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20 May 2013

On May 9 2013 the Competition Authority fined Telecom Italia, the Italian incumbent operator, for exclusionary conduct aimed at hampering its competitors' market expansion. The authority determined that Telecom Italia abused its dominant position by committing two separate infringements of Article 102 of the Treaty on the Functioning of the European Union:

• denying wholesale network infrastructure access and broadband access to its competitors; and
• offering anti-competitive discounts to its business clients, thereby squeezing its rivals' margins.

The infringements took place between 2009 and 2011.

In relation to the first infringement, the authority found that Telecom Italia had unfairly refused a number of requests for activation of wholesale services from other operators. According to the authority, Telecom Italia treated requests coming from other operators in a discriminatory manner compared with those originating from its internal divisions, thereby obstructing competitors' access to its infrastructure and making service access activations significantly more difficult.

As to the second infringement, the authority found that Telecom Italia's discount policy was unfair and harmed competition in the market for retail access to the public telephone network at a fixed location for non-residential customers. According to the authority, Telecom Italia aggressively discounted its pricing for large business clients to the extent that it would have prevented equally efficient competitors from operating in a profitable manner.

The authority opened an in-depth investigation and raided Telecom Italia's offices in June 2010 after receiving complaints from Wind and Fastweb. It published and market-tested undertakings offered by Telecom Italia and eventually rejected them.

The authority imposed two separate fines totaling €103.794 million (about 0.3% of Telecom Italia's total turnover in 2011). In determining the fines, the authority took into account Telecom Italia's recidivism as an aggravating circumstance, and its cooperation and recent financial losses as mitigating circumstances.

Telecom Italia stated that it ensured alternative operators full and equal access to its network, partly through the voluntary implementation of the 'open access' model. It also said that it would appeal the authority's decision before the Lazio Administrative Court.

This case demonstrates the authority's continued focus on the Italian telecommunications market, with Telecom Italia facing a difficult challenge to protect its declining market position.