AGREEMENT ON THE LAUNCHING OF A SINGLE DIGITAL PLATFORM (Advisory opinion)
PRESS RELEASE
The Italian Competition Authority submitted to the Speakers of the Senate and Chamber of Deputies, the Prime Minister, the Ministry of Posts and Telecommunications an advisory opinion on Section 2, subsection 19-bis, of the draft law on the "Institution of a regulator for communications and broadcasting", which the Chamber of Deputies is discussing at present.
Such a subsection amended the Section concerning the prohibition of dominant positions, which was contained in the draft law above and was ratified by the Senate on May 22nd, 1997. This amendment was designed to implement the agreement between Rai, Stet, Mediaset and Canalplus - through a capital shareholding of Telepiù - on the launching of a single digital platform. Such an agreement would lead the parties above to hold market shares higher than the ownership limits placed by the aforementioned draft law.
The Authority felt that the agreement, concluded through a shareholding of more parties in the same company, had as effect an harmonisation of their decisions to collectively run the controlled firm. As such, the agreement would cover not only technological aspects, but also organisational and commercial ones, as the collective management of clients and television programming.
According to the Authority, a technological agreement aimed both at implementing an integrated infrastructure to transmit signals and defining standards for collective access to pay TV services could be an important innovation serving a faster development of the market concerned. However, if this project was developed through the shareholding in the same company of the main national broadcasters, both general and specialised, and Italy's state-controlled telecoms holding group, by implying not only technological but also commercial integration, it would distort competition substantially and block the penetration of the new market of pay TV services. In particular, the agreement could have horizontal effects blocking competition between the parties above in the development stage of the market. In fact, the parties, even if they enjoyed a single technological infrastructure and same standards for access, would be enabled to independently manage the commercial aspects of their activity in the new born market of pay TV services.
Furthermore, the Authority noted that the relevant competitive advantages already enjoyed by the participants in the agreement - as the strengthened market position, the privileged relationship with users, the nearly exclusive control over essential inputs as television rights for the main sport events coverage - were a necessary condition for the creation of other barriers to entry into a market characterised by low competition in itself, if and when a coordinated management of clients and television programmes occurred.
The Authority reported that in many occasions the European Commission did not authorise such agreements in the markets of pay TV services, which were concluded by parties holding a dominant position or a monopoly in the contiguous market of telecommunications, broadcasting and television production. In particular, the Commission held that, whether operators holding a dominant position created and managed a shared infrastructure, effective competition would be prevented and the achievement of technical and economic development goals would be compromised.
In August 1996 the Authority had already submitted to the Speakers of the Senate and Chamber of Deputies, the Prime Minister and the Ministry of Posts and Telecommunications an advisory opinion on the draft laws on the "Institution of a regulator for communications and broadcasting". In this connection, the Authority emphasised the need to eliminate the existing obstacles to competition to develop the Italian telecommunications services, in a framework in which promotion of competition and information pluralism played an essential role, in a complementary way.
Given that the Parliament will approve an important reform of the communications system, which is designed to develop competition in the markets concerned, the Authority deemed that the proposed amendment allowing the agreement between Rai, Stet, Mediaset and Canal Plus, through their shareholding in the same company, would create conditions for the constitution of a dominant position, as well as substantial obstacles to effective competition in the market of digital pay TV services.
The Authority therefore found that Section 2, subsection 19-bis, of the draft law on the "Institution of a regulator for communications and broadcasting", which was designed to allow the partnership between the main companies of the market concerned, not only did not seem to be necessary to search for equal technological standards fostering the sector development, but also was able to distort the future structures of the new-born market of the pay TV digital services and to reach a monopoly, so as to violate both national and community competition laws.