PRESS RELEASE

ANTITRUST PRESENTS GOVERNMENT AND PARLIAMENT WITH POSSIBLE MEASURES FOR RESTARTING ECONOMIC GROWTH AS SOON AS POSSIBLE

From local public services to post offices, from transport to banking and energy, from the professions to administrative streamlining: the Authority's technical proposals for removing the remaining obstacles to market liberalization and promoting competition. Liberalization needs to be coupled with interventions that ensure social equity and foster labor law reform to provide new job opportunities for the most heavily-impacted subjects

From local public services to post offices, from transport to banking and energy, from the professions to administrative streamlining: the Authority report signed by president Giovanni Pitruzzella contains a broad spectrum of technical proposals that are designed to remove every last obstacle to market liberalization in order to better promote competition, competitiveness and national growth. This contribution is made with utmost respect to the political and constitutional autonomy of Government and Parliament, but also in full recognition of how the current phase of history exhibits all of the preconditions for promoting the general interest by establishing a "virtuous cycle" among representative institutions, political forces and independent Authorities in order to overcome stakeholder selfishness and resistance by the vested interests that liberalization is destined to undermine.

According to the Antitrust, the instrument of choice is the annual law on competition. To eliminate obstacles and overcome the resistance of groups who feel most threatened, the general interest itself and its predominance over various self-centered factions needs to be reestablished through far-reaching interventions that can dissolve anti-competitive snarls simultaneously in multiple markets populated by different economic-social actors.

The Antitrust realizes that in order to overcome prolific corporate incrustations and the natural resistance of big economic actors to effective openings of the markets, liberalization policies will inevitably take on the form of works in progress, even while the urgency of the crisis begs us to apply interventions without delay. In a similar way, the social costs of rapid liberalization should not be overlooked or underestimated. This is why the Authority is inviting the institutions of representative democracy and the different political forces to supplement these liberalization measures with other interventions designed to ensure social equity by fostering suitable reforms in labor law, which can create new work opportunities for subjects who lose or are at risk of losing their jobs as a result of the complex process of economic restructuring.

The proposed interventions are as follows, sector by sector.

LOCAL PUBLIC SERVICES - LIBERALIZE AND PRIVATIZE

To ensure effective application of the recently-approved principles of liberalization, an obligation needs to be introduced that first of all requires local authorities to define their public service obligations. Once the boundaries have been circumscribed, the possibility of competitive services management needs to be verified by means of open procedures that allow workers from the sector to express their interest in competition-based management. If these procedures fail, only then should local entities be allowed to maintain exclusive managements tendered to private parties, while in-house contracting (managed directly by one of public entity's own corporations) is only permissible if direct benefits are clearly demonstrable through market analysis. In addition, contracts that are not the result of competitive comparison need to have their expiration dates moved up, with the local entity being offered an opportunity to avoid early termination by immediately initiating a competitive procedure to sell off shares of the public corporation (total or mixed) to private parties. The local entity must conclude the procedure within a short time period upon penalty of sanctions.

PUBLIC TENDERS - BAN ON IN-HOUSE WORKS

In regard to public tenders at all levels of public administration, the Code on public contracting needs to incorporate an explicit prohibition on in-house works and services. Concerning services, precise limits need to be included and a market analysis will be needed to demonstrate the concrete benefits of in-house contracting in any case. An obligation to acknowledge tendered contracts will need to be included as well, with failure to comply triggering the early contract expiration sanction. A clause should also be provided that allows for the confirmation of tenders handed over by the in-house corporation.

'TRAP' LAW FOR PUBLIC ADMINISTRATION AUTHORIZATIONS AND DEDUCTIONS FOR BUREAUCRATIC 'TAXES.'

According to the Antitrust, the Government needs to be authorized to generate a consolidated law on all authorization proceedings, including the express abrogation of any unnecessary procedures. Non-compliance with the time limit for completing the acknowledgement triggers the 'trap' effect, and all current authorization rules and conditions are discontinued. The effectiveness of certain pro-competitive measures is also partly dependent, in fact, on administrative implementation of the economic liberalization principle and partly on the separate principle of procedural simplification and streamlining.
While Regions and local entities will still need to make adjustments, the national legal regime should be passed in the meantime in any case. To deter the imposition of new bureaucratic burdens on individuals and businesses in the future, the Authority proposes the introduction of a principle by which individuals and businesses may deduct any costs sustained for adjusting to new laws that introduce new bureaucratic requirements. The objective? To "force" legislatures to come up with the resources should they approve new laws that worsen the burden on individuals and businesses that, under this profile, must be covered by financial resources. An identical mechanism should be applied to the Regions as well.

FUELS - RATIONALIZE THE SYSTEM AND INCENTIVIZE THE AUTONOMY OF MANAGERS.

In the fuel sector, the Authority proposes a more incisive rationalization of the distribution system by favoring the aggregation of small operators/station managers in order to foster the growth and development of operators that are independent from oil companies. To eradicate the access obstacles faced by new operators who are not vertically integrated (white pumps and GDO), the Regions need to be prevented from including restrictions not provided by national law in order to block the opening of new stations and the prohibition on fully-automated stations should be eliminated. To give the distribution system greater independence from oil companies, type restrictions based on company agreements need to be eliminated so that the relationships between station owners and managers can draw on all of the different contract types provided for by law. For the managers, this would introduce full autonomy in relation to the station owner by incentivizing, for instance, different forms of small-operator aggregation in the supply business. For the oil companies, this would also make it possible to refuel sales points other than their own (opening the door to multi-brand stations).

ELECTRICITY AND GAS - HEIGHTEN DOWNSTREAM COMPETITION BY NARROWING THE INFORMATION GAP BETWEEN DISTRIBUTORS AND FINAL RETAILERS WHO ARE NOT VERTICALLY INTEGRATED.

In reference to the gas sector, without prejudice to the issue of monopolistic versus competitive phases and the issue of vertical separation processes, on the one hand, and the distinct ownership of the transport system and the storage infrastructures currently controlled by ENI (the incumbent), on the other, the Authority finds that the information gap between distributors and final retailers who are not vertically integrated with the distributors themselves needs to be narrowed very soon in order to heighten downstream competition. This will require the introduction of specific disclosure obligations along with an increase in the quantity and quality of data made available. The Authority also finds that pro-competition measures related to the tax breaks for the construction of new gas import infrastructures need to be adopted very soon

HIGHWAYS AND AIRPORTS - REVIEW THE RATE MECHANISMS AND REDUCE THE DURATION

OF CONCESSIONS

The rate review system from the Agreement between ANAS and Autostrade per l'Italia needs to be amended to switch over to a mechanism that subtracts the expected productivity rate from the inflation rate and, above all, offers a sizeable premium for improving the quality of services and for future investment projects, where present. The regulation of highway infrastructures is being entrusted to the Transport regulation Authority, which has already been planned without any changes being made to the role of the Agency for highway and roadway infrastructures. As for airports, implementation of the European directive calls for the introduction of non-discriminatory rate models oriented towards costs, efficiency and the stimulation of investments, with transparent mechanisms to be used for adopting airport aeronautical charges and supervised by the new Authority.

Last of all, the fifty-year duration of concessions needs to be reduced and recalibrated to the nature of the investment and the likelihood of its remuneration. For investments that have not been fully amortized, the tendering procedures can in any case foresee appropriate forms of compensation for the outgoing party when a new concessionaire takes over.

RAIL TRANSPORT - TRANSPORT AUTHORITY TO GUARANTEE IMPARTIALITY IN THE MANAGEMENT OF RAILWAY INFRASTRUCURES

Railway transport, in another case without prejudice to the issue of the vertical separation between railway infrastructure management (network, terminals and stations) and service management, the Antitrust hopes that the Transport Authority is rapidly made operational in order to monitor the "impartiality" of management for any and all infrastructures deemed essential for enabling a proper competitive comparison of freight and passenger rail transport services. This Authority will need to identify the appropriate measures for maintaining balance in the financing of public service obligations (e.g., new operators pay a contribution towards the universal service, at least for openings related to number of trains and more important routes). In regional rail transport, public resource "prizes" should be awarded to any regional administration that declines to renew direct contracting with FS for another six years. To facilitate the participation of more competitors in the tendering for regional rail transport services, the actual availability of rolling stock at the time of the tender should not be treated as a prerequisite for participation.

WHEELED-VEHICLE TRANSPORT - ELIMINATE MINIMUM RATES.

Legal provisions that set or accommodate the setting of minimum rates for road transport services need to be eliminated.

COMMUNICATIONS - PROMOTE NGN NETWORKS IN AREAS OF MARKET FAILURE.

In accordance with Community Guidelines, next-generation networks need to be promoted in areas where it is less likely that market operators will be making commercial investments in the near future. At the same time, unjustified administrative obstacles to the creation of networks by operators in the sector (new entrants, in particular) also need to be removed in order to reduce potential sources of litigation.

POSTAL SERVICES - REDEFINE UNIVERSAL SERVICE AND BREAK UP BANCO POSTA

In the postal sector, the boundaries of universal service should be limited exclusively to those essential services that would otherwise be impossible for individual users to purchase, as identified by the dedicated regulatory Authority. The duration of the postal service contract itself (currently set at 15 years) should also be reduced. The VAT exemption should no longer be applied to postal services that are governed by negotiable conditions. As for Banco Posta, a company separate from Poste Italiane

needs to be created with banking activities defined as the company object and in full compliance with the industry standards contained in the Consolidated banking law.

BANKS AND INSURANCE - PROHIBIT THE COUPLING OF POLICIES WITH LOANS, LOWER INTERBANK COMMISSIONS.

According to the Antitrust, it would be better to limit the interventions to the calculation methods and levels of multilateral interbank commissions than to prescribe maximum and minimum prices for the bank commissions being charged to users. Banks should also be prohibited from stipulating loans or financing coupled with the sale of insurance policies bound to the same contract.

On the question of RC Auto, the direct payment mechanism needs to be upgraded by adding in thresholds for the reimbursements received from the injured party's company and adjusted as a function of the efficiency objectives that the companies need to achieve. Bodily injury, however, is excluded from the direct payout procedure context.

NO TO EXCEPTIONS IN THE OPENING OF NEW COMMERCIAL EXERCISES.

In the context of commercial distribution, the Authority finds that greater clarification of the types of businesses not covered by the law in order to avoid reductionist interpretations, thereby abolishing the possibility of making exceptions to the principle of the freedom to open new exercises.

ON TAXIS - LIBERALIZATION WITH 'COMPENSATORY' LICENSES.

To increase the total number of taxi licenses, the cities exhibiting the greatest shortfalls in the supply side of this service are in need of a stimulus - the adoption of suitable "compensation" measures for existing license holders. More specifically, in order to minimize the reform's repercussions and make it more effective in practice, the Authority recommends offering existing license holders the possibility to acquire an extra license free of charge. This extra license may then be sold in order to recuperate the decrease in the value of their original entitlement, and the supply of taxi services will still increase significantly in any case.

PHARMACEUTICALS - LIBERALIZE CATEGORY C, INCREASE THE NUMBER OF PHARMACIES.

In regard to pharmacies, the sale of medically-prescribed pharmaceuticals at the patient's full expense (also known as category C drugs) is in need of liberalization and the barriers to opening new pharmacies need to be lifted while increasing authorized staff strengths. The possibility for individual owners to own multiple pharmacies should be augmented by raising the maximum number from 4 to 8.

EDITORIAL DISTRIBUTION - REVIEW THE REMUNERATION OF NEWSSTANDS.

The remuneration of retailers should be differentiated on the basis of objective parameters related to the quality of the services rendered and overall business performance in order to help ensure re-supply and deal with problematic issues related to the distribution chain.

PROFESSIONS - ABOLISH ALL RATES TABLES, INCREASE AUTHORIZED STAFF STRENGTHS FOR NOTARIES.

In the professions sector, every form of rates table needs to be abolished and the Professional Associations themselves need to be reorganized to ensure the impartiality of disciplinary bodies. In the sector of professional education, the powers of the Association Boards needs to be limited to establishing the minimum requirements for training courses without requiring any authorizations or recognitions in advance.

Authorized staff strengths for notaries also need to be revised upwards to achieve a significant increase in the number of positions.

For all Associations, lastly, the law that places the Associations themselves in charge of controlling the veracity and transparency of their members' advertising needs to be repealed.

INCREASE CONSUMER PROTECTION SANCTIONS

The Antitrust has also suggested more general measures, such as increasing the sanctions for violation of the Consumer Code and for deceptive advertising to 5 million euros, as compared to the current 500 thousand euro limit, and extending the consumer protection law to cover micro-enterprises as well. Stronger sanctions are also needed to reinforce the obligatory corporate separation of companies that intend to do business in other markets if they, by legal provision, already manage services in the general economic interest or operate as a market monopolist.

CIVIL JUSTICE - SPECIALIZED DIVISIONS FOR THE 'CIVIL' PROTECTION OF COMPETITION

The Antitrust proposes to entrust industrial and intellectual property issues to specialized divisions, which are to be established at tribunals and courts of appeal, with competency for nullity and damage compensation actions as well as petitions for urgent relief, including injunctions, for violations of the provisions of national and Community Antitrust law. The primary goal is to concentrate this competency before judges who are specialists in the sector.

Rome – 05^th January 2012