TELECOM ITALIA/SEAT PAGINE GIALLE
PRESS RELEASE
PRESS RELEASE
An investigation has begun into the takeover by Telecom Italia of
Seat Pagine Gialle
At its meeting on 17 May 2000, pursuant to section 16(4) of the Competition Act the Competition Authority began an investigation to ascertain whether the takeover by Telecom Italia Spa of Seat Pagine Gialle Spa was compatible with Competition law.
The acquisition notified to the Authority would give Italy's largest fixed and mobile telephony telecommunications carrier, which also manages the Internet Service Provider with the largest customer base in Italy (TIN.it), the ownership of the leading national corporate advertising company, producing both printed publications and computerized services (White Pages, Yellow Pages, On-Line Yellow Pages) and supplying advertising on the Internet through the Virgilio portal. Furthermore, the operation would integrate the distribution chains of both companies, with the traditional Telecom retail channels (for example the "InSip" stores) being expanded to include the TIM stores (for example "Il telefonino" stores), the Buffetti stores, and the Sea network of agents.
The merger between Telecom Italia and Seat, which would to directly involve the supply of Internet access services, Web services, the sale of advertising space in the telephone directories and on-line, electronic commerce services, and the distribution of telecommunications products and services, would give the company resulting from the merger absolute predominance over all the relevant markets on which the two companies currently operate, through the horizontal juxtaposition of some of their operations and the substantial vertical integration effects that would result from it.
With regard to the horizontal juxtaposition effects, the merger could strengthen Telecom Italia's dominant position on the Internet access services market, primarily because of Seat's operations through the McLink company.
Furthermore, the merger could also give Telecom Italia a dominant position which could restrict competition on the market for collecting advertising for telephone directories, where Seat already is totally dominant, and for the sale of on-line advertising in view of the important of the Telecom Italia data base on its business telephone subscribers which is currently used by Seat, albeit not on an exclusive basis.
With regard to the telecommunications products and services distribution market, the acquisition by Telecom Italia of the sales points and agency networks used by Seat could not only strengthen Telecom Italia's dominant position on these markets but could also restrict access to the distribution market by current and potential Telecom Italia competitors.
In relation to the vertical integration aspects, lastly, the operation could also have effects on the nascent electronic commerce services market. Notwithstanding the need for a careful investigation of the types of relevant markets involved, the new company resulting from the merger could in fact become the company with the largest customer, consumer and corporation base, able to use the one-stop-shopping system to provide all the services that can be supplied via the Internet, based on access to on-line services provided using all the facilities produced as a result of technological development, including advertising on Internet sites, as well as the possibility of selling and purchasing the goods and services requested through the Net.
The investigation by the Authority to see whether the proposed operation would strengthen or create a dominant anti-competitive position on the relevant markets by Telecom Italia will be completed by July.
Rome, 18 May 2000