The Italian Competition Authority fines ferry operators for parallel behaviour in a price fixing case
di Giovanni Scoccini, pubblicato in Concurrences
The Italian Competition Authority (the “ICA”) is currently looking closely at the maritime sector. The authority is involved in two cartel proceedings: one concerns the passenger maritime sector in the Gulf of Naples [1] and the other one the maritime routs in the Strait of Messina [2]. In addition, it recently closed the proceeding I734 TARIFFE TRAGHETTI DA/PER LA SARDEGNA [3] in which the ICA found a cartel and fined the participating ferry operators that operate the routes from the mainland to Sardinia for price fixing. The ICA fined the ferry operators Moby, GNV and SNAV and Marinvest – the holding company of the latter two -, because they agreed a parallel fare increase for the Italy-Sardinia maritime routes for the 2011 summer season. A fourth ferry operator, Forship, was investigated, but not fined because it was found not having participated in the cartel.
This decision of the ICA is interesting because it relied heavily on economic assessment of the parallel behaviour of the parties.
The ICA concluded that the parallel fares increase for the Italy-Sardinia routes was the result of a concerted practice because it could not be explained otherwise than by reference to concertation.
The ICA’s assessment focused on the fare increase charged by the fined undertakings in 2011 on the common routes. According to the ICA, the price increase was possible because each ferry operator was not afraid of the reactions of the others because the parties had agreed not to engage in a price war.
According to the Italian case law [4], conscious parallel behaviour can amount to a concerted practice:
a) if there is no plausible alternative explanation of such behaviour and/or
b) if actual documentary evidence of the concertation is found.
Where the ICA relies on documentary evidence, the burden of proof is on the parties allegedly involved in anti-competitive conduct to prove they have a lawful plausible explanation for the parallel conduct.
In this instance, the documentary evidence found by the ICA against the ferry operators was not conclusive. The ICA found that the parties had contact, but it could not characterize this contact as anticompetitive. According to the ICA there was legitimate contact between Moby and Marinvest with the aim of organising a joint take-over of Tirrenia, the public ferry operator that was in financial difficulties. In addition, there was legitimate contact to conclude commercial agreements between Moby and GNV. The fined parties and other companies were encouraged by the Italian Government to enter into the above-mentioned joint venture to save the state owned company Tirrenia. The ICA deemed the purposes of both the joint venture and the object of the commercial agreements between Moby and GNV to be lawful.
However, the authority presumed that these contacts allowed the parties to exchange information and agree their fares, which therefore made the price increases that were introduced subsequent to the contact anti-competitive.
The evidence of this contact, even if not conclusive, was enough to shift the burden of proof to the investigated undertakings, which were now expected to provide a plausible alternative explanation for the parallel increase of the fares.
The ICA dismissed all the alternative explanations submitted by the parties, including that the ferry operators needed to increase their fares in order to recover the losses they suffered in the previous years. According to the data collected by the ICA, SNAV, GNV and Forship operated at a loss on all the routes from the mainland to Sardinia since 2008, while Moby on the other hand operated profitably on all the routes, safe for a few years.
For this reason the ICA held that a parallel increase of the fares was not justified. Moby, which was profitable, did not need to increase its prices and should have acted independently.
However, if it is true that Moby could have acted independently, then one could argue that Moby could easily have forecasted that the other operators would have increased their fares because they needed to recover the losses suffered in the previous years. They did not have other options. They were well aware that they could not engage a price war with Moby which was larger and more efficient.
It is therefore reasonable to argue that Moby could have decided to increase its prices unilaterally without fearing the response of its competitors. Given the high transparency of the market and the possibility to modify prices very quickly, Moby could have reacted promptly if its competitors had adopted a low price policy.
From the text of the decision it is not clear whether this defensive argument was used against the ICA or whether the parties relied on other arguments.
However, in order to persuade the ICA of their unilateral and independent behaviour, the fined undertakings should have opposed economic arguments supported by evidence. The ICA has held that they neither demonstrated a plausible economic explanation of their conduct, nor provided an analysis based on internal data in support of their argument that they rationally and independently decided to increase their fares.
The case demonstrates that in the most complex antitrust cases, the debate often shifts from legal arguments to economic ones. It sets an important precedent for the other cases which are currently involving the transport sector, especially for the case regarding the maritime routs in the Strait of Messina that was launched after the ICA first observed the parallel price increases on this route. If the ICA’s decision is appealed, the administrative judge will very likely be called to assess the validity of the economic assessments submitted by the parties. As requested by the European Court of Human Rights, the judicial review of the ICA’s decision shall be full and will enter into the economic assessment of the ICA.
[1] See ICA, I689C – ORGANIZZAZIONE SERVIZI MARITTIMI NEL GOLFO DI NAPOLI,, opening decision of 30 May 2013, No. 24357 in Boll. Uff. No. 24/2013.
[2] See ICA, I763 – SERVIZI DI CABOTAGGIO MARITTIMO STRETTO DI MESSINA, opening decision of 26 June 2013, No. 24427, in Boll. Uff. No. 27/2013.
[3] See ICA, I743 – TARIFFE TRAGHETTI DA/PER LA SARDEGNA, decision of 11 June 2013, No. 24405, in Boll. Uff. No. 25/2013.
[4] Supreme Administrative Court sez. VI, No. 597/2008:
