Violation regulatory provision act unfair competition


Private enforcement in directory assistance services

The market in directory assistance services in Italy is undergoing liberalisation. However, as a result of the behaviours of some established providers, certain new entrants have been obliged to issue private enforcement claims before the Ordinary Courts on the grounds of unfair competition.

The Italian Communications Authority - by way of resolution no. 15/04/CIR - laid down a set of rules with which operators managing relevant essential facilities (such as network and infrastructure assets) are required to comply in order to facilitate the entry of new players to the directory assistance services market. In particular, these regulations require operators, which enjoy a dominant position because of their former monopolistic or oligopolistic position, to supply consumers with unbiased information on the liberalisation of the market (the so-called “neutral messaging requirement). This requirement was aimed at preventing dominant suppliers from continued exploitation of the competitive advantage gained during the previous monopolistic or oligopolistic arrangements prevailing in the directory assistance services market.

The operators who had previously enjoyed a dominant position did not comply with these regulations. Therefore a new entrant (seeking to enter the directory assistance services market in Italy filed a petition with both the Milan Court and the Rome Court to obtain interim relief.

In particular, the claimant argued that the violation of a relevant provision - though arguably of an “administrative” nature - amounted to an act of unfair competition for the purposes of section 2598 no. 3 of the Italian Civil Code, if that violation were aimed at undermining fair competition and hindering new competitors from entering the relevant market.

Courts of Milan and Rome respond robustly to support private claim

The Court of Milan, granting the preliminary injunctions claimed, held that:
“Such behaviour by the defendant(s) amounts to a violation of the principle of fair competitive behavior as defined in article 2598 no. 3 of the Italian Civil Code... (as it creates) anti-competitive effects to the clear detriment of the claimant who, in the current example of the directory assistance services market which was only recently liberalised, is currently unable to operate on the same terms as the defendant;”

The Court of Rome, which also granted interim relief, stated:
“...the prejudice to the interests of the claimant is apparent in the damage to the right of the new entrant to be treated fairly by existing competitors, including their compliance with legal provisions, regulations and administrative measures.”

In particular, the Court of Milan stressed that:
“without doubt, such conduct seems to be in conflict with section 2598 of the Italian Civil Code as it is capable of giving rise to unfair advantage on the part of the defendant to the detriment of other operators.”

In summary, the Italian Courts have indicated that violation of regulatory or administrative provisions issued by a public entity, by a firm enjoying a dominant position, will amount to an act of unfair competition on the assumption that the violation is aimed at undermining competition or hindering potential competitors from entering the relevant market.