Italian competition authority fines Enel and Acea for abusing dominance in regulated retail energy markets to gain customers in competitive markets
1. The facts
The alleged anti-competitive conducts tied in with ongoing liberalization of the retail electricity market, as started with the introduction of the retail electricity choice for all customers under Italian Law No. 125/2007 which implemented energy-sector EU Law.
Italy’s 2015 Annual Competition Law provided for phasing out electricity retail prices regulation by July 1st, 2019 (later postponed until July 1st, 2020). Until then, while all electricity customers are free to choose their supplier, a default option will be available to residential customers and small and medium enterprises (“SMEs”), who have not chosen – or do not want to choose – their supplier and provided by the local Distribution System Operator (“DSO”) at a price set by the regulator. This scheme, known as “maggior tutela” or “greater protection” has been in place since July 1st, 2007.
Under such regime:
- the commercial counterpart of the consumers is a legally-unbundled company belonging to the same conglomerate as the local DSO (the largest DSO supplies about 86.5% of the customers under a regulated tariff);
- the price is set by the regulator, based upon the costs incurred by Acquirente Unico in the wholesale markets. Acquirente Unico is a state-owned company in charge of procuring electricity, through a mix of spot and long-term contracts; and
- in order to match the costs of competitors and not displace competition, the wholesale cost of Acquirente Unico is topped by a certain amount, set by the regulator in order to match the supposed entry and operating costs of an “efficient” new entrant.
In 2017, the Italian Antitrust Authority ("AGCM") opened an investigation into various subsidiaries of the holding companies, Enel S.p.A. ("Enel"), Acea S.p.A. ("Acea") and A2A S.p.A. ("A2A") for an alleged abuse of a dominant position (Art. 102 TFUE) consisting in a policy of progressively "transferring" customers already supplied under the "greater protection" regime towards free market options/contracts. According to the AGCM’s assumption, Enel, Acea and A2A, regarded as dominant by virtue of their respective positions (i) in the distribution of electricity, both in the area in which they operate as a legal monopoly on the basis of a concession, and in other areas open to competition; and (ii) in the sale of electricity to the consumers under the “greater protection” regime, have implemented the following non-replicable practices vis-à-vis non-vertically-integrated companies:
- commercial exploitation of the information regarding the personal data and the billing data of the customers to be served under the “greater protection” regime;
- in the case of Enel, engaging with a campaign aimed at reacquiring customers from the competing company Green Network, allegedly also through defamation campaigns against the latter;
- in the case of A2A, the proposition of offers directed at its customers under the “greater protection” regime.
In the AGCM's opinion, these practices were intended "to alter future competitive scenarios resulting from the complete market liberalization at the expenses of non-vertically-integrated electricity suppliers" and, according to the applicant AIGET ("the Italian Association of Wholesalers and Energy Traders"), "to accelerate the ongoing process of emptying the pool of customers still in the "greater protection" regime in the context of the possible implementation of competition-enhancing policies for the provision of electricity services to customers who have not yet chosen a supplier at the time of the termination of the 'greater protection' regime".
2. The legal assessment
According to the Decision published on January 8th, 2019 (the "Decision"), both Enel (at least from January 2012 to May 2017) and Acea (from 2014 until the end of 2017) have collected the privacy-consent statements of the customers supplied under the "greater protection" regime to contact them for commercial purposes and make "targeted" offers to these customers with a view to encourage them to sign electricity supply contracts on the free market.
Since none of the competitors was proved able to replicate these offers – especially in areas where the two groups exclusively provide the service under the "greater protection" regime –, the two holding companies conducts were deemed illegitimate and suitable to artificially strengthen the competitive advantage the latter groups have been benefitting from for historical reasons (Enel is the national former incumbent, while ACEA is the Rome municipality utility company).
These conducts are deemed to jeopardize the long-term competitiveness of non-vertically-integrated suppliers, which also need to attract customers still supplied under the "greater protection" regime.
The case has a number of similarities with an interim decision of the French competition authority in 2014. In that case, the French authority made an interim decision, provisionally finding that GDF Suez had abused its dominant position in the relevant gas supply markets. The abuse consisted of offering a dual fuel offer combining regulated and unregulated supplies that its competitors could not match, and using the data on a large number of French customers that it had obtained as the regulated supplier in order to target customers for offers to switch to unregulated tariffs. Interestingly, like the AGCM, the French authority took the view that issuing misleading statements about competitors might also be a form of abuse. The French authority ordered GDF Suez to disclose certain customer data to its competitors, subject to a number of data protection safeguards. The AGCM did not order similar disclosure.
3. Why is this relevant?
The Decision rendered by the AGCM marks, therefore, a further step on the notion of abuse of a dominant position being further overstretched and, nonetheless, it raises severe doubts we may summarize as follows:
- the AGCM seems to treat the processing and storage of personal data resulting from the signing of the privacy-consent statements as a "strategic asset", likely to result in Enel e Acea "to identify precisely and without margin of error which customers are still in MT [greater protection regime], information not publicly available […]". It is common knowledge, when a monopolist owns a resource that is a necessary input for producers on the downstream market because the resource cannot be "duplicated", that a refusal to deal may constitute an “abuse” if otherwise competition on the downstream market or access to that market would be made impossible. This seems not the case in the proceedings regarding Enel and Acea;
- furthermore, Article 102(c) TFEU was originally designed to deal with "pure" secondary discrimination between third-party customers, so that it is hard to conceive transactions with an undertaking's associated company as "equivalent" to a transaction with a third party.
For more details:
 The AGCM eventually dismissed all the allegations regarding A2A.
 In Italy the "greater protection" regime still accounts for over 60% of domestic customers and almost 50% of non-domestic low-voltage customers.