Administrative Court annuls Italian competition authority’s decision against Bayer Cropscience

Last 16 May 2012, the Italian administrative court (“TAR Lazio”) published its ruling (available only in Italian) that annulled the decision of the Italian Competition Authority that fined Bayer Cropscience Srl and Bayer Cropscience AG (together “Bayer”) Euro 5,124 million for abuse of dominant position in the market for the production and commercialization of fosetyl-based fungicides in breach of Article 102 of the Treaty on the Functioning of the European Union (see Newsletter 4-5/2011, p. 11, for additional background).

Bayer’s abuse consisted in the refusal to provide Sapec Agro S.A. (“Sapec”), and other companies grouped under the European Union Fosetyl-Aluminium Task Force (the “Task Force”, i.e. a group of companies formed to share the costs of the fosetyl-based products dossier required to obtain the market authorizations in Italy and in other EU countries) access to certain studies in its possession (“Bayer’s studies”). The Bayer’s studies were deemed an essential facility (EU and Italian laws prohibit duplication of studies on vertebrate animals where such studies had already been carried out) to which access was necessary in order to acquire market authorization for fosetyl-based products. According to the ICA, because of the lengthy negotiations with Bayer in relation to such studies, Sapec and the other companies belonging to the Task Force were forced out of the market insofar as their market authorizations in Italy had expired/been withdrawn in the meantime.

Contrary to the ICA, the TAR Lazio found that Sapec and the other companies belonging to the Task Force did not properly follow the procedures to obtain access to the Bayer’s studies, and that Bayer acted in accordance with the procedures, which did not put Bayer under a duty to facilitate or cooperate with competitors who did not follow such procedures. For instance, the TAR Lazio noted that Helm, another competitor, had followed the procedures and accordingly was granted access to the Bayer’s studies.

More importantly, the TAR Lazio held that at least before the withdrawal of the market authorizations in 2007, Sapec and the other companies belonging to the Task Force could have duplicated the required studies on vertebrate animals, which therefore could not be considered an essential facility. Besides, the TAR Lazio found that at a later stage the studies had in fact been duplicated in order to obtain market authorization in Portugal, which, in turn, would have allowed Sapec and the other companies to regularize the file to obtain market authorization in Italy.

Incidentally, the TAR Lazio criticized the market definition adopted by the ICA. In particular, the TAR Lazio questioned whether, despite the detailed market analysis, the ICA was correct in defining the relevant market with regard to a specific fosetyl-based product that could only be used to protect a specific plant (grapevines) from a specific parasite (peronospora).

The ICA may appeal the TAR ruling. [Gabriele Accardo]