News

ANTITRUST FINES A WELL-KNOWN TELECOMMUNICATIONS COMPANY 116 MILLION EUROS FOR HINDERING THE DEVELOPMENT OF FIBER.

11/03/2020

On February 25, 2020, the Antitrust Authority (AGCM) concluded the A514 investigation procedure by establishing that a well-known company active in the telecommunications sector (infra “the Company”), has implemented an anti-competitive strategy aimed at hindering the development of investments in ultra-wideband network infrastructure [1].

 

THE BACKGROUND:
The A514 investigation procedure originated from an initial report filed by a public company, which reported alleged anti-competitive conduct by the Company during several tenders launched by the same reporting company in 2016, in order to ensure coverage of the areas of market [2] failure in Italy as part of the Italian Strategy for the development of the Ultra-Large Band. During the months immediately following this first report, further communications were added to this first report concerning certain elements relating to the conduct already contested previously.
On June 28, 2017, the AGCM, considering the multiple reports collected to be of a relevant nature, decided to initiate proceedings against the Company pursuant to Article 102 TFEU, in order to verify the possible abuse of the dominant position by the telecommunications company.

THE COMPLAINED CONDUCTS:
When initiating the procedure, the Antitrust Authority assumed that the conduct of the Company was capable of achieving two specific objectives of harming competition: (i) firstly, to hinder the conduct of the tender procedures in order to preserve a historical monopolistic position in the territories defined as “white areas” and to avoid the entry into the market of the legitimate company winner of the tenders; (ii) secondly, to gain customers in advance on the new segment of ultra-wideband retail telecommunications services, also with anti-competitive commercial policies (non-replicable prices, lock-in). In addition to these assumptions of alteration of normal competition, on February 14, 2018 the Antitrust Authority included an additional reason for analysis in its preliminary assessment. In fact, an objective extension of the scope of the measure was decided, with reference “to the conduct concerning the Company’s wholesale pricing strategy on the market for wholesale broadband and ultra-wideband access services and the use of privileged information concerning the customers of alternative operators to the Company on the market for retail broadband and ultra-wideband telecommunications services”.

THE ESSENCE OF THE MEASURE:
Following a prolonged investigation phase, on February 25, 2020, the AGCM officially decided to fine the Company €116 million euros, considered liable for having intentionally engaged in anti-competitive conduct which, taken as a whole, allowed to integrate a strategy qualified as a dominant position within the meaning of Article 102 TFEU. Specifically, the Company was held liable for having engaged in “conduct aimed at preserving its market power in the provision of fixed network access services and telecommunications services to end customers” and for having “hindered the entry of other competitors, preventing both a transformation of the market in accordance with conditions of infrastructure competition and regular competition in the market for retail services to end customers”. In fact, the first two points of complaint highlighted in the initial reports have been fully accepted and the Company’s responsibility for hindering the conduct of tenders under the Government’s National Ultra-Wideband Strategy has been established. On the other hand, the point relating to the alleged pricing strategy put in place by the Company together with the alleged use of insider information on the customers of the alternative operators has completely fallen.
For these reasons, the AGCM has decided to fine the Company of a significant financial burden in order to provide the necessary deterrent to possible future anti-competitive conduct. In any case, in quantifying the fine, the Antitrust Authority has positively assessed the Company’s conduct in the final phase of the investigation procedure, aimed at ensuring that the promotional offers submitted had overall economic conditions that were fully replicable by other competing operators.
With respect to the payment of this fine, the AGCM has also specified that it has postponed the deadline for compliance to October 1, 2020, “in view of the serious difficulties facing our country’s production system, resulting from the extraordinary epidemiological emergency from COVID-19, as well as the high amount”.
Finally, the Company immediately communicated its doubts about the severe ruling, defining as unjustified the fine imposed by the Antitrust Authority and also announcing a clear willingness to appeal to the Regional Administrative Court (“TAR”).

[1] It is possibile to find out the full measure at the following link: https://www.agcm.it/dotcmsdoc/allegati-news/A514%20chiusura.pdf
[2] The areas with market failure are commonly defined as “white areas”, due to their characteristics of low population density and jagged location on the territory for which only direct public intervention can guarantee the resident population a connectivity service. Without public subsidies, in fact, the market in itself would not justify the innovative infrastructure in these areas.

Paolo Rovera e Alessandro Bura


THE STREETWEAR TRADEMARK “BOY LONDON” DECLARED INVALID BECAUSE IT IS CONTRARY TO THE ACCEPTED PRINCIPLES OF MORALITY.

04/03/2020

With its recent Decision No 20 461 C, the Invalidity Division of EUIPO declared the trademark “BOY LONDON” invalid on the grounds that it evokes Nazi symbolism and is, therefore, contrary to the accepted principles of morality according to Article 7(1)(f) RMUE.

 

The Fact
The Invalidity Division of the EUIPO, by decision of 20 December 2019, declared the clothing trademark BOY LONDON invalid as contrary to morality pursuant to Article 7(1)(f) RMUE.
The figurative trademark in dispute contained a figurative component representing an eagle with wings outstretched with its look to the right resting its claws on the letter “O” of the word “BOY”, written in capital letters under the image of the eagle. Below the word “Boy”, the word “London” appears in significantly smaller characters:

The applicant’s arguments were based on the assumption that the contested sign was a clear representation of the so-called “Parteiadler”, one of the emblems of the German National Socialist Party:

The contrast to accepted principles of morality and public order as grounds for the invalidity of trademarks
As is well known, Article 7(1)(f) RMUE prohibits the registration of trademarks contrary to public policy and morality. The wording of this principle is very broad and requires prudent application taking into consideration, on the one hand, the right of traders to freely use signs they wish to register as trademarks and on the other hand the right of the public not to be disturbed by offensive, threatening or abusive marks. The purpose of the prohibition of registration of trademarks contrary to morality and public policy is not to avoid the commercial use of the sign but to avoid registration of the trademark in cases where the grant of the monopoly that offends against certain basic values of civilised society. Furthermore, it seems necessary to specify that Article 7(2) states that Article 7(1)(f) applies even if the grounds for refusal exist only in part of the Community. The assessment of the existence of an impediment to registration on grounds of contrary to public policy or morality cannot, in any case, be based either on the perception of the part of the public that is easily impressionable or offensive, or on the perception of the part of the public that is imperturbable, but must be made based on criteria of a reasonable person (see 14/11/2013, Ficken Liquors, T-54/13, EU:T:2013:593). For the purposes of examining the restrictions to registration for reasons contrary to public morality or public order, the Invalidity Division – also in the decision in comment – recalls that the relevant public cannot be limited to the target audience of the goods and services for which registration is requested, but, on the other hand, it is necessary to take into account that the sign contrary to public morality or public order could offend those who might accidentally be confronted in their daily lives.

The decision of the Invalidity Division of Euipo
The Invalidity Division, upholding the applicant’s argument, declared the trademark in subject contrary to morality, since the “message evoked by the sign and perceived by the public recalls Nazi symbolism” and therefore invalid within the meaning of Article 7(1)(f) RMUE in combination with Article 59(1)(a).
First, from a visual point of view, the Invalidity Division considered that the relevant public could perceive the contested trademark as a reference to Nazi symbolism, even though the trademark, unlike the Parteiadler, does not show the swastika and bears the word element BOY LONDON. The omission of the swastika and the addition of the word component, however, do not change the public’s perception of the trademark, according to the assessment of the Invalidity Division, which refers to Advocate General Bobek’s Opinion in Case 240/18P. In that opinion, the Advocate General had found that “morality refers to values and beliefs to which a particular company adheres at a given time (…). Unlike the descending nature of public policy, morality develops from the top-down”. For this reason, in order to assess whether a sign is contrary to morality, it is necessary to use evidence relating to the specific case to ascertain how the relevant public would react if the sign was used to distinguishing goods or services.
In the present case, in support of its argument, the applicant filed, inter alia, several articles of newspapers, magazines and online forums in which both consumers and the mass media compared the contested mark to Nazi symbolism. That documentation showed that, although not all users agree that the contested mark refers to Nazi symbolism, “a non-marginal part of the public perceives the eagle contained in the sign as a reference to the Nazi emblem” (see p. 16 Invalidity Decision No 20 461 C).
In view of all this, the Invalidity Division has therefore declared the contested trademark invalid, establishing that it refers to the Nazi party and communicates an image that is perceived by the relevant public as a reference to an ideology contrary to the fundamental values of the European Union. In particular, “the contested MUE is therefore of such a nature as to shock or offend, not only the victims of the massacres carried out by the Nazi party but also anyone in the territory of the Union who is confronted with that mark and has a normal degree of sensitivity and tolerance”.

Paolo Passadori


CORONAVIRUS PROTECTION AND PRIVACY AT THE CROSSROADS: EMERGENCY GOVERNMENT ORDER WITH WIDE-RANGING AUTHORIZATION APPROVED BY ITALIAN DATA PROTECTION AUTHORITY – A(N IN)DELICATE BALANCE

25/02/2020

Decree no. 630 adopted on February 3, 2020 as an urgent measure of combatting the spreading of the Coronavirus has been approved by the Italian Data Protection Authority. The decree confers wide-ranging authorizations of data treatment to the personnel of the Civil Protection, a government body responding directly to the President of the Council of ministers. Such data treatment may include the communication between the personnel and may regard the delicate aspects disciplined in Art. 9 and 10 GDPR regarding racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning health or data concerning a natural person’s sex life or sexual orientation and also data relating to criminal convictions and offences or related security measures.

 

The legal framework
Due to the spreading of the Coronavirus, the Italian Council of ministers, on January 31, 2020 had declared a six-months emergency period. The Civil Protection, a structure based on a wide number of governmental, administrative, regional and local entities had developed a draft decree of first urgent measures with wide ranging authorizations restricting citizens civil liberties, at the same time providing exceptions and a lowering of the applicable standard of personal data protection. The decree was adopted following approval by the Italian Data Protection Authority. The only observation of the Data Protection Authority concerned the necessity to provide for measures guaranteeing that at the end of the six-month period, all administrations involved in the activities of the Civil Protection, would take appropriate measures to bring the processing of personal data carried out in the context of the emergency, into the ordinary competences and rules governing the processing of personal data. With the regard to the framework of European Union law it shall be noted that pursuant to art. 9 para 2 lit. i) GDPR the processing of some of the data referred to above may be necessary for reasons of public interest in the area of public health, such as protecting against serious cross-border threats to health. In these cases, the law shall provide for “suitable and specific measures to safeguard the rights and freedoms of the data subject, in particular professional secrecy”.
A delicate balance
The mentioned decree no. 630 of the Civil Protection of February 3, 2020 contains a referral to the general principles laid down by Art. 5 GDPR but does not contain specific measures to safeguard the rights and freedoms of the data subject. The latter aspect is of particular relevance as according to the newspaper ItaliaOggi, edition of February 25, 2020, the authorized data treatment vis à vis citizen suspected of infection would not be limited to traditional forms of data treatment but could include also analysis of mobile communication data and geo-localization in order to establish possible chains of contacts. Another aspect of concern regards the express authorization conferred to the Civil Protection to treat also data “relating to criminal convictions and offences or related security measures”. This possibility is not covered by the exception provided for under European Union law, namely art. 9 para 2 GDPR. Further amendments, prior to the end of the situation of emergency, which guarantee an adequate protection of involved data subjects appear necessary and inevitable.

Tankred Thiem


ANTITRUST: EU COMMISSION FINES NBC UNIVERSAL EURO 14.3 FOR RESTRICTING SALES OF MERCHANDISE PRODUCTS

18/02/2020

Several companies belonging to Comcast Corporation, including the film major NbcUniversal, have been fined €14.3 million by the European Commission for restricting merchandising sales of products related to films such as Minions, Jurassic World and Trolls within the European market.

 

The EU Commission’s investigation phase:
In June 2017, the Commission launched an antitrust investigation regarding certain licensing and distribution practices of NbcUniversal to assess whether it had unlawfully prevented licensees and distributors from selling freely, within the EU single market, NbcUniversal brand products for the production and sale, including Minions, Jurassic World, Trolls and other NbcUniversal films.
EU Commission’s investigation found that NbcUniversal’s non-exclusive licence agreements infringed EU competition rules because they contained, in particular, clauses limiting out-of-territory sales to allocated customers, as well as online sales, with the obligation to pay the revenues of those sales to the licensor. NbcUniversal also obliged licensees to impose these sales restrictions to their customers, encouraging compliance with the same, also through audits that could lead to the termination or non-renewal of licence agreements.
The Commission concluded that NbcUniversal’s illegal practices, which have been in place for more than 6 and a half years (from 1 January 2013 to 25 September 2019), have partitioned the Single Market and prevented licensees in Europe from selling products across borders and between customer groups, to the ultimate detriment of European consumers. Executive Vice President in charge of competition Margrethe Vestager said: “These restrictions meant that shops could not freely choose which products to order from different European distributors. A department store in Spain could not sell pyjamas with E.T. because the Belgian manufacturer of those pyjamas was prohibited from selling in Spain. The extra-terrestrial had managed to reach Earth but was stopped in Spain due to a contractual restriction. Meanwhile, a teenager in Sweden could not buy a T-shirt with the character from the film “The Big Lebowski” online. Thus, because of these restrictions, consumers lost the possibility to choose, maybe even at lower prices”.
Vestager noted that the Commission’s 2017 investigation into e-commerce markets found that territorial restrictions had increased both in contracts for the sale of consumer goods online and in contracts for the licensing of digital products. For this reason, fighting against such anti-competitive restrictions has become a priority for the Commission.
Indeed, as stated by Vestager, the total amount of fines that the Commission has imposed on companies for creating barriers to cross-border trade in the single market amounts to EUR 184 million since May 2017 (only last year there have been two significant convictions against two major companies for EUR 12.5 million and EUR 6.2 million).
This operation is linked to other EU Commission’s activities, such as those to monitor effective compliance with the Geoblocking Regulation (EU) 2018/302, which aims to remove unjustified geographical restrictions on online shopping.

The cooperation of NbcUniversal:
It must be acknowledged that NbcUniversal cooperated with the Commission, beyond its legal obligations, by acknowledging the infringement and providing additional evidence to complete the investigation and waiving certain procedural rights which led to administrative efficiencies.

The sanction
The fine was calculated on the basis of the Commission’s 2006 Guidelines (see https://ec.europa.eu/commission/presscorner/detail/en/IP_06_857) taking into account, in particular, the value of sales relating to the infringement, its gravity and duration. However, the cooperation of NbcUniversal resulted in a 30% reduction of the fine, which was then set at €14,327,000.00.

Action for damages
Without prejudice to the sanction of the European Commission, there remains the right for all persons affected by the conduct of NbcUniversal to claim damages before national courts. The Commission has in fact recalled that, according to the case law of the Court of Justice and Council Regulation No. 1/2003, a Commission decision constitutes binding proof that the conduct took place and was unlawful.

The described developments demonstrate once again the value of a system of continuous verification of contract assets, especially with regard to licensing agreements, so that European legislation protecting competition in the free market as well as the recent geoblocking regulation is respected.

Margherita Stucchi and Tankred Thiem


AMBUSH MARKETING: THE GOVERNMENT TAKES THE FIELD TO UNMASK AN ANNOUNCED AMBUSH MARKETING

11/02/2020

On January 13, 2020 the Council of Ministers approved a draft Statutory Provision to fight the practice of “parasitic advertising” (commonly known as “ambush marketing”), i.e. the illegal association of a third party company trademark to an international event, for the mere purpose of exploiting its resonance in the media and without incurring sponsorship costs. This is the first attempt by the Italian Legislator to regulate the phenomenon in an organic manner (and not for individual events), also providing for administrative fines to be directly applied by the Italian Competition Authority (AGCM).

 

Ambush marketing: definition of the phenomenon
The phenomenon of “ambush marketing” has been defined as the undue advantage acquired by the unfair competitor who unlawfully associates its image and brand to an event of particular media resonance, without being linked by sponsorship relationships (or similar) with the organization of the event. In this way the unfair competitor takes advantage of the media exposure of the event without bearing the costs, with consequent undue hooking up and negative interference with the contractual relations between the event organizers and authorized parties.
According to the doctrine (1), the ambush, planned and conducted by the unfair competitor, can be carried out in the following different ways:
i. “predatory ambush” or “ambush by association”, consisting of association with the event through the unauthorised use of distinctive or evocative signs of the event, or through indirect recalls;
ii. “insurgent ambush”, through the implementation of surprise initiatives close to the event;
iii. “saturation ambush”, due to the intensification of the unfair competitor’s promotional activities until all advertising space left free by the official sponsor is saturated.
Far from being an exhaustive and organic classification, so far the “ambush marketing” phenomenon (and its various practical applications) has found protection in the Italian Courts on the basis of the legislation on unfair competition pursuant to Article 2598 no. 3 of the Italian Civil Code as general professional misconduct of the unfair competitor who parasitically exploits the advertising of others (also as an infringement of Legislative Decree no. 145 of August 2, 2007) (2). With respect to the rules of self-regulation in the field of advertising, the case is frequently referred to as unfair, misleading and in any case clearly parasitic advertising messages (articles 1, 2 and 13 of the Advertising Self-Regulatory Code) (3).
In the past ambush marketing has had temporary regulations that expired at the end of the single event for which such regulations were issued (among these see Law no. 167 of 17 August 2005 issued in view of the “Torino 2006” Winter Games).

The forecasts included in the draft Statutory Provision
For the first time in Italy, the Legislator intends to regulate in an organic manner the phenomenon of ambush marketing, through the creation of a specific administrative violation under the supervision of the Italian Competition Authority (AGCM), which may apply fines up to Euro 2.5 million, without prejudice to other provisions in force (civil and criminal).
However, the draft Statutory Provision at stake intends to regulate only certain types of conduct that are strictly defined as illegal and limited in scope and time.
Concerning the subject matter, the prohibited conducts – limited to sporting, trade fair or entertainment events of national or international importance – includes the following:
• to create an indirect link between a distinctive sign and an event likely to mislead the public about the identity of the official sponsors;
• to state in your advertisement that you are an official sponsor of an event, without being one;
• promotion of a distinctive sign by any action likely to attract the public’s attention, not authorised by the organiser, which is carried out during an event or in places adjacent to the event;
• to sale and market products or services that are also partially marked with an event logo or other distinctive signs likely to mislead or create the impression of an indirect connection with the event.
Excluded from unlawful conducts are those carried out in performance of contracts concluded with individual athletes, teams, artists or participants in protected events, so as not to frustrate the sponsorship contracts signed by these parties (with clearly) anti-competitive effects.
As for the time’s limitation, it is expected that the prohibitions will operate from the ninetieth day before the official start date of the relevant events until the ninetieth day after the official end date of the events themselves.

Conclusions:
The draft Statutory Provision at stake has been openly developed in view of the European football competition “EURO 2020” – which will include some matches of the tournament also in Italy – in order to clarify what the Legislator has defined as “grey areas” in the competitive protection against parasitic advertising. The intention seems certainly commendable given that the Legislator, for the first time, intends to typify the conduct considered illegal, providing an additional tool to repress illegal competitive conducts that are often not sanctioned because they occurs in many forms and, many times, considered extraneous to traditional competitive violations. However, the Legislator’s tendency to increasingly entrust independent administrative authorities (such as AGCM in the present case) with important tasks could present disadvantages, as, on the one hand, the judicial guarantees are lower (compared to traditional appeal to the Courts) and, on the other hand, adequate resources are not provided for enforcement and thus the effectiveness of the action might be frustrated.
At this stage we shall wait for “EURO 2020” to verify if the measures provided by the Draft Law scheme here in comment will be able to “unmask” the advertising ambushes that – certainly – will be carried out during the competition.

(1) Among others see UBERTI, Concorrenza sleale – l’Ambush marketing come illecito anticoncorrenziale, in Giur. It., 2018, 10, 2159.
(2) Among others, see the decisions of the Court of Milan, December 15, 2017 and January 18, 2018, both in Foro it. 2018, 7-8, I, 2528.
(3) In particular, see IAP ruling no. 052/2014 of July 8, 2014 in AIDA 2016, 1735.

Alessandro Bura