AGCM

PRESS RELEASE

A FINE OF MORE THAN €1.0 MILLION TO ABBANOA SpA: UNFAIR COMMERCIAL PRACTICES IN THE PROVISION OF WATER SERVICES IN SARDINIA

At the conclusion of proceedings against Abbanoa Spa, the sole provider of an integrated water system in Sardinia, the Italian Antitrust Authority imposed a total fine of €1.080 million for three unfair commercial practices that took place during 2011-2015 against several consumers. The investigation was conducted by the Italian Antitrust Authority following about six hundred complaints by consumers and consumer groups, including in particular the regional Adiconsum, while at the same time taking account of the opinion delivered by the Authority for Electricity, Gas and Water Supply System (Autorità per l'energia elettrica, il gas ed il sistema idrico, AEEGSI) under the Memorandum of Understanding with the same Antitrust Authority. During the proceedings, two inspections were carried out in collaboration with the Special Antitrust Unit of the Financial Police (Guardia di Finanza).

While taking note of the financial difficulties and of the obstacles that were encountered by Abbanoa in its takeover from the previous management, the Antitrust Authority established that some business practices that were adopted by the company were not in line with a professional due diligence that would be expected from an operator that provides service in a monopoly situation for the supply of a vital and essential product such as water and that has, for the recovery of debts, an important commercial leverage such as the threat to stop the service.

In particular, the investigation revealed several unfair practices by Abbanoa during the assessment, verification and billing of consumption: failure to make periodic readings which resulted in the issue of invoices to adjust the balance that were too high; the issue of invoices on the basis of estimates that proved too high; failure to observe the established billing cycle; the billing of water treatment services that had not been provided; references in invoices to arrears that were not real; the application of procedures that place on consumers a larger share of the burden for the payment of water consumption that had not taken place due to hidden leaks in the water system; the issue of invoices for long-term consumption with high amounts in the absence of adequate information on the application of new tariffs following the takeover from the previous management. According to the Italian Antitrust Authority, this conduct is marked by a high lack of diligence and is used to exert undue influence on consumers or to obtain the payment of amounts that are not due or that correspond to consumption that did not take place. With regard to this practice the Antitrust Authority imposed a fine of €400,000, net of a significant reduction for the poor financial conditions that had been experienced and for management difficulties that Abbanoa had to overcome.

Abbanoa also placed obstacles to the takeover of existing consumers, restricting the entrance of consumers in arrears even in the case of requests by third parties and not in arrears: this caused undue influence on consumers who might have been led to the payment of arrears of the previous owner. For this conduct the Antritrust Authority imposed a fine of €80,000 net of mitigating circumstances.

Finally there were very serious shortcomings in the management of complaints that led to failure to suspend collection procedures and the interruption of consumption pending examination of the complaint, in the context of vigorous policies against arrears by means of the disconnection of consumers. In particular, it was noted that there were large numbers of complaints that had not been handled at all (the so-called “complaints outside the format”), inadequate management of several complaints that objected to the prescription of credits that did not suspend recovery procedures and very long response times for the remaining claims handled. With regard to this conduct, the Antitrust Authority decided to impose a fine of €600,000, net of mitigating factors.

The company Abbanoa must inform the Italian Antitrust Authority about changes introduced to overcome the problems that had been detected.

Rome, 29 September 2015