TELECOM ITALIA/VIDEO ON LINE (Decision not to initiate the investigation)
PRESS RELEASE
Telecom Italia has accepted the objections made by the Authority during the preliminary examination of the case and, as such, has decided to modify and broaden the commitments already assumed in order to be authorized to acquire Video on Line's (VOL) operating division. After having considered these new commitments, and also in view of the liberalisation of telecommunications infrastructures provided for by the Directive no. 96/19/EEC on July 1st, 1996, the Italian Competition Authority decided not to oppose the acquisition.
Last April Telecom filed with the Authority a notification concerning the acquisition of the above mentioned operating division, which would have been incorporated into a specific unit named "Business Unit". Telecom, through this operation, would have acquired the main local Internet access provider for individuals and families. The Authority pointed out that this operation could distort competition in the market involved, in particular, in light of the dual role played by Telecom in the market of liberalised services. In fact, on the one hand, Telecom, as public carrier, is exclusive supplier of leased lines; on the other hand, it is supplier of the services which are opened to competition.
Further, the problem of the neutral access points (nap), which connect networks managed by different carriers, seemed critical as well. Actually, Telecom has its own network all over the Italian territory and can supply a higher number of points of presence (POP); as such, it might have not been interested in creating the neutral access points with rivals.
On the basis of the objections made by the Authority, Telecom assumed the following commitments:
1) to supply, periodically and in advance, all the operators with the information regarding the development of telecommunications public network, in order to make them possible to plan their activities;
2) to maintain all the peering agreements stipulated by Video on Line and to verify with super partes organizations (as, for example, the Internet Service Providers Association) the feasibility of a peering system opened to all operators. Whether this plan would not be defined within next October 30th, Telecom undertook to carry out, within the subsequent three months, a service of neutral access points in order to supply all operators, both Italian and foreigner, with peering services at cost prices;
3) to allow for the Business Unit an accounting separation, according to industrial accounting principles. The separate profit and loss account of the Business Unit will be included in the annual report and will be certified by a registered auditing company;
4) to apply to the profit and loss account of Interbusiness service - through which Telecom provides Internet access to businesses - the same accounting principles used for drawing up the Business Unit's profit and loss account.
The commitments assumed by Telecom are contained in the pre- merger notification; as such, if and when the company would not fully comply with them, the Authority reserves the faculty to initiate an investigation, under Section 16 of Law no. 287/90.