The Italian Competition Authority opens an antitrust investigation into abusive conducts in the telecommunication sector

The Italian Competition Authority (ICA) has recently opened an Article 102 TFEU investigation against a major TLC operator, Telecom Italia (TI), which was alleged to have put in place a complex foreclosing strategy to preserve its strong market position from the entry of new operators (Case A514,Condotte Fibra Telecom Italia).
The relevant product markets targeted by the ICA investigation were the wholesale market for the provision of access services to the fixed wide band and ultra-wide band networks (the wholesale market) and the retail market for the provision of telecommunication services on the fixed wide band and ultra-wide band networks (the retail market). In the ICA’s view, TI had a dominant position in both of the above markets, also considering the vertical integration between its wholesale and retail activities.
The TI allegedly abusive conduct in the wholesale market concerned the competitive tender procedures organized by the contracting authority, Infratel Italia (II), for the award of the public contracts for the construction of ultrawide band networks. The ICA feared that TI hindered the carrying out of these procedures with the view of preventing the market entry of new competitors. To this end, TI unilaterally changed its investment policy. Contrary to what it stated over the preliminary phase of the competitive tender procedures, TI announced an investment plan in the areas uncovered by the ultrawide band networks that were enlisted in the tender notice of II. TI asked II for the revision of the mapping of the uncovered areas and withdrew from the subsequent phases of the tender procedure though it was admitted to participate in it. Moreover, TI also submitted many complaints and claims before administrative and judiciary bodies. Though all the TI complaints and claims were rejected, nevertheless they had the effect to postpone the conclusion of the II tender procedure and also create a situation of uncertainty surrounding that procedure. The ICA qualified these conducts as a misuse of the rights of TI.  
The ICA believed that these conducts of TI could not be explained but for the intention to obstacle the II’s competitive procedure, thereby making the market entry of new operators less attractive. The TI conduct might also undermine the sustainability of investments of TI’s competitors, such as Open Fiber, that planned to build more innovative networks than those planned by TI.
The Commission took the view that the commercial policies of TI in the retail markets were such to rise switching costs for consumers to the extent to substantially reduce the portion of market contendible by competitors. In that regard, TI proposed to consumers commercial offers that could not be replicated by competitors. The ICA suspected that such practices could amount to a margin squeeze scheme. Moreover, the terms included in the supply contracts TI concluded with retail customers apparently pursued lock-in strategies as they imposed financial penalties for earlier termination of contracts.

In conclusion, on the basis of the preliminary fact-finding, the ICA believed that TI might put in placer a complex foreclosing strategy in the wholesale and retail markets. The goal of the TI strategy was to frustrate the carrying out of the competitive tender procedure organized by TI so to preserve its monopoly position in the wholesale market. TI also intended to win customers in emerging retail markets for ultra-wide band services.

Comments

Post a Comment

Popular posts from this blog

Aspen: The Italian Competition Authority fines a generic manufacturer of drugs for excessive pricing

By the decision made on 29 September 2016 in Aspen [i] , the Italian Competition Authority (ICA) has imposed a fine of more than EUR 5 million on the Aspen group (Aspen), a South African manufacturer of generic drugs. Aspen violated Article 102 TFEU by imposing excessive prices for the supply of the so-called ‘Cosmos drugs’. These drugs included Leukeran, Alkeran, Purinethol and Tioguanine, which included the active principles of chlorambucil, melphalan, mercaptopurine and tioguanine, respectively. All these drugs were used to treat cancer pathologies and included in a wider package of pharmaceutical products, whose marketing rights had been purchased by Aspen from the originator GlaxoSmithKline (GSK) in 2009. Aspen had a dominant position in the relevant product markets for the commercialization of anti-cancer drugs manufactured using the active principles of alkeran, leukeran, purinethol and tioguanine. It had the only one market authorization for the sale of drugs and potential ...
Read more

Geographical allocation of turnover in aviation mergers: What the European Commission recently hold

The European Merger Control Regulation (ECMR) stipulates that only concentrations with a European dimension fall within the regulatory jurisdiction of the European Commission to review. A concentration is presumed to have such a dimension when it meets the financial threshold in Article 1 of the ECMR. To this end, it is necessary to calculate the turnover generated by the merging parties within the Community or in one or more member states. However, the geographical allocation of the turnover required by Article 1 for the purpose to establish the Commission’s jurisdiction can be a tricky issue in case of mergers between undertakings with a cross-border activity such airliners. In fact, the activities of airlines span several countries as they typically operate flights and sell tickets in many national markets. Recently, the Commission has dealt with the issue at length in the Ryanair/Aer Lingus case. It identified three possible methodologies for geographical allocation of turnover: -...
Read more

The European Commission unconditionally clears the Facebook/WhatsApp merger

By a Phase I decision the Commission unconditionally approved the Facebook $ 19 billion acquisition of WhatsApp ( Case No COMP/M.7217,Facebook/WhatsApp) . The Commission was required by the parties to review the transaction by means of a reasoned submission filed on the basis of Article 4(5) of the EU Merger Regulation. Indeed, the merger was not a concentration with EU dimension within the meaning of Article 1 EUMR falling within the Commission jurisdiction, since the EU turnover of WhatsApp in 2013 failed to met the financial thresholds in that provision. The Commission identified three relevant product markets affected by the concentration. It restrained the first relevant market, the market for consumer communication services, to the communication apps for smartphones, because WhatsApp was available only for this device. Following its approach in Microsoft/Skype (Case M.6281), upheld by the General Court in the case T-79/12, Cisco Systems and Messagenet v Commission, the Com...
Read more