The role of competition policy is to initiate dynamism and encourage companies to innovate, while enabling the exit of less efficient entities from the market. During the crisis caused by the covid-19 pandemic, the OECD emphasized that industrial policy must not lead to protectionist measures. In their efforts to stimulate economic recovery, governments must ensure competition in markets. Indeed, protecting companies from competition can reduce their efficiency and contribution to recovery.
Since its establishment, the Italian Competition Agency (Competition and Market Authority – AGCM) has acquired significant competences in the area of representation of pro-competitive positions with the aim of introducing pro-competitive provisions into public policies related to existing and future legislative or regulatory measures. In 2011, the powers of the AGCM were significantly expanded, giving the Agency the opportunity to challenge any administrative act that contradicts the principles of competition before the administrative court. In 2020, the AGCM was given a new advisory mandate regarding the assessment of the principle of proportionality in any new legislative or administrative provision/measure relating to regulated professions.
Today, the Italian Competition Agency can rely on a wide range of competences in the field of representation to cooperate with policy makers and contribute to a more competitive and dynamic environment in the country. These competencies include:
- Non-binding opinions addressed to the Parliament, the Government or local administrations, regarding legislative or administrative acts that disrupt the functioning of the market and are not justified by public goals of general interest;
- Legal challenges before the Administrative Court in connection with administrative acts passed by central and local administrations, which violate competition rules;
- Market research, whenever markets or sectors show characteristics that point to the existence of competition restrictions. They result in final reports that can be sent to the Government and Parliament if obstacles of a legislative or regulatory nature are found; and
- Italy's special competence in the field of representation, which implies the possibility to periodically submit a comprehensive report to the Government aimed at the adoption of the "Annual Law on Competition". In particular, as a result of this report, the Government should submit an annual competition law proposal to the Parliament in order to promote the pro-competitive evolution of the regulatory framework.
The Agency strives to encourage a culture of competition through various advocacy activities, consultative and suggestive in nature, addressed to legislators and regulators, both at the national and local levels, in order to ensure compliance with the principles of competition. Namely, in a system of multi-level governance such as the Italian one, regulatory barriers that unnecessarily and disproportionately hinder, limit or inhibit competition can be introduced at different levels of government (national, regional or local).
Advocacy interventions are aimed not only at removing restrictions, but also at providing suggestions to legislators on how to reconcile competition with other public policy goals. This reconciliation is achieved through the proportionality test. Through the proportionality test, it is possible to limit the introduction of anti-competitive restrictions and reduce their scope to what is strictly necessary to achieve the basic goals of public interest that the legislator is trying to achieve.
The advocacy activities carried out by the Agency during 2023 indicated the existence of a number of key problems related to competition, primarily in the area of public procurement and obstacles to opening the market to competition. These key issues have often shown a transversal character across different sectors.
These efforts target unfounded access restrictions that are considered unnecessary or disproportionate in achieving the relevant public interest. Such barriers include:
a) restrictions on the number of executors (quantitative restrictions). Measures such as minimum distance requirements or reserved activities can artificially limit competition by creating barriers to entry for new entrants. By putting these restrictions to the test, the Agency seeks to create a level playing field that allows more operators to enter the market, encouraging healthy competition and innovation;
b) disproportionate/unnecessary conditions for access to the profession (qualitative restrictions). This may include unnecessary obstacles, such as mandatory attendance of specialized courses or licensing exams, which are not directly related to ensuring the expertise or quality of professionals.
The main goal that AGCM wants to achieve is to ensure that access to markets is fair and open, enabling a dynamic environment in which professionals can compete on the basis of quality and innovation, without being constrained by unnecessary regulatory burdens that unfairly and/or artificially limit the supply structure. This approach not only benefits professionals, but ultimately leads to better results for consumers through greater supply, improved quality and lower prices. The Italian agency intervened, among other things, to deal with measures that had the effect of closing a certain market, blocking or even just delaying the entry of new participants. In cases where only "competition to enter the market" was possible, the Agency criticized, for example, acts that provide for the extension of existing concessions or exclusive contracts. On the other hand, when "competition on the market itself" was possible, the Agency challenged, for example, provisions on unjustified exclusivity or other measures that prevented free access of the executors.
Issuing opinions is not enough: it is important that those opinions initiate real change. For this reason, AGCM has been systematically implementing it since 2013 ex post annual supervision of its interventions in the area of representation of competition rules; the results of those interventions are published in the annual report (and in an expanded version available on the AGCM website). This report shows the extent to which legislators and public administrations, both at the central and local levels, take into account activities related to competitive advocacy. This continuous monitoring, with an update every year, enables the Agency to check in detail the effectiveness of its interventions in the field of competition representation and to gain a better insight into the key factors that contribute to their success, which enables a better quality direction of the relevant activities, taking into account the legal instruments that use and/or specific topics that are covered.
The analysis showed that the success rate is significantly higher when the intervention in the field of advocacy refers to a draft law, regulation or administrative act (77%), than when it refers to an already established/existing legislative or regulatory provision (50%). This result further confirms the importance of timely, possible ex-ante approach, whether the successful outcome of the Agency's interventions in the field of competition representation would not be ensured.
These courses of action and the lessons learned about advocacy interventions can be particularly useful in countries where the culture of competition is still developing, and the related principles are gradually incorporated into national legislation, as is the case in Montenegro. The Agency for the Protection of Competition of Montenegro can give opinions on national or local laws and regulations that affect, or could affect, competition. During the last few years, her interventions related, among other things, to the Law on Public Procurement, the Law on Free Access to Information and the Draft Law on Audiovisual Services. The Agency's recommendations regarding public procurement and free access to information led to pro-competitive changes. The road is long, but the journey has begun with a clear direction.
The author is drector of the Department for international cooperation and EU issues at the Italian Competition Agency (Competition and Market Authority (AGCM)
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