SARDINIA SECURITY SERVICE COMPANIES (Conclusion of the investigation)
PRESS RELEASE
At the conclusion of the investigation initiated last June, the Italian Competition Authority decided that actions taken in a tender by certain security service companies working in Sardinia, in particular in the province of Cagliari, constitute a restrictive agreement and, as such, violate Section 2, subsection 2, of Law no. 287/90. The parties concerned by the decision are Cooperativa Vigilanza Sardegna S.r.l. and its controlled company Nuova Sicurvis S.r.l., Istituto di Vigilanza La Sicurezza Notturna S.r.l. and Istituto di Vigilanza Notturna e Diurna di Cannas Bruno & C.
Such a restrictive agreement was aimed at sharing the market and fixing prices of surveillance. In addition, two of the parties involved - Cooperativa Vigilanza Sardegna S.r.l and Istituto di Vigilanza La Sicurezza Notturna S.r.l. - implemented strategies which were intended to limit market access to two operators, Cooperativa Sarrabus Gerrei and Cooperativa Vigilanza Sant'Elena, who did not participate in the agreement and were willing to exert effective competitive pressure.
The Authority analyzed the bids submitted by the parties in the tenders arranged to contract the security services in the province of Cagliari over the last two years. On the basis of its examination, the Authority considered that the customer loyalty achieved by the parties during the years was the result of a conscious parallel behaviour. As evidence of this, it is to be noted that in many tenders the firm interested in maintaining the service previously performed for the contracting entity adjudicated the contracts, even if it had submitted an offer higher than the winning prices applied by the other firms in other tenders organized in the same province in the immediately preceding period.
Up to the first semester in 1992, the market was almost completely shared, at levels of increasing prices. After the entry of Cooperativa Sarrabus Gerrei and Cooperativa Vigilanza Sant'Elena into the market, and in consequence of their competitive pressure, Cooperativa Vigilanza Sardegna and Istituto di Vigilanza La Sicurezza Notturna, the two parties involved in the agreement, whose market shares were eroded by the third parties, applied systematically, in the tenders which the new entrants participated in, very low prices - sometimes dumping prices - that, nevertheless, were structured in such a way as to restore the preexisting market sharing. By contrast, in the tenders which the parties not involved in the agreement did not participate in, the winning prices resulted to be increased also after the 1992 first semester.
The agreement among Cooperativa Vigilanza Sardegna, Istituto di Vigilanza La Sicurezza Notturna and Nuova Sicurvis seems was lasted until the end of 1995, whereas Istituto di Vigilanza Notturna e Diurna di Cannas Bruno & C. took part up to September 1994.
In compliance with the Authority's decision, the parties are ordered to cease immediately the ascertained restrictive agreement. In addition, considering the seriousness of this violation, the Authority imposed on the parties involved administrative fines, which are different in proportion to the role effectively played by each party in the agreement.
The Authority ordered Cooperativa Vigilanza Sardegna to pay a fine equal to 1.5 per cent of the relevant market's total sales, for an amount of 277 million lire. Further, the decision required the other parties to pay the following amounts: Istituto di Vigilanza La Sicurezza Notturna 135 million lire, Nuova Sicurrvis 30 million lire and Istituto di Vigilanza Notturna e Diurna di Cannas Bruno & C. 32 million lire, respectively equal to 1.5, 1.0 and 1.0 per cent of the relevant market's total sales.