Algorithms: The Puppet-master

An algorithm is a step by step method of solving a problem. It is commonly used for data processing, calculation and other related computer and mathematical operations. [Technopedia]

Algorithms are becoming the master of our fates. An algorithm decides the results of our Google search, whether we are entitled to receive a loan, the price of our health insurance, or the likelihood we commit a new crime.

Our behaviour is tracked, predicted and influenced by algorithms.  An algorithm collects, classifies, structures, aggregates and analyses all the information made available to it and takes its decision. The majority of us suffer the consequence of an algorithm’s decision with little or no questioning. We tend to believe that algorithms are fair, right, and unbiased. They are mathematical models after all.

However, algorithms have built in human errors, as well as conscious and unconscious biases. Algorithms can be designed to deliberately deceive regulators (e.g. emissions controls, traffic managements or price-fixing). Or they can become a means of “propaganda.” Lastly, algorithms can become too complicated for humans to understand or unpick (Andrews, 2017).

Hence, automated decisions making can result in: (i) loss of opportunities; (ii) economic loss; (iii) social detriment; and (iv) loss of liberty [here].

How we ensure that algorithms are designed to achieve the greater good, instead of resulting in harmful outcomes is an issue we have yet to find an answer to.

How the algorithm is encoded, how it is trained and managed it is the beginning of the story. Addressing human behaviour is only one part of the problem.  How the algorithm is deployed, managed and governed by corporations is the obvious consequent issue. And last but not least, how the algorithm develops, through machine learning is to be considered (Andrews, 2017).

An algorithm is capable to result in an infringement of consumer protection, privacy and competition rules, among others. The assessment of the societal impact of these new technologies calls for a multidisciplinary approach that brings together economists, lawyers, experts of computer security and artificial intelligence as well as philosophers (here).

[To be continued]

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Is OPEC a (successful) cartel?

The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Nowadays the international organisation counts 14 Members.

OPEC’s mission is:

  • to coordinate and unify the petroleum policies of its Member Countries and
  • ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.

It seems pretty obvious that OPEC is acting as a cartel. Indeed, the general perception is that OPEC has been able to control the prices and the production of the oil industry. Nonetheless, no competition authority has gone after the organisation so far, to my knowledge. Similarly, I could not find any record of a successful civil law suit.

Is the long, undisturbed life of OPEC only the consequence of politics and pragmatism? Has OPEC been able to continue exist because of faulty rules of procedure or due to the impossibility to apply antitrust legislation to such an international organisation?

But most importantly, has the market finally adjusted itself to prevent OPEC from exercising market power and behave anticompetitively?

Indeed, there are evidence showing that OPEC was never really in control of the market because its Members did not respected the cartel’s decisions [here]. In any case, due to changed conditions of the oil industry, some commentators are arguing that OPEC is no longer able to exercise a decisive influence on the oil’s price.

A successful cartel

A cartel is a group of similar, independent companies which join together to fix prices, to limit production or to share markets or customers between them [here].

Economics tells us that firms have always the incentive to cheat. However, under certain conditions, cooperation can be sustained as the Nash equilibrium.

Sustainable collusion occurs when:

  1. Market players repeatedly interact;
  2. The cheating by one player can be (easily) detected by the other cartellists;
  3. There is a high enough discount factor;
  4. The threat of retaliation is credible; and
  5. Coordination is feasible.

If we simplified to the extreme, likelihood of collusion increases if there are (i) few market players (ii) producing an homogeneous good, (iii) having a similar cost structure, (iv) the spare capacity necessary to retaliate, (v) enjoying a collectively high market share, (vi) in a transparent market (vii) with significant barriers to entry and expansion.

Is OPEC still a successful cartel?

The OPEC’s mission screams to the world that the organisation is acting to distort free competition in the oil industry. No secrecy, no rooms filled with smoke, everything is done under the sun.

Even assuming that the procedural obstacles to start an antitrust case against OPEC can be overcome (e.g. international immunity, cross-border jurisdictions, the need to qualify as an “undertaking” according to EU law), are there the elements to find an antitrust infringements? In other words: is OPEC a successful cartel? Can OPEC really hinder competition in the market?

When it comes to Article 101 TFEU, the anticompetitive conduct must have an appreciable effect on the EU market. Hence, even in case of infringement by object, the undertaking should be allowed to prove that its conduct had no such appreciable effect on the market.

The debate on “restriction by object” and “restriction by effect” is far from being settled. I will limit myself in stating that any cartel that does not enjoy a significant market power would be shooting itself in the foot by trying to restrict competition. [The “by object/effect” issue is excellently discussed here, specifically in relation to OPEC].

OPEC’s Members own 3/4 of the world’s oil reserve. They produce 40% of the global demand and  their exports represent about 60% of international traded oil.

The numbers above seem to hint that OPEC has some substantive market. However, many have started to doubt that OPEC can still effectively control oil’s price. Indeed, OPEC seemed unable to prevent the 2008 price race, despite the fact it increased its production quotas to the highest level in history.

In the past few years few events have contributed to erode OPEC’s power. The development of substitutes of oil products play now a competitive constraint on OPEC’s ability to increase prices. If the cost of a barrel goes too high, the switch to other energy sources will become more convenient, attracting further investments; shale oil prices are constraining OPEC’s ability/willingness to increase prices, for example [here]. Non-OPEC countries also influence OPEC’s strategy. Russia is now the biggest oil producer, as well as the number 1 energy producer [here]. Russia, as much as Saudi Arabia, depends on oil exports for a great  portion of their budget revenues. The two countries put energy issues at the heart of their foreign policy and use oil (and in Russia’s case, natural gas) as tools to achieve political objectives [here]. Russia’s increased production kept under control OPEC’s behaviour, even in the face of a high demand [here].

Other factors that influence the sustainability of the OPEC’s cartel are the differences in production costs of the OPEC’s members, the different weight that oil’s revenues play in their national economy, and their different policy’s objectives [here].

Moreover, a sustainable cartel needs a credible retaliation mechanisms. While Saudi Arabia, the biggest oil supplier, usually keeps at hand more than 1.5 – 2 million barrels per day of spare capacity for market management [here], the rest of the Members have little room to increase production [here].

If OPEC has no influence on oil’s price, what does?

Normally, prices drop when supply and demand increase and vice versa. But in the oil world, demand and supply are only part of the equation. Elements of geopolitics, environmental concerns as well as the oil’s status as the preferred source of energy complicate the picture [here].

The production costs per barrel depend on technological progress and the characteristics of the resource stock [here], which are independent from OPEC.

In the long-run the two factors that drive oil price are: the global demand and the future supply. The former is directly linked to the constant population growth and the increasing need for oil of emerging countries. The latter is highly uncertain to remain stable given that supplier countries manage their reserve more and more independently from the needs of third parties. There is no concrete reason for them to respond to the needs of importing countries and establish a low price [here]. So even in the absence of OPEC the price is very unlikely to go below costs of production.

Zietlov argued that factors that play a greater influence on the oil’s price than OPEC’s market power are:  the steady increasing of global demand, the temporary supply constraints, the US dollar exchange rate, and the growing importance of resource pragmatism and nationalism.

 

The oil industry might be a perfect example of the need to trust the market to eventually adjust itself. Similarly, the oil’s industry provides an example of how market shares are not always indicative of real market power.

However, if now the market seems to have adjusted to a level playing field, it could also go back to a less competitive scenario. For example, things might change if Russia decides to formally join the organisation, so bounding itself to abide OPEC’s decision and increasing OPEC’s spare capacity, necessary to retaliate [here].

P.s.: In the EU, the Commission would have the option to go after OPEC also for infringement of article 102 TFEU. However, from the above I conclude that in spite of the high market shares, OPEC is not able to behave independently of the other market players, hence its Members should not be found to enjoy collective dominance.

Vertical mergers are not necessarily competition law friendly

The vertical integration of producers of complementary products or services results in no loss of direct competition as they operate at different levels of the supply chain. On the one hand, vertical mergers are likely to produce efficiency gains because they give rise to a direct incentive to reduce prices and/or improve quality. On the other hand, they can create market power, either by coordinated or unilateral effects, which may result in detriment to consumers. Competitive and anticompetitive effects of a vertical merger arise from the same source: the creation of cost asymmetries between the integrated firm and its rivals. Whether the deal will result in detriment to consumers, it depends on whether it will be greater the market power increase or the reduction in cost of the integrated firm.

Substitution vs. complementarity

Horizontal mergers involve producers of substitute products and are likely to cause anticompetitive effects because substitute products have a positive cross-price elasticity: if product A’s price increases, the demand of product B will rise as some customers will switch to the latter. Because post-merger some of the lost sales are internalised, a horizontal merger creates an incentive to raise prices.
Conversely, the relationship between complementary products is characterised by a negative cross-price elasticity: the sales of both products will increase following the reduction of either’s price. If producers of complementary products merge, this beneficial effect is internalised providing an additional incentive to lower prices. This externality effect is not restricted to prices: any improvements of quality, promotion or distribution will produce a positive effect. Because the integrated firm will act to maximise profits across the two lawyers of the chain, prices will decrease and output will rise. Vertical mergers are presumed to be pro-competitive; indeed, the main rational behind a vertical merger is the achievement of efficiencies rather than the increase of market power. However, in limited circumstances the cost asymmetries produced by the integration can result in the foreclosure of competitors and eventually lead to higher prices. The competition concerns created by vertical mergers are similar to those put forward in abuse of dominance cases: the integrated firm might have the ability to foreclose rivals in downstream and/or upstream markets, might act to raise rivals’ costs or weaken their offering by bundling, discriminating or refusing to supply.

Anti-competitive effects of vertical mergers

Efficiencies can create cost asymmetries between the merged firm and its non-integrated rivals, which can eventually lead to an increase of the integrated firm’s market power as a result of:
(i) the loss of attractiveness as a substitute of rivals’ products, either because they are of lower quality, more expensive or because competitors are excluded from the market or prevented entry (unilateral effect); or
(ii) the increased likelihood of coordinated conduct (coordinated effects).

The change of incentives and constraints following the vertical integration can rise rivals’ costs (input foreclosure) or reduce their revenues (customer foreclosure). Moreover, vertical integration can make it easier for firms to coordinate or evade regulatory obligations.

Input foreclosure
To engage in anticompetitive input foreclosure, a firm needs to have the ability and the incentive to foreclose and its behaviour must result in detriment to consumers.
The merged entity will be able to engage in input foreclosure only if it controls an important input to downstream rivals. If it will either stop supplying competing downstream firms or will do so at a higher price, the cost of downstream rivals may be negatively affected and, as a consequence, their prices will increase. The restriction could also prevent a new entry, and hence the vertically integrated firm will preserve significant market power upstream. The downstream prices will either increase or fall, depending on whether dominates the cost or the market power effect of integration. In conclusion, the overall effect on consumers is ambiguous.

However, engaging in a foreclosure strategy involves a profit sacrifice, i.e. the lost margins on the sales of products to downstream competitors that are not made post-merger. Only if the benefits outweigh the costs, the integrated firms will have the incentives to engage in foreclosure. The empirical analysis assessing the trade-off between costs and benefits involves, inter alia, the assessment of upstream and downstream margins as well as the propensity of consumers to switch and the reaction of competitors.

If, as a result of the foreclosure, rivals’ price increases, costumers will switch to the integrated firm’s product: the greater the switching rate, the greater the benefits will be since the merged entity will earn both the wholesale and the retail margin on those additional sales. However, the merger will harm consumers and, hence will be considered anticompetitive, only if it allows for a price increase possible given the reduced competition.

The merger will not cause anticompetitive effects unless the competing upstream firms are capacity-constrained, or less efficient, or if branding is important since, in these cases, the downstream firms may find it difficult to obtain equivalent input at pre-merger price. Competition concerns are unlikely to arise also if the upstream product represents only a small proportion of the overall retail price because, in these instances, even a substantive price increase would be unlikely to affect the final price. Similarly, the greater is the incentive for the downstream firms to absorb the price increase, the less effective will be a foreclosure strategy.

Customer foreclosure
If before the merger the downstream firm was a significant market player, and following the integration it stops purchasing from upstream rivals, the latter’s average costs of supply might increase because of the reduction in sales. If customer foreclosure results in exit (from higher average costs) or reduced competitive vigour (from increased marginal costs), the competitive constraints that upstream competitors exert on the upstream division of the integrated firm will be reduced, leading to greater market power upstream and higher input prices. It is a concern only when the vertical merger involves a firm that is an important customer that enjoys significant market power in the downstream market, i.e. it has the ability to foreclose.

Only in certain instances consumers are harmed. There are competition concerns, only if, by denying access, the wholesale price to non-integrated downstream firms increases leading to reduced competition downstream and hence higher retail margins. Competition concerns may also arise when the integrated firm is successfully winning sales from its upstream competitors and the upstream market is characterised by significant economies of scale, since customer foreclosure can lead to higher input prices. In general, customer foreclosure is anticompetitive only if there is a significant customer in the downstream market with large market share, the input suppliers are subject to significant economies of scale, and the upstream firms are not able to expand sales to other downstream firms.

Enhanced likelihood of collusion
Vertical mergers can make it easier for firms to engage in tacit or express collusion since it might facilitate the exchange of pricing and other competitively sensitive information in either the input or output market, or it can eliminate a disruptive buyer or enhance market transparency. The greater the benefit of the downstream division from raising the costs of its rivals, the greater the incentive for the integrated firm to coordinate pricing upstream. However, the coordinated effects are likely to be significant only if either the upstream or the downstream market is conducive to coordination.

Evading price regulation
If the upstream market is regulated, but the downstream market is not, by integrating, the upstream monopolist can realise its monopoly profit in the downstream market. This is possible by either discriminating other downstream players or engaging in cost misallocation. At the same time, a downstream monopolist active in a regulated market could integrate and use transfer pricing to evade its regulatory constraint and earn the monopolist profit upstream. If the integrated firm engages in discrimination, it will disadvantage its downstream rivals by reducing the quality of the input or raising competitors’ costs. This relaxes the competitive constraints played by downstream competitors and hence, the integrated firm will be able to increase prices. If the regulated price upstream is cost-based, the integrated firm will have the incentive to have its downstream costs attributed to its upstream division so that it relaxes the price constraints in the upstream market and increases its profits downstream. As it occurs with cost misallocation, the market power and profits are realised by the unregulated entity. These strategies are of concern because they result in greater exercise of market power and produce inefficiencies.

Pro-competitive effects of vertical mergers

Vertical integration enhances coordination between the upstream and downstream firms. The most evident positive effect of vertical integration is that the merged entity will no longer pay a wholesale price that includes a mark-up over marginal cost: it will transfer the input internally at only marginal cost. Hence, vertical integration solves the problem of double marginalisation and can allow for an immediate price reduction.
Efficiency gains are not limited to costs and price reductions; they also include improvements in quality, increased variety, and innovation leading to new products.

From an empirical point of view, those efficiencies are found to outweigh possible anticompetitive effects in most contexts. However, in limited circumstances, vertical mergers can indirectly generate anticompetitive concerns as a result of changes in constraints and incentives.

***

Bishop, S. and Walker, M., The economics of EC competition law: concepts, application and measurement, University Edition, Sweet and Maxwell, 2010.

Church, J., The Impact of Vertical and Conglomerate Mergers on Competition, European Commission, 2006, available at: http://bookshop.europa.eu/en/the-impact-of-vertical-and-conglomerate-mergers-on-competition-pbKD7105158/.

Church, J., Vertical Mergers, in Issues in Competition Law and Policy, Vol. 2, p. 1455, ABA Section of Antitrust Law, 2008, available at SSRN: https://ssrn.com/abstract=1280505.

Gunnar, N., Jenkins, H., and Kavanagh, J., Economics for Competition Lawyers, Oxford University Press, 2016.

RBB, The efficiency-enhancing effects of non-horizontal mergers, 2005, available at: http://ec.europa.eu/DocsRoom/documents/3667/attachments/1/translations/en/renditions/native.

Rosengren, E.S., and Meehan, J.W., Antitrust policy and vertical mergers, in New England Economic Review, 1995, pp. 27-38.

Is economics helpful when it comes to cartels?

Economics implies that cartels are inherently unstable and so should be short-lived because they price above the Nash equilibrium. However, the evidence is cartels are often long-lived.

When players interact for an infinite number of times, as do firms in real markets, they can escape the short-run Nash equilibrium of the Prisoner Dilemma. In the context of infinite interaction, a collaborative behaviour becomes sustainable depending on the benefits of cheating, the credibility of the punishment’s threat and the discount factor.
“Punishment” refers to the reaction of non-cheating firms to an infringement of the collusive agreement: non-cheaters will move away from the cartel equilibrium towards a more competitive equilibrium, so that the cheater’s profit is reduced. Stability of the cartel is ensured by a punishment mechanism that makes the benefits derived from deviation smaller than the benefits of keeping colluding. An effective punishment mechanism should be strong enough to deter cheating, but also credible. It is in every cartel member’s interest to set the punishment mechanism as high as possible, but credibility follows from each non-cheating firm’s interest to implement it if a breach actually occurs. The punishment mechanism should hurt the cheating firm more than the non-cheating ones; hence, it must correspond to the latter’s profit-maximising behaviour.

Economics’s contribution to anti-cartel enforcement

Ex ante, economics can be used to prevent the formation of cartels by prohibiting mergers that would ease collusion. As tacit and explicit collusion rest on the same economic principles, the criteria used to identify tacit collusion in merger review processes can provide guidance also for the detection of explicit collusion.

Ex post, competition law enforcement can benefit from economic analysis because the latter can provide evidence:

  1. on the plausibility that an industry is/was cartelised, i.e. it can
    a) suggest where to look for a cartel, and
    b) reveal whether, given the characteristics of the market, the cartel
    allegation is credible; and
  2. on the impact that a cartel has had in the market.

Unfortunately economics is unable to establish with certainty whether a market is cartelised: economic models can be employed as screening devices, but further investigation will always be necessary.

Likelihood of collusive behaviours

Economics can help identify markets that are prone to cartelisation and establish whether the cartel allegation is credible given the market’s characteristics. However, economists tend to reject the idea of prosecuting cartels on economic grounds only because patterns of prices under collusion and competition are often similar; moreover, economics cannot distinguish between no collusion and unsuccessful collusion, and it cannot distinguish between tacit and overt collusion.

Structural and behavioural markers represent – complementary – screening tools; they identify suspicious behaviours, but cannot provide hard evidence of collusion. Indeed, they could produce false positives, or negatives, because they cannot distinguish between tacit and express collusion or because market players can evade them. Moreover, not all noncompetitive behaviours infringe competition law.

Estimation of the cartel’s effect on the market

Economics is useful to assess the cartel’s effects on the market. The actual cartel’s impact is of relevance for damages actions, but it can also have a bearing on the size of the fine imposed.

The harm suffered by the direct purchaser of a cartelised product has three elements: (i) the direct effect – the quantity of product purchased multiplied by the increase in price as a result of the cartel; (ii) the output effect – the increase in the purchaser’s selling price that is a likely consequence of its input prices increasing, leads to a reduction in the demand for its products; and (iii) the passing-on effect, which occurs when the direct purchaser raises its selling price in response to the increase in output costs, therefore reducing the harm it suffers

The consequence of a cartel on the market can be estimated by understanding what would have happened absent the wrongful conduct: the claimant’s position during the cartel is compared to the position that he would have been in “but for” the anti competitive behaviour. The difference between the claimant’s profits in the counterfactual world to the one in the cartelised scenario is the amount of compensatory damages due to the claimant. To estimate the counterfactual profit we need to know, or estimate, the following:

  1. the amount of the overcharge;
  2. how much lower would have been the selling price at the lower input costs; and
  3. the level of sales occurred at this lower price.

Direct evidence can be useful to quantify the damage; however, economists have developed different helpful tools to carry out the calculation. Comparator-based methods assume that the counterfactual scenario is representative of the likely non-infringement scenario and that the difference between the infringement data and the data chosen as a comparator is due to the infringement. Cost-based methods estimate the non-infringement price by using some measure of production costs per unit and adding a mark-up for a profit that would have been reasonable in a competitive market. Financial methods compare the counterfactual profitability and the actual profitability of the claimant or the defendant. These approaches can estimate the likely non-infringement scenario but cannot delineate it with certainty and precision.

 

In conclusion, even though economic cannot provide hard core evidence of collusion, it is a useful tool to detect cartels and understand their effects in the market. However, the quality of the answers economics can provide is only as good as the data available and as appropriate as the approach chosen.

***

Ayers, I., How cartels punish: a structural theory of self-enforcing collusion, in Columbia Law Review, 1987, pp. 295-325.

Bishop, S. and Walker, M., The economics of EC competition law: concepts, application and measurement, University Edition, Sweet and Maxwell, 2010.

Friedman, J.W, A non-cooperative equilibrium for supergames, in Review of economic studies, 1971, pp. 1-12.

Harrington, J.E. Jr., Behavioral screening and the detection of cartels, EUI-RSCAS/EU Competition 2006 – Proceedings, 2006

The Big Data Challenge

Big Data is the fuel of the digital economy. It is the large amounts of different types of data produced at high speed from multiple sources, requiring new and more powerful processors and algorithms to process and to analyse.

Big Data can enhance economic growth and be helpful in various sectors. For example, by making information transparent, or by helping to create new services and products or  to better tailor existing ones.

However, Big Data also creates concerns. When it constitutes personal information, i.e. when it can personally identify an individual or single them out as an individual, it can be used as a currency, becoming the quid pro quo for online offerings which are presented or perceived as being ‘free.’  Moreover, even though we have not analysed the impact of free services on the digital economy yet, we have already understood that power can be achieved through the control over great volumes of data on service users. Refusal of access to personal information and opaque or misleading privacy policies can result in the abuse of a dominant position and in harm to consumer. This may justify a new concept of consumer harm for competition enforcement in digital markets.

Big Data touches on areas that are of interest for data and consumer protection, as well as for competition law. Competition regulation aims to achieve an efficient allocation of marketing resources and ensure consumer welfare. Consumer protection rules’ goal is to prevent the use of  misleading claims about products and services. Data Protection regulates how collected data can be used. In the end, the three areas of law share common goals: the promotion of growth and innovation and the enhancement of the welfare of individual consumers.

A new investigation on Big Data

At the end of May the Italian Competition (& Consumer Protection) Authority joined the team of enforcers which has opened their own investigation on Big Data. However, the Italian investigation will look at the issue with new eyes as the competition regulator has joined forces with the Data Protection Authority and the Communications Authority to carry out the exercise.

The three Italian regulators  will assess if and when access to Big Data might constitute an entry barrier or if Big Data can facilitate the adoption of anticompetitive behaviours that could possibly hinder development and technological progress. To get their answer, the three authorities will analyse the impact that online platforms and the associated algorithms have on the competitive dynamics of digital markets, on data protection, on the ability of consumers to choose, and on the promotion of information pluralism. They also aim to verify the effect that information aggregation and that access to Big Data obtained through non negotiated forms of user profiling have on the digital ecosystem [For more information see the press release here].

 

The Digital Clearing House

It seems a widely accepted fact that to respond to the digital challenge, enforcers need to come together.  Last year, the European Data Protection Supervisor (EDPS) proposed to set up the Digital Clearing House (DCH) to bring together, in a voluntary network, privacy, competition and consumer protection authorities willing to share information and to discuss how to better enforce the rules [here].

The DCH had its first meeting just the day before the three Italian regulators launched their investigation. Participants included regulators with responsibilities for various aspects of the digitised economy from around the world. Participants expressed their concerns on information and power disparities between individuals and the service providers whom they rely on. Their discussions touched on common short and longer term issues, such as fake news and voter manipulation, data portability, as well as the emergence of attention markets and the opacity of algorithms which determine how personal data are collected and used. Regulators have identified four areas of overlap or possible gaps in the current legal framework:

  1. unfair or harmful terms and conditions for digital platforms;
  2. security considerations for connected things and apps;
  3. the ‘fake news’ phenomenon; and
  4. the longer term impact of big tech sector mergers.

The next meeting of the DCH will take place in the fall.

For Further Background

 

Italian Annual Competition Law Bill: the NeverEnding Story

Article 47 of Law n. 99/2009 obliges the Italian Government to submit to the Parliament, a competition law bill to stimulate competition in the Italian market. The bill should be submitted on a yearly basis, taking into account the Annual report that the Italian Competition Authority submits every summer to the Parliament.

In February 2015, the Council of Ministers adopted, for the first time, a draft of the competition law bill…which still awaits for the Parliament’s approval.

The Government’s draft was not as bold as expected (and announced), and received a rather cold welcome by the Italians. For example, the provision favouring Uber and similar services disappeared. The provision extending to para-pharmacies the ability to sell Class C medicines (i.e. those not reimbursed by the National Health System) suffered a similar faith. The only actual pro-competitive article seemed to be the one that takes away, from Poste Italiane, the monopoly  for the notification of fines and other judicial documents.

The Lower Chamber of the Parliament approved the bill in September 2015. Since then, the bill has been sitting in the Senate.

In these two years, the bill was not really improved. If anything its content was watered down, as recognised by the President of the Italian competition Authority as well as the European Commission.

The Senate’s plenary is scheduled to vote on the draft in April. The Press reports that, now, the Government intends to impose the “vote of confidence” to ensure a smooth and short debate of the bill. However, few issues remains unresolved. Once the Senate will finally adopt the text, the latter will be sent back to the Lower Chamber for the final approval.

The text approved by the Senate’s Committee contains 74 articles, introducing new rules for TMT and TV operators, the financial services, postal, energy, tourism, transport sectors, as well as for lawyers and notaries. During the discussion at the Senate’s committees level, the two rapporteurs introduced an article changing the mergers’ notification thresholds. It was announced that the Government intends to introduce a “defensive” measure against hostile takeovers, to ensure total transparency in investment strategies in Italian companies.

After more than 800 days the Senate approved the bill on 3 May 2017. The text, which now contains 74 articles, now awaits the final approval by the Lower Chamber.

The content of the drafted bill in pills:

INSURANCE: New rules on discounts for cars’ insurance policies to reward the virtuosity of consumers.

ENERGY: Liberalization of retail energy market (in July 2019). New rules to enhance consumer protection. New provisions to simplify renewable energy production and to encourage small electricity distribution companies.

MOBILE TELEPHONE, ELECTRONIC COMMUNICATIONS AND AUDIOVISUAL MEDIA: rules to increase transparency of mobile contracts and make easier for customers to switch operator. However, operators may impose the payment of the costs incurred by the company to end the contract.

ENVIRONMENT: Stronger rules to allow producers’ access to the packaging market, new minimum quality standards for the treatment of electrical and electronic equipment’s waste, and procedural simplifications concerning ferrous and non-ferrous metal waste.

BANK SERVICES: new provisions to protect competition and transparency in the financial leasing sector.

PROFESSIONAL SERVICES: changes for notaries, regulated professions (e.g. engineers and lawyers) and pharmacies.

TRANSPORT: within a year the Government has to approve new rules for non-scheduled public car services (Taxi).

[To To be continued]

Italian Competition Law Bill – The NeverEnding Story on Storify.