Increasing number of requests to the Italian Competition Authority for the Legality Rating

The so called “legality rating”, introduced by Article 5-ter of Legislative Decree no. 1 of 24 January 2012, and subsequently implemented through the Decision of the Italian Competition Authority (“ICA”) No. 24075 of 14 November 2012 – “Implementing regulation concerning the legality rating” (the “Regulation”), set an awarding system by which ICA can assign a score, from one up to three “stars”, to deserving companies with a turnover of more than two million Euro that meet certain requirements of legality and good management.

In order to be assigned one “star” the company must have not committed any of the administrative crimes listed in Legislative Decree no. 231/2001 and not been condemned during the previous two years for antitrust violations, as well as violations of consumer law provisions. Furthermore, the company must make payments and execute financial transactions exceeding one thousand Euro exclusively through traceable systems.

The base score of one star will be increased of a “+” for each of the following conditions met:

• respect of the provisions set out in the Protocol of legality executed by the Ministry of Internal Affairs and by the Italian Industrial Federation dated 10 May 2010;
• use of traceable systems of payments also for amounts lower than those set by law (i.e. one thousand Euro);
• adoption of a function or organizational structure able to guarantee that the activities of the company are carried out in compliance with the legal provisions applicable to the same company, or of an organizational model pursuant to Legislative Decree no. 231/2001;
• adoption of processes aimed at implementing measures of Corporate Social Responsibility;
• be registered in one of the lists of suppliers, services suppliers and activities performers which have not been targeted by organized crimes’ infiltration;
• have adhered to a Code of Business Conduct and Ethics adopted by trade associations;
• adoption of organizational models for the prevention and fight of corruption.

When three “+” are reached a further star is granted up to a maximum of three stars.

According to the data recently provided by ICA, during 2014 the requests for obtaining the legality rating from ICA, which is free of administrative costs, have more than doubled, if compared to those submitted in 2013, after the entry into force of Decree no. 57 of 20 February 2014 – MEF – MISE – “Regulation concerning the selection of the criteria to be followed during the evaluation of the companies’ legality rating in order to grant financing”, laying down the criteria that must be observed before granting public financing and regulating the access to credit.

One of the most relevant aspects for the companies, in fact, is that pursuant to the provisions set forth in Decree no. 57/2014 the legality rating assigned by ICA is evaluated “for the granting of financings by public administration bodies and for the access to credit”. Moreover, “the financial institutions which do not evaluate the legality rating before granting financings in favor of the companies must communicate to the Bank of Italy a detailed report containing the reasons justifying their decision.”

In 2013, when the Regulation entered into force, the requests submitted to ICA were 142, while in 2014 they were 402, therefore amounting to 544 requests filed as of 31 December 2014. During the course of 2014 ICA issued 271 ratings, equal to nearly 50% of the requests received.

The legality rating lasts two years from its issuance, and may be renewed upon request. If a company no longer holds one of the basic requirements necessary in order to be assigned one “star”, ICA revokes the legality rating, and if a company fails to meet the requirements which increased its legality ranting, ICA reduces the number of stars assigned to such company.

ICA website (www.agcm.it) includes a section constantly updated, comprising the number of companies to which a legality rating was assigned, suspended or revoked, and indicating the respective effective date.