Law No. 178 of December 30, 2020, known as the 2021 Italian Budget Law (“Budget Law”), introduces pivotal provisions in connection with Regulation (EU) No. 2019/1150 of June 20, 2019 promoting fairness and transparency for business users of online intermediation services (“Regulation”), which has been applicable since July 12, 2020.
The Regulation applies to online intermediation services and search engines used by business users and corporate website users, respectively, in their businesses, and it aims mainly to ensure transparency and fairness on the platforms, as well as effective redress opportunities (further information on the Regulation is available here and here).
Although the Regulation is directly applicable in the Member States, it requires the intervention of the national legislators to define fundamental aspects regarding concrete enforceability of the Regulation’s provisions. Specifically, national legislators are required to establish the applicable sanctions and the measures necessary to ensure their implementation, also identifying the authority in charge of monitoring applicability of the Regulation. Paragraphs 515, 516, and 517 of Article 1 of the Budget Law address these matters and provide specific obligations for online intermediation services and search engines.
- The competent authority: The Italian Communications Authority
Paragraph 515 of Article 1 of the Budget Law identifies the Italian Communications Authority (Autorità per le Garanzie nelle Comunicazioni, “AGCOM”) as the competent authority that shall ensure adequate and effective implementation of the Regulation by monitoring operator practices. Indeed, that provision amends Article 1 of Law No. 249 of July 31, 1997 on the establishment of AGCOM (“Law 249/1997”), extending AGCOM’s powers also towards online intermediation services and search engines. Furthermore, AGCOM should issue guidelines, promote codes of conduct, and gather relevant information to promote equity and transparency on operator platforms.
In line with the above, AGCOM has already carried out procedural, supervisory, and analytical activities with regard to different kinds of online platforms, including the platforms of online intermediation services and search engines covered by the Regulation. Moreover, AGCOM actively participated in the negotiation process at the European level that led to adoption of the Regulation and subsequently cooperated at the national level in the drafting of proposals aimed at ensuring adequate and effective application of the Regulation.
In any case, AGCOM’s power to enforce the Regulation does not affect the consumer protection provisions establishing that the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) has the exclusive power to counter professionals’ conducts that constitute unfair commercial practices (Paragraph 516 of Article 1 of the Budget Law).
The Budget Law also provides new obligations for online intermediation services and search engines, namely the obligation to enroll in the Register of Communication Operators (“ROC”) managed by AGCOM and to pay the annual contributions to AGCOM.
- Enrollment in the ROC
Paragraph 515 of Article 1 of the Budget Law requires online intermediation services and search engines that offer their services in Italy to enroll in the ROC managed by AGCOM, even if they were not established in Italy. By way of background, the ROC is designed to ensure that a shareholding structure is transparent and public and to make it possible to apply rules prohibiting anti-competitive mergers, protecting plurality of information, and enforcing compliance with the limits on shareholdings in foreign companies.
Article 1 of Law 249/1997 provided this type of obligation for many different operators, such as, inter alia, audiovisual media services providers, advertising agencies (including online advertising agencies), newspaper publishers, companies providing telecommunication services, call center operators, etc.
In light of the above, it should be noted that most of the providers of online intermediation services and search engines offering services in Italy are already enrolled in the ROC as online advertising agencies.
According to the relevant ROC regulation (AGCOM resolution No. 666/08/CONS), an application to enroll in the ROC must be completed within 60 days of beginning relevant business activity. The application must contain various types of information disclosed through standard forms provided by AGCOM, and it must be updated in case of modification of the data disclosed (e.g., the operator starts a new additional activity subject to ROC enrollment). Furthermore, as a consequence of ROC enrollment, operators must file annual communication with the ROC.
In the light of the new requirement, it is very likely that in the next few weeks AGCOM will issue a resolution aimed at amending the relevant ROC regulation (AGCOM resolution No. 666/08/CONS) and providing more detail on the modalities of enrollment (e.g., by specifying a deadline for online intermediation services and search engines to carry out enrollment).
- Annual contribution to AGCOM
Paragraph 517 of Article 1 of the Budget Law requires online intermediation services and search engines to pay the annual contribution to AGCOM. Companies operating in the media sector (radio-TV, press, advertising, etc.), including operators enrolled in the ROC, are already required to pay the annual contribution to AGCOM.
The rationale behind this obligation is that the costs for the functioning of independent authorities must be borne by the operators under the supervision of those authorities rather than by taxpayers. Therefore, a large number of Italian independent authorities (e.g., the National Commission for Companies and Stock Exchange, or CONSOB) are funded by the operators in the markets they oversee. Requiring online intermediation services and search engines to do so is consistent with the fact that AGCOM is now the authority that monitors their conduct and enforces the Regulation’s provisions; since the consequent expansion of AGCOM’s duties is expected to result in an increase in the relevant expenses, operators are now required to fund this additional AGCOM activity.
The amount of the annual contribution is established by AGCOM each year. According to Law No. 266 of December 23, 2005, AGCOM can establish such amount at a level up to 0.2% of the revenues of the operators, based on the most recent financial statements approved on the date of the publication of the relevant AGCOM resolution.
As for online intermediation services and search engines, the Budget Law sets the annual contribution for 2021 at 0.15% of revenues generated in Italy – including those recorded in the financial statements of companies based abroad – relating to the value of production, based on financial statements from the previous year (Paragraph 517 of Article 1 of the Budget Law). For subsequent years, AGCOM will establish the amount of the annual contribution as described above.
Online intermediation services and search engines that fail to comply with AGCOM orders and warnings issued in relation to the above-mentioned new obligations – i.e., payment of the annual contribution, enrollment in the ROC, and related obligations – or with any of the provisions of the Regulation shall be sanctioned with an administrative fine ranging from 2% to 5% of revenues generated in the last financial year closed prior to the date of AGCOM’s challenge.
Law 249/1997 already provided for this sanction for the violation of dominant positions’ rules, now extended by Paragraph 515 of Article 1 of the Budget Law as per the above.