AGCM

PRESS RELEASE

TLC: ANTITRUST, TELECOM ITALIA ABUSED ITS DOMINANT POSITION IN THE NETWORK INFRASTRUCTURE, TOTAL FINE OF € 103.794 MILLION

Using two distinct behaviours it defended its market shares by hindering competitors’ offerings to customers and making it not replicable to big business customers.

Telecom Italy abused, using two distinct behaviours, the dominant position it holds in the provision of wholesale access to the local network and broadband, hindering the expansion of competitors in markets for voice telephony services and broadband internet access. The Autorità Garante della Concorrenza e del Mercato established this, which then warned the company about repeating such behaviours in the future and penalised it with a total fine of 103.794 million Euro.

At the end of the investigation, initiated on 23^rd June 2010, the Antitrust Authority determined that Telecom’s abuse proceeded through two distinct behaviours:

1) The company imposed an unjustifiably high number of rejections on competitors for activating wholesale services, the so-called KO.

The data emerged in the course of the investigation show that Telecom, in exercising its discretion, dealt with orders from other operators in a discriminatory manner vis-à-vis those coming in from its own internal divisions.

Through such behaviours, Telecom hindered the access of competitors to the infrastructure, both in the case of providing services on active lines, and in the case of providing services on inactive lines. This effectively made the activation process for network access services significantly more difficult for other operators than for the internal divisions of Telecom.  

For that offence the Authority approved a fine of € 88.182 million, which takes into account the mitigating circumstances recognised to Telecom for the various activities initiated after 2009 to improve its procedures for access to competitors and the operating losses and aggravating circumstance of recidivism (Telecom was already convicted of abuse of a dominant position in relation to substantially exclusionary conduct).

2) Telecom Italia implemented a policy of discounts to big business clients for retail access to the fixed public telephone network, which does not allow a competitor, equally efficient, to operate profitably and on a lasting basis in the same market.

Basically, Telecom has designed a rate policy for large business clients, at least for the period 2009-2011, distinguished by the capacity, given the network access costs charged to other operators, to compress the margins of equally efficient competitors, with effects restricting competition in the retail market of access services for residential customers. The discounts offered to customers were selectively targeted at customers who use vendor selection procedures and who are located in areas open to competition, where the access service is available on the final leg of the client’s network (the so-called unbundling of the local loop, ULL).

The Antitrust’s analysis showed that Telecom would not have been able to offer retail services at these prices without suffering losses if it paid the wholesale costs it charged competitors.

For this conduct the Authority decided on a fine of € 15.612 million which takes into account the aggravating circumstance related to recidivism, because Telecom was already convicted of an abuse of its dominant position in relation to substantially similar behaviours and, as a mitigating circumstance, the losses in the company's balance sheet.

Rome, 10^th May 2013