At the IBA in Rome, held from the 7th to the 12th of October 2018, Leaders League crossed paths with Gabriella Muscolo, Chairwoman of the Italian Competition Authority, a key figure in the competition law landscape in Italy and Europe.
Leaders League. Could you briefly present your professional background, as well as your role within the Italian Competition Authority?
Gabriella Muscolo. Since May 2014, I have been a Commissioner at the Italian Competition Authority and since last October 1st, also the acting Chairwoman of the Italian Competition Authority. I am a former judge and entered the judiciary in 1985 and since June 2003, I have sat on the Specialist Section for Intellectual Property and Competition Law in the District Court of Rome and at the Court for Undertakings in Rome.
From 2009 to 2014, I was a member of the Enlarged Board of Appeal of the European Patent Office. My fields of specialization are therefore competition as well as intellectual property law and in both sectors I continue to publish and lecture at Italian and foreign universities.
What are the biggest challenges your institution faces?
During the past few years, the ICA - as is the case for most of the world’s competition agencies - has been confronted with an increasingly complex situation, characterized by a profound instability that poses unprecedented challenges. We are experiencing, on one hand, a growing disaffection for competition principles and, on the other hand, an increasing request for protectionism deriving from the inequalities determined by the economic crisis and the full development of globalization.
The digital revolution has created new markets, new business models and new dominant players, with resulting profound structural changes not only in the ecosystem of the internet, but also in traditional industries. In such a complex scenario, it is clear that competition issues cannot be addressed from a single perspective, but rather require a complex strategy, encompassing a series of consistent actions.
Above all, competition authorities have to ensure that their intervention spurs rather than hinders innovation. While the risk of over-enforcement needs to be borne in mind, at the same time we must not be caught out by the opposite danger, that of under-enforcement. Let me now highlight the main trends of ICA’s intervention in the digital sector. First of all, in its advocacy and enforcement activity, ICA has favored the development of an adequate broadband network infrastructure. It is a process that the Antitrust Authority is following very closely.
A second aspect of ICA’s activity in the digital economy sphere is linked to the sharing economy and to online platforms that play a prominent role in the digital economy expanding the two-sided or multi-sided business model in an unprecedented way. ICA has, for example, used in an innovative way the power to intervene amicus curiae towards national courts to promote a system of rules that does not block the development of platforms like Uber. A case involving Booking.com, with particular reference to one clause – the Most Favoured Nation clause – has been closed rapidly and simultaneously in Italy, Sweden and France in an unprecedented cooperation among agencies. Last but not least, the ICA has been very active in the digital markets, also taking advantages of its nature of authority empowered to intervene both in the field of competition and consumer protection.
Which competition law violation occurs most frequently in Italy? Can you tell us about a significant case you recently encountered?
In recent years ICA has focused on the difficult task of challenging cartels. As it is well known, these cartels block innovation and, in certain sectors, also translate into higher expenditure for the public purse and so a heavier burden for tax payers, or have particularly serious consequences in terms of social equity.
From 2007 to 2016, the ICA opened 95 cases concerning illegal agreements, of which 69 concerned cartels: 38 have been closed ascertaining an infringement of competition laws (excluding, then, non-violations and commitments decisions). Since the adoption by ICA in 2014 of the new guidelines concerning sanctions, sanctions have increased. Another area where the competition law has been recently applied in Italy is the pharmaceutical sector, which plays a central role in the Italian economy. In that context, the most significant intervention concerned a case, dating from 2016, where a South African multinational (Aspen) was fined for an exploitative abuse, using the rarely applied theory of harm of excessive prices. This happened after a price increase of over 1,500% for certain cancer drugs, which was entirely unjustified in terms of price structure. It is worth noting that the ICA reinforced its analysis by combining two different methods to measure the excess of prices and appropriate legal considerations to assess unfairness and also that the risk of distorting dynamic competition was non-existent as the medicines were since a long time off-patent. Following the authority’s intervention, the prices of the drug, at the end of the negotiations with the Italian Medicines Agency (AIFA), were reduced by 80%.
It is very interesting to observe how this type of abuse was also ascertained in the United Kingdom and in Continental Europe: immediately after the Italian decision, also the European Commission opened a proceeding against Aspen.
You specialize in competition law and intellectual property law. How are those practices related?
According to current legal and economic theory, the intellectual property (IP) system and competition law do not have conflicting goals. On the contrary, the IP and the antitrust systems play a complementary role in ensuring the correct functioning of the market; indeed, through different means, both of them contribute to the maximization of consumer welfare.
In certain circumstances, however, IPR holders may use their rights so as to restrict competition in the market, thereby reducing consumer choice. The issue of the abuse of IPRs as an antitrust violation has been discussed mostly in the context of the application of the rules on abuses of dominant position. A paradigmatic scenario of the complex relationship between patent law and competition is also the regime of the so-called Standard Essential Patents (SEPs) encumbered with obligations to license on fair, reasonable and non-discriminatory (FRAND) terms. Another notable example of how this delicate interplay can be managed is in the pharmaceutical sector: with regards to ICA’s experience, reference can be made to the well-known Pfizer case.
This said, let me conclude on this issue only by adding that, nowadays, the intersections between competition and the IP systems seem to be particularly significant in the digital economy, since these big databases, algorithms and data mining tools which are related to the emersion of these new digital incumbents, could be protected by IPR.
Interview by Camille Guével