TELECOM ITALIA
PRESS RELEASE
PRESS RELEASE
THE COMPETITION AUTHORITY HAS FINED TELECOM ITALIA S.P.A. FOR ABUSE OF A DOMINANT POSITION
At its meeting on 16 November 2004, the Authority resolved to close the investigation that began in June 2003 into the Telecom Italia S.p.A. company, imposing fines totalling an aggregate EUR152 million for having abused its dominant position on the fixed network telecommunications services for business customers.
The investigation had revealed that the abusive conduct by Telecom Italia formed part of a single strategy, clearly laid down in the central level, in order to explicitly exclude its competitors from the business end-users market for telecommunications services and thereby to maintain its historically dominant position both on the end-users market and the market for intermediate services for its competitors.
More specifically, Telecom Italia had implemented this strategy through two types of conduct, both of which were in violation of section 3 of the Competition Act:
a) the use of contractual terms and conditions, such as exclusive clauses, and clauses equivalent in terms of their effects to English clauses, which would ensure that a substantial part of the business customers would be bound to Telecom Italia, making it more difficult or impossible for competing telecommunications companies to offer fixed network telecommunications services, and to handle even only a part of the traffic of the customers in question; these clauses were therefore considered to be abusive not because they might discriminate between different end customers, and rather because of the effect they would have on excluding competitors;
b) the offering of financial and technical conditions to customers which the competitors could not replicate because of the costs and technical conditions laid down in the regulations for the offering of intermediate services to competitors. This conduct was deemed discriminatory on the intermediate services market because it entailed imposing technical and financial conditions on its competitors that were less favourable than those offered to its own commercial divisions for the same services to the end-customer. The purpose of this conduct was to hamper access by competitors to the end services market.
The second group of actions comprised a variety of different economic and technical offerings both to large customers as well as smaller customers, public and private, and in particular the CONSIP bid in 2002 for the supply of telecommunications services to the Italian civil service. The framing of this bid was of particular importance both in terms of the size of the tender, and because the financial terms and conditions offered to CONSIP, that were below the costs to its competitors on the upstream markets, were widely marketed to private domestic users as well.
On this specific point, it should be emphasised that by charging its own commercial divisions less than the costs defined by the regulations for the supply of the essential intermediate factors needed to provide the final services, Telecom Italia introduced discrimination into the network costs to the detriment of its competitors which, in the medium-long term, as the literature and Community and national case law now universally agree, significantly hampers the establishment of truly competitive market conditions, and consequently a real and lasting reduction in charges to the end-customers.
These actions constitute very serious violations of competition law and, moreover, they have been committed by a company which has a special responsibility because of its dominance. The seriousness of this offence could not be mitigated by the commitments submitted by Telecom Italia, which were of a regulatory nature and only applicable to the future, and which were therefore unlikely to remove the abuse in conduct and the effects of this conduct on the market.
The opinion issued by the Communications Regulatory Authority on the draft measure adopted by the Competition Authority substantially agreed with the latter's judgement, particularly with regard to the definition of the relevant markets and the non-replicability of Telecom Italia's technical and financial offer to business users. The Communications Regulatory Authority nevertheless expressed a partially positive assessment of the regulatory scope of some of Telecom Italia's undertakings.
In calculating the amount of the fine, the Authority took account of the very serious nature of the violations that had been ascertained, the fact that Telecom Italia has been found liable on several occasions before of substantially exclusive conduct, and hence of the same type of conduct as found in the instant case, but also of the Communications Regulatory Authority's partial appreciation of the commitments presented by Telecom Italia in relation to regulation.
On the basis of all this information, the Authority therefore fined Telecom Italia a total of EUR76 million for each case of abusive conduct.
Rome, 19 November 2004