News October 2008

 

Competition - Court Partially Annuls Competition Authority Decision on Concrete Cartel

On June 26 2008 the Regional Administrative Court of Lazio partially annulled the Competition Authority's 2007 decision to fine Xella International GmbH and RDB SpA, two suppliers of autoclaved aerated concrete, for engaging in anti-competitive practices in Italy. 

The authority fined Xella and RDB €510,000 and €1.86 million, respectively, for entering into an anti-competitive arrangement with the intention of coordinating their commercial strategies, their aim being to monopolize and share the Italian market and to compartmentalize neighbouring geographical markets. The authority ordered the two companies to dismantle the production company RDB Hebel SpA, a joint venture which, in the authority's view, had played a crucial role in the implementation of the cartel.

The authority also fined RDB €1.96 million for abusing its dominant position by engaging in a complex exclusionary strategy aimed at eliminating Italgasbeton SpA, the only other manufacturer of the relevant products in Italy. RDB was found to have: 

  • selectively offered prices below its average total unit cost to Italgasbeton’s clients;
  • solicited Italgasbeton’s employees and 
  • disseminated defamatory information in the marketplace, such information being likely to harm Italgasbeton’s reputation.

Product liability - Blood Derivative Products: Supreme Court Rules on Causation and Limitation

For many years Italian case law on blood derivative products was inconsistent. In January 2008 the joint divisions of the Supreme Court were asked to intervene in cases involving liability for human immunodeficiency virus(HIV), hepatitis B and hepatitis C infections contracted as a result of treatment with blood derivative products. The court was asked to (i) clarify the appropriate criteria by which to establish causation, and (ii) determine the date from which the limitation period is deemed to run.

Decisions 576 and 581 lay down significant principles on the legal basis of claims relating to blood derivative products, specifically on the issues of causal link and the statute of limitations. These principles are likely to apply to other kinds of product liability claim.

Both cases related to claims for damages brought by haemophiliacs in respect of infections allegedly contracted following treatment with blood derivatives. One case was brought by a haemophiliac against the hospital where he was treated and against the Ministry of Health for its alleged failure to monitor and protect public health. The other was brought directly against the ministry by several patients or their heirs. The plaintiff in the first case claimed damages for having contracted HIV; those in the second sought damages arising from infection with the HIV, hepatitis B and hepatitis C viruses. All attributed the damages to treatment with blood derivative products.

The plaintiffs relied on (i) the provision of Article 2050 of the Civil Code(1) that introduces a presumption of liability for damages caused by the performance of a hazardous activity or business, and (ii) the general provision on tortious liability in Article 2043 of the code.(2)

The hospital and the ministry argued preliminarily that the claims were time-barred. Their defence on the merits was based on a lack of causation and on the contention that Article 2050 did not apply because the provision of treatments using blood derivative products is not a 'hazardous activity' within the meaning of the article. The ministry also relied on a previous Supreme Court decision(3) in which it was held that because the HIV, hepatitis B and hepatitis C viruses were first identified in 1978, 1985 and 1988 respectively, the ministry could not be held liable for infections contracted as a result of treatments carried out before those dates.

The court ruled as follows:

  • The ministry may be held liable in tort under Article 2043 for a failure to fulfil its duty to oversee public health if such failure results in a violation of the rights of individuals.
  • The ministry's liability was based on Article 2043. Article 2050 did not apply in this case, as it relates to 'activities' and can apply to products only if they pose an inherent risk deriving from performance of the activity for which they are intended (eg, fuel tanks).
  • Causation need not be established with reference to the criterion applicable in criminal cases, which requires that the event be related to the tortious conduct or omission beyond any reasonable doubt. Rather, the causal relationship need merely be more probable than not. In addition, the decisions clarify that a foreseeability test must be applied - the harm resulting from an act or omission must be reasonably predictable on the basis of statistical or scientific criteria.
  • The court overruled the principle previously established to exclude the ministry's liability for HIV and hepatitis C infections where treatments with blood derivatives occurred before 1985 and 1988, respectively. It held that the date from which to assess liability was 1978, when scientists discovered that hepatitis B could be transmitted through infected blood. Thus, the contraction of the three different viruses could not be deemed to be the result of three different violations of the ministry's duties and the claimants were not required to establish a causal link in respect of infection with each of the three different viruses. Rather, there was only one adverse event: the damage to the individual's health. The causal chain consisted of three elements: a transfusion or treatment with infected blood, infection and damage to health.
  • On the question of the statute of limitations, which is normally five years for liability in tort, the court applied the principle in Article 2947(3) of the code, which states that if the conduct or omission is also considered a criminal offence and a longer statute of limitations applies for such an offence, this longer period may be applied. The court found that the ministry's omission did not amount to the criminal offences of negligently causing an epidemic or causing injuries to multiple individuals (for which a 10-year period applies). Instead, it found that in respect of claims by living patients, the ministry's omission amounted to the offence of causing serious injury to health, for which a five-year period applies. In respect of claims on behalf of deceased patients, the court applied the 10-year period applicable for manslaughter.

The decisions establish that the limitation period starts on the date on which the plaintiff becomes aware that his or her disease was caused by a transfusion, not on the date of the transfusion or the date on which symptoms first appear.

Labour - Supreme Court Rulings on 'Mobbing' and Employers' Liability

In a recent Supreme Court case an employee pursued compensation claims against her employer for damage other than economic damage or damage to property. The employee accused her managing director of sexual harassment, verbal abuse, threats, demotion, illegitimate transfer and obstructing her work; the employer was accused of tolerating the managing director's behaviour. This case was the starting point for the court's reflections on recent decisions about 'mobbing' - a term commonly used in Italy to describe bullying in the workplace, often by a group, but also by an individual.

Previous decisions have characterized mobbing as consisting of a variety of acts, which may be intrinsically legal, but which:

  • are repeated over a prolonged period;
  • are intended to alienate or harass the employee; and
  • damage the employee's mental and physical integrity and wellbeing.

The mobber's intent to inflict harm and the period over which the activities take place distinguish mobbing from other illegal acts, such as unfair demotion.

Article 2087 of the Civil Code requires employers to adopt all necessary measures to safeguard their employees' moral and physical integrity. Thus, an employer can be held liable for mobbing if it merely tolerates misconduct by its employees, provided that the misconduct is objectively and subjectively illegal and a connection exists between the mobbing and the victim's professional activity.

However, some experts have reservations about the position - established by recent decisions - that an employer’s legal actions may be considered mobbing if they are performed with intent to cause harm, since this analysis does not incorporate the notion of the abuse of right and thereby extends the boundaries of liability.

E-commerce - ISP Liability: Television Network Mediaset Sues Google and YouTube

According to recent press reports, Italian television network Mediaset is suing Google and video-sharing website YouTube for €500 million in damages before the Court of Rome. Mediaset alleges that YouTube and Google have made illicit use of its property - namely, 4,000 audiovisual clips. Mediaset is also claiming damages for lost advertising revenue for slots in television programmes available on YouTube. The claim raises significant questions about the liability of internet service providers (ISPs) and is expected to spark vigorous debate among media and internet stakeholders.

Italy transposed the EU E-commerce Directive (2000/31/EC) by passing Decree 70/2003. The directive attempts to remove the legal uncertainty surrounding ISP liability by introducing a principle whereby ISPs are deemed subjectively rather than objectively liable. However, the directive imposes no general obligation on ISPs to monitor user-generated content or investigate potentially illicit activities. Thus, a judge can find an ISP liable only if it is directly at fault or if it has acted fraudulently.

The decree excludes ISPs from liability where they have played a passive role in transmitting information from a third party. It also limits the liability of providers of other intermediary services, such as information storage. Thus, providers of infrastructure services and access services cannot be held liable for the information that they transmit, provided that they do not initiate the transmission and do not determine either the recipient of the transmission or the information it contains. 

Italian legislation follows the directive in grading ISP liability according to three levels of activity: conduit services, caching and hosting. However, the decree states that a judge or other competent administrative authority may nonetheless require website operators to report potentially illegal activities on the Internet without delay. Such competent authorities may also require providers of hosting services to supply the information needed to identify the owners of the hosted webpages.

Before the decree came into force, Italian courts frequently found ISPs liable for illegal content because they were the only identifiable party connected with such content and thus the only party from which the injured party might claim compensation. In practice, it is often impossible to discover an internet user's identity or personal data.

In early ISP liability cases in Italy, plaintiffs often attempted to claim that:

  • ISPs owe a duty to monitor user-generated content and website content, including the actions of system operators and the content of bulletin board systems;
  • ISPs' functions should be considered a dangerous activity and ISPs should therefore exercise special control of website content; or
  • ISPs should be deemed complicit in the illicit activity of users and customers.

However, since 2006 the courts have tended towards the exclusion of general liability and the removal of any general obligation on ISPs to monitor website content or investigate potentially illegal activity. Rather, judges have assessed liability on a case-by-case basis:

  • A webpage used the image of a well-known actor for advertising purposes without his authorization. On September 15 2007 the Tribunal of Rome found the ISP - as the content provider - and the website owner liable for damages.
  • A website reproduced photographs of a well-known actress without authorization. The webpage was linked to Yahoo! Research. The actress sent a warning letter to Yahoo! asking it to remove the links to the web page, which it did immediately. However, the identity of the individual directly responsible was discovered only after a long delay. On July 16 2007 the Tribunal of Milan found Yahoo! not liable for the damage caused by the delay. It found that only a competent administrative authority or a judge can ask an ISP to cease an illicit activity.
  • Ruling on the basis of Italy's privacy laws, on July 14 2007 the Tribunal of Rome found that ISPs are not obliged to supply the names of users of a peer-to-peer service.
  • On August 20 2007 the Tribunal of Lucca found that a hosting provider that allows access to a news group is not liable for the content of users' messages.

On February 9 2007 the Tribunal of Rome gave an ISP 15 days in which to supply (i) the personal data of customers who had uploaded content in breach of copyright, and (ii) all other information necessary to identify the individuals responsible for the uploading.