ASSOCIAZIONE ITALIANA INTERNET PROVIDERS/TELECOM
PRESS RELEASE
PRESS RELEASE
Telecom Italia found in breach of the Internet services market: the company has undertaken to restore competitive conditions
The Competition Authority, at its meeting on 20 January, resolved to close the investigation of Telecom Italia which began as a result of a complaint received from Associazione Italiana Internet Providers (AIIP) alleging that it had abused its dominant position on the Internet services market.
With the sale of its TIN and Interbusiness services, Telecom Italia acquired absolutely dominant position on the Internet access services market for both residential and business customers.
As the former telephone monopoly-holder, Telecom Italia managed all the telephone links, switched and dedicated, as well as Internet access links for domestic customers, and was the main supplier of network infrastructure for its competitors, the Internet Service Providers.
The Authority examined the conduct of Telecom Italia since 1996 on different Internet access service markets and found that it had been in breach of competition law in several respects.
In particular, when marketing its Internet access services, Telecom Italia had implemented a policy to expand the market by investing very heavily in the network and in advertising, using the shared charge service and the widespread and prolonged application of very low charges to its subscribers.
Because of its continuing financial losses resulting from this commercial policy Telecom Italia was able to substantially expand on the market, at the expense of its competitors, and Telecom Italia was only able to sustain these losses thanks to its ability to offset them against the revenues acquired in its capacity as the statutory, or de facto, monopoly-holder from the dial-up links or the offering of digital direct circuits.
Telecom Italia had also imposed discriminatory conditions on the sale of Interbusiness services in the past, upstream of the Internet connectivity offering, to completing providers in comparison with its own customers. This was accompanied by the offering of particularly generous loyalty discounts to its customers.
In order to restore real competition on the Internet access services market, Telecom Italia had concluded an agreement with AIIP in the context of the investigation, undertaking to give all the competing Internet Service Providers, upon request, some of its revenues from the dial-up links developed since 1998, and to reduce the cost of the direct digital circuits acquired by the providers.
The Authority considered that in the light of the undertakings by Telecom Italia under the agreement concluded with AIIP, it had ceased its anti-competitive behaviour in marketing the Internet access services and that the financial aspects had been offset. For these commitments had a positive effect on the competitive capacity of the Internet Service Providers in relation to possible forms of financing the offering of Internet access services to end-users.
Taking account of the gravity of Telecom Italia's conduct but also of its undertaking to restore conditions of genuine competition on the market, the Competition Authority imposed a minimum fine on the corporation of 1,248,000,000 lire, requesting the company to submit a report within 120 days on progress made with the actual implementation of its agreement with AIIP and the measures it had adopted to remove the statutory infringements that had been ascertained.
Rome, 11 February 2000