Italy: New Antitrust Decision On Telecommunications Network Offering

Last Updated: 5 January 1998
The Italian Antitrust Authority has issued on October 30, 1997 a new decision on the offering of fixed networks by the incumbent operator Telecom Italia which reflects substantially on the possibility for competing operators to realize and implement specific transmission necessities.

As known, until 1998 Telecom Italia is the exclusive provider of the public telecommunications network and of dedicated lines in Italy. It also currently holds a dominant market position in the rendering of liberalized telecommunications services.

On April 1996, telecommunications service provider Albacom (a British Telecom - Mediaset - BNL joint venture) requested the lease of dedicated lines from Telecom Italia for the offering of data transmission and telephony services for Closed User Groups, with a transmission capacity between 64 Kbps (Kilobit per second) and 2 Mbps (Megabit per second). Telecom Italia denied such request on the basis that the fees and contributions for dedicated lines in an urban ambit have only been yet partially determined by a Communications Ministry Decree.

As a result of such denial, Albacom filed a claim before the Italian Antitrust Authority (the "Authority") for alleged abuse of Telecom Italia's dominant market position, under the general rules set forth by Law no. 287/90. The Authority considered all possible violations of antitrust provisions by the incumbent operator, in particular the denial of the request, discriminatory behaviours on the set prices and technical characteristics of the network offered and the application of excessive prices. Moreover, in the interpretation of the case, the Authority analized also the implications of EC Directive 92/44, under which a telecommunications operator must allow competitors the access to any type of dedicated lines for the offering of liberalized services and must progressively adapt the offering of dedicated lines to the market requirements and to the development of the public network.

According to Telecom Italia, for connections with a capacity between 64 Kbps and 2 Mbps the maximum tariffs set for the 2 Mbps capacity should be applied, due also to the need to assure the interconnection of intermediate capacities required by other users.

Such capacity and price imposition, according to the Antitrust Authority, is contrary to European networking and antitrust principles. In particular, according to the decision, the absence of application of tariffs proportional to the transmission capacity at an urban level implies an inefficient use of the local transmission capacity, and a lack of flexibility of adaptation of the offering to the specific requirements of clients. Furthermore, the obligation to lease lines at 2 Mbps involves the payment of fees which substantially affects the possibility for other service providers to offer new liberalized services.

It is worth noting that, according to the incumbent Telecom Italia, the absence of requests for lines with an intermediary capacity in an urban ambit has also resolved in a limited investments necessary for optimizing the use of the transmissive capacity of the network. Such investments, if actioned by end users, would have resulted in a reduction of costs and introduction of cost-related proportional tariffs.

In the mentioned decision, the Antitrust Authority, Telecom Italia's conduct concerning the providing of urban lines with intermediary capacity has resolved in an abuse of dominant position, hindering the possibility of competitors to dispose of a transmissive capacity at a local level appropriate for their services and limiting the technical development to the detriment of final consumers. Telecom Italia has also been condemned to a fine of Lit. 950 million for the anticompetitive behavior and violations of the national antitrust provisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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