INTERNATIONAL TOBACCO AGENCY/STATE TOBACCO MONOPOLY (Start of full phase investigation)
PRESS RELEASE
The Italian Competition Authority initiated a proceeding against Amministrazione Autonoma Monopoli di Stato-AAMS (State tobacco monopoly) to probe an alleged violation of Section 3 of Law no. 287/90 (abuses). The inquiry follows a complaint filed by an Italian company, International Tobacco Agency (ITA), which was seeking to market in Italy cigarettes made in Germany under the Trussardi brand.
AAMS, in fact, can affect competitors' market access, given that cigarettes can be imported into Italy only if the Minister of Finance has approved of the registration on its price lists, after having received AAMS' binding opinion.
AAMS has never provided it, despite ITA's repeated requests of registration. The complaint pointed out also restriction on competition imposed by AAMS' distribution contracts, which determine the quantities of cigarettes that new manufacturers can market.
AAMS, together with the US multinational Philip Morris, which is bound to the state monopolist by an output license, is the nation's largest cigarette maker and distributor. In addition, Philip Morris holds a dominant position on the cigarette wholesale distribution market, since it is still the only cigarette importer and owns the single national distribution network. As such, it is to be noted that the existence of considerable contractual ties between AAMS and Philip Morris Group might also constitute an abuse of collective dominant position, in violation of Section 3 of the Competition Act. In particular, the omitted or delayed response on behalf of AAMS to ITA's registration requests, may constitute an abusive enjoyment of the rights given to the monopolist by the law, in order to gain competitive advantages.
Lastly, the arrangement and imposition by AAMS of a cigarette distribution contract containing clauses which have as their object restriction on output quantities to be distributed in Italy, so that to prevent rivals' entry into such a market, could be considered an abuse of dominant position, in violation of the aforementioned Section 3.