TELECOM ITALIA/SEAT PAGINE GIALLE
PRESS RELEASE
PRESS RELEASE
Conditional authorization for the acquisition by Telecom Italia of Seat Pagine Gialle
The Competition Authority, at its meeting on 27 July 2000, resolved to authorize the acquisition of Seat Pagine Gialle by Telecom Italia, conditional upon full compliance with a number of undertakings entered into voluntarily by Telecom and Seat in the course of the proceeding, and several further measures imposed by the Authority to remove any potential anti-competitive effects of the operation.
As notified, the acquisition would have imposed substantial horizontal and vertical restrictions on competition in many of the markets on which both Telecom and Seat operate.
The undertakings agreed by the parties to the acquisition, with which full compliance is required if the operation is to be authorized, are as follows:
a) Seat must dispose of its 66 percent equity interest in MC-Link;
b) Telecom must dispose of its entire equity interest in Excite Italia;
c) beginning on 1 September 2000 Telecom Italia must provide, online and free of charge to all interested providers, its database of information on all telephone subscribers, updated every ten days. Anyone else interested in acquiring the database will be able to obtain it for 1,500,000,000 lire;
d) beginning on from 1 January 2008, the collection of advertisements in the White Pages must be put out to tender;
e) Telecom must take no action that might lead to the closure of Buffetti's distribution network, which must be allowed to market products of other operators competing with the Telecom group. Taking account of the indications set out in the opinion of the Communications Regulator, the Authority has also required Telecom and Seat to keep their sales structures and their trademarks completely separate for a period of three years.
In particular, with regard to the effects of the horizontal juxtaposition of both parties' operations, the Authority considered that distortions to competition on the Internet access services market would be prevented if SEAT were to dispose of its entire equity interest in the MC-Link company; it also considered that the undertaking to permit competing companies to market telecommunications products, coupled with the obligation to keep Telecom's and Seat's trademarks and sales networks separate for a period of three years would be sufficient to remove the restrictions on competition which the operation could create on the telecommunications products and services distribution market.
With regard to the vertical integration effects, the Authority considered that supplying the telephone subscriber database free of charge to specific categories of operators, without any conditions on its use, would make it possible to develop commercial activities linked to the use of the database and generate real competition on the relevant markets to the benefit both of the providers already operating on that market and potential new market entrants. This applied in particular to the publication of printed telephone directories and online directories, the addition of other publishing initiatives, particularly on portals, and the gathering of advertising copy for telephone books and online directories. This effect is heightened by the fact that a tendering procedure will eventually be introduced for the awarding of the contract to collect advertising copy for the White Pages which will do away with the structural and permanent linkage between Telecom and Seat for the collection of adverting copy for the telephone subscribers' directory, and will thereby weaken the potential anti-competitive effects of the takeover.
On the basis of these considerations, the Authority therefore authorized the acquisition of Seat by Telecom Italia.
The Authority also emphasized, in the light of the opinion issued by the Communications Regulator, and in particular of its examination of the rules and organizational procedures for setting up and providing a general telephone directory service, that the undertakings entered into by the parties to offset any potential anti-competitive effects of the takeover do not prejudge any of the decisions that might be taken by the Regulator in the performance of its statutory activities.
Rome, 27 July 2000