TELECOM ITALIA/INTESA (Conclusion of the investigation)
PRESS RELEASE
The Italian Competition Authority blocked the proposed merger of Telecom Italia/Intesa. The parties in fact intended to proceed with the operation by conferring the exclusive control of Intesa to Telecom Italia.
Intesa is a company controlled jointly by Fiat and IBM and provides businesses with data transmission services. In particular, Intesa offers Value-Added Network (VAN) Services and applications in Italy and abroad, through a capillary data network all over the Italian territory and the link-up with IBM Global Network, the international network managed by IBM.
Intesa serves more than 3000 clients and is the second largest company in Italy for sales in the market concerned, behind Telecom Italia.
The examined merger would have modified Telecom's positioning in the markets of data transmission services for businesses both at the national and international level. The Authority considered that the operation could be unlikely to damage competition in the international markets in virtue of their competitive structure. However, the merger would have strengthened the dominant position of Telecom in Italy and would have constituted a further dominant position of the same company.
In fact, within the national territory, Telecom Italia:
a) has enjoyed up to now special and exclusive rights for the offer of transmission capacity;
b) has a monopoly over the X.25 protocol in data transmission;
c) provides competitors with access to their clients in the markets of data transmission and transnational services;
d) is the first largest supplier of customized data transmission services.
The planned merger would have allowed Telecom Italia to acquire its principal rival in the market of data transmission for business.
Furthermore, Telecom Italia would have been vertically integrated with the supply of applications, which is the last phase of data transmission service chain, so as to become the sole operator able to offer the complete range of services.
Taking into account the specific characteristics of the national market and consistently with the principles of the Court of Justice judgments, the Authority ruled that the planned merger between Telecom Italia and Intesa was uncompatible with antitrust regulation and, as such, prohibited the operation.