code of ethics adopted in 2006 by Federazione Nazionale degli Ordini dei Medici Chirurghi e degli Odontoiatri infringed competition law, sanctioned the organization with a 800.000 euros fine and imposed it to stop the illicit conduct. Federazione Nazionale degli Ordini dei Medici Chirurghi e degli Odontoiatri is the Italian national federation of the professional associations of surgeons and dentists, which adopted the code of ethics to regulate the professions.
In particular, the NCA held that the rules of the code regarding advertising amounted to an illicit concerted practice, able to affect trade and the freedom of choice of the consumers who needed medical services.
In fact, the code stated that doctors shall not make any “promotional or comparative advertising” and that any ads that any doctors want to publish shall be respectful of the decency of the medical profession. The assessment of this parameter was demanded to the professional associations. Doctors, therefore, could choose either to demand a preliminary opinion before the publication of the advertising, or to take the risk of an eventual sanction from the professional association.
The professional associations, in the application of the code of ethics of the national federation, impeded any form of advertising of their members by even fining them in some cases. Many of the forbidden advertising concerned price advantages applied to specifics medical services that were publicised via the famous website Groupon. The professional associations argued that a publicity based on the economical convenience of the services, was offensive to the honour of the medical profession, and misleading to consumers, who could have been induced to choose a certain doctor only on the basis of price convenience.
The NCA held that the adoption of a code of ethics by the national federation of the professional associations of surgeons and dentists amounted to a decision taken by an association of undertakings, relevant under article 101 TFEU. The Authority considered that, on the one hand, the prohibition of comparative advertising was an unjustified restriction of competition, considering that this form of publicity is largely recognised as a useful tool for undertakings entering a market, and on the other hand, it stated that the respect of the decency of the medical profession, without any further specification, could not be considered a lawful benchmark in order to decide which advertising should be approved and which should not .
In particular, the NCA considered as an unlawful restriction to competition not only the ban on advertising medical services in terms of economical convenience or special treatments available for patients, but also the prohibition to recur to comparative advertising.
As to the period and duration of the infringement, the NCA held that the infringement was to be considered “continuing”. In fact the rules of the code of ethics subjected to investigation were adopted in 2006, confirmed by the national federation in 2014, and their effects continued during all the years of enforcement of the code.
The NCA’s decision was upheld, on the 25th of March 2015, by the First Grade Administrative Court (Tribunale Amministrativo Regionale del Lazio), which rejected the appeal filed by the National Federation of district councils.
The Court stated that the infringement was continuing “by nature”. In fact, anticompetitive effects were the direct consequence of an illicit permanent conduct (i.e. the enforcement of the 2006 Code of Ethics). According to the First Grade Court, therefore, not only the relevant conduct, but also its effects, had to be taken into consideration in order to assess whether a competition infringement is “continuing” or not, and consequently, in order to ascertain the relevant dates for limitation period .
The Supreme Administrative Court Decision and the EU law principles.
The Italian Supreme Administrative Court, the Consiglio di Stato, overturned the NCA’s decision, which had been upheld by the First Grade Court, stating that when the National Competition Authority started its investigation the limitation period was already expired.
The Court noted that the reconstruction of the infringement adopted by the First Grade Court had been abandoned by the majority of the criminal law scholarship and jurisprudence. The anticompetitive offence could not be described as “bi – phasic” and continuing, that consisted in a first phase of adoption of the illicit rule (commission of the infringement), and in a second period of conservation of the illicit Code of Ethics (omission to remove the effects of the illicit conduct).
In the Court’s view, an infringement shall be considered “continuing” only when the conduct of the offender lasts through time and is permanently linked to the anticompetitive effects challenged by the Competition Authority.
In the light of the foregoing, the Court held that a competition infringement consisting in the adoption of an anticompetitive code of ethics was to be considered as an “instantaneous” infringement, whose effects could, eventually, last through time. The commencement of the limitation period, therefore, should have been counted from the day the code was approved and entered into force (i.e. 2006) and was largely expired by the time the investigation was opened by the Italian NCA (September 2013).
In our opinion, the decision of the Supreme Administrative Court is not compatible with the principles of EU Competition Law established by the European Commission and the EU Courts.
On the one hand, it appears to be conflicting with the Effet Utile principle, according to which “where a provision of Community law is open to several interpretations, only one of which can ensure that the provision retains its effectiveness, preference must be given to that interpretation” . This general principle of the EU law explicitly applies to competition law. In fact, according to the Court of Justice “(…) Articles 85 and 86 of the Treaty, in conjunction with Article 5, require the Member States not to introduce or maintain in force measures, even of a legislative nature, which may render ineffective the competition rules applicable to undertakings” .
On the other hand it appears to be conflicting with the principle of effectiveness of EU law, according to which “it is for the domestic legal system of each Member State (…) to determine the procedural conditions governing actions at law intended to ensure the protection of the rights which citizens have from the direct effect of Community law, provided that such national rules do not render the exercise of EU rights virtually impossible or excessively difficult.” .
By contrast, the interpretation adopted by the Italian Supreme Administrative Court could impede the application of EU competition rules in the professional service sector and, therefore, limit the exercise of the rights given to consumers by EU law. In fact, it could lead to the impossibility to apply competition rules to professional services after five years from the adoption of an anticompetitive regulatory framework by the governing body of the profession.
Also, the interpretation of EU Commission of limitation periods of code of conducts applied by associations of undertakings in violation of competition law differs from the one adopted by the Italian Administrative Court.
The Commission has adopted numerous decision in cases concerning competition in professional services , both before and after the adoption of the regulation n. 1/2003, which regulates time limitation in public antitrust enforcement. As known, article 25 parr. 1 and 2 of this regulation, concerning “Limitation periods for the imposing of penalties” declares that: “The powers conferred to the Commission by article 23 and 24 shall be subject to the following limitation periods: a) three years in the case of infringements of provisions concerning requests for information or the conduct of inspections; b) five years in the case of all other infringements. Time shall begin to run on the day on which the infringement is committed. However, in the case of continuing or repeated infringements, time shall begin to run on the day on which the infringement ceases”.
On the 24th of June 2004, the Commission adopted a decision on the recommended prices for Belgian architects (Case COMP. 38/549) ascertaining that the fixation of minimum prices for professional services supplied by Belgian architects and foreign architects working in Belgium, decided by the regulatory body of the profession with a decision of the 12th of July 1967, should be considered as an anticompetitive conduct by object, and therefore be sanctioned under article 81 (now 101) of the EU Treaty. In response to the architects’ association objection about the expiration of the time limitation period, the Commission noted that “The Association amended and adapted the fee scale in 1978 and 2002, and published it or made it available without interruption. The infringement is therefore a continuing infringement for which the five years limitation period begins to run on the day on which the infringement ceases”.
According to the Commission’s view expressed above, therefore, the decision of the Italian Supreme Administrative Court appears incompatible with EU law. The infringement ceases only when the anticompetitive rule is revoked while continues as long as it is enforced by governing bodies.
The Commission took similar decisions also before the adoption of the regulation 1/2003.For example, in a decision of 30 January 1995, concerning the fixation of prices by the Spanish governing body of Industrial Property Agents (COAPI) , the European Authority stated that the decisions of the COAPI adopted since 1987 concerning the annual establishment of minimum scales of charges applicable to clients constituted an infringement of article 85 (now 101) of the European Treaty and sanctioned the COAPI without any regard to time limitation.
The economic sector represented by the market of professional services has always been unique for what concerns the application of competition law . However, it is well known that members of professions are undertakings for the purposes of the competition rules and that a professional association with regulatory powers, when adopting a regulation, should be considered as an association of undertakings and therefore be subjected to article 101 and 102 of the EU Treaty .
Following this consideration, competition rules should be observed in professional services, particularly in the adoption and enforcement of their codes of ethics, which could play a great role in altering the market. It is clear that the distortion of competition is greatest when the anticompetitive conduct is established by a governing body because of the threat of the fines that it could impose.
The interpretation of time limit rules as the one given by the Italian Supreme Administrative Court could represent an insuperable obstacle to the application of competition rules in the professional services. It is based on a previous orientation of the Italian Supreme Criminal Court on instantaneous criminal conducts whose effects last in time, but it is incompatible with competition law as applied by the European Commission and the EU Courts. Such an interpretation, in fact, could lead to a violation of the Effet Utile and effectiveness principles, which represent fundamental principles of EU law. In particular, it could make impossible to apply EU competition rules after five years from the adoption of an anticompetitive code of ethics by a professional governing body.
 In the same sense, see ECJ, 18.07.2013, Case C-136/12, Consiglio Nazionale dei Geologi vs. Autorità garante della Concorrenza e del Mercato, par. 50 – 54. And in particular: “50. An agreement, decision or concerted practice, extending over the whole of the territory of a Member State has, by its very nature, the effect of reinforcing the partitioning of markets on a national basis, thereby holding up the economic interpretation which the Treaty is designed to bring about (…). 51. That may be the effect of the decision of the association of undertakings in question in the main proceedings, since Italian law provides that geologists, throughout the territory of the Italian Republic, must be members of the professional association, which means that they are subject to rules of professional conduct and liable to disciplinary actions for the breach of those rules. 52. In the light of the foregoing, the Court finds that rules of professional conduct lay down as criteria for determining professional remuneration the dignity of the profession as well as the quality and scale of the work to be performed are liable to restrict competition within the internal market”.
 According to article 28 of the law n. 689 of 1981, for Italian law, in cases of administrative law infringements (which include antitrust infringements) time limitation period expires after five years from the day the party held the illicit conduct.
 ECJ, 14.10.1999, Case C-223/98, Adidas, para. 24.
 ECJ, 21.09.1988, Case C-267/86, Pascal Van Eycke vs. ASPA NV, para. 16.
 ECJ, 16.12.1976, Case C-33/76, Rewe, para. 5.
 See cases COMP/33.407 of the 30 June 1993, CNSD; COMP/33.686 of the 30 January 1995, COAPI; COMP/34.983 of the 5 June 1996, Fenex and COMP/38.549 of the 24 June 2004, Recommended prices for Belgian Architects.
 Decision of the 30th of January 1995, Case 95/188 EC.
 In its “Report on Competition in Professional Services”, of the 9 February 2004 (Commission Communication COM 2004 – 83), the EU Commission explicitly noted that there could be potential tension between competition rules and self-regulation adopted by professional governing bodies, and that, therefore, it could be useful to open a discussion within this economic sector in order to reduce it. This tension could reside, for example, in the presence of public interests related to the profession subject to regulation (ECJ, 19.02.2002, Case C-309/99, Wuoters and Others, para. 97 and following) or in the event that an anticompetitive conduct is made compulsory by a State regulation, and that, therefore, undertakings could not be liable for implementing it (ECJ, 09.09.2003, Case C-198/01, Consorzio Industrie Fiammiferi – CIF, para. 52 and following).
 In this light, see ECJ, 19.02.2002, Case C-309/99, Wuoters and Others op. cit., para. 56 and following.