THE BACKGROUND:
The A514 investigation procedure originated from an initial report filed by a public company, which reported alleged anti-competitive conduct by the Company during several tenders launched by the same reporting company in 2016, in order to ensure coverage of the areas of market [2] failure in Italy as part of the Italian Strategy for the development of the Ultra-Large Band. During the months immediately following this first report, further communications were added to this first report concerning certain elements relating to the conduct already contested previously.
On June 28, 2017, the AGCM, considering the multiple reports collected to be of a relevant nature, decided to initiate proceedings against the Company pursuant to Article 102 TFEU, in order to verify the possible abuse of the dominant position by the telecommunications company.

THE COMPLAINED CONDUCTS:
When initiating the procedure, the Antitrust Authority assumed that the conduct of the Company was capable of achieving two specific objectives of harming competition: (i) firstly, to hinder the conduct of the tender procedures in order to preserve a historical monopolistic position in the territories defined as “white areas” and to avoid the entry into the market of the legitimate company winner of the tenders; (ii) secondly, to gain customers in advance on the new segment of ultra-wideband retail telecommunications services, also with anti-competitive commercial policies (non-replicable prices, lock-in). In addition to these assumptions of alteration of normal competition, on February 14, 2018 the Antitrust Authority included an additional reason for analysis in its preliminary assessment. In fact, an objective extension of the scope of the measure was decided, with reference “to the conduct concerning the Company’s wholesale pricing strategy on the market for wholesale broadband and ultra-wideband access services and the use of privileged information concerning the customers of alternative operators to the Company on the market for retail broadband and ultra-wideband telecommunications services”.

THE ESSENCE OF THE MEASURE:
Following a prolonged investigation phase, on February 25, 2020, the AGCM officially decided to fine the Company €116 million euros, considered liable for having intentionally engaged in anti-competitive conduct which, taken as a whole, allowed to integrate a strategy qualified as a dominant position within the meaning of Article 102 TFEU. Specifically, the Company was held liable for having engaged in “conduct aimed at preserving its market power in the provision of fixed network access services and telecommunications services to end customers” and for having “hindered the entry of other competitors, preventing both a transformation of the market in accordance with conditions of infrastructure competition and regular competition in the market for retail services to end customers”. In fact, the first two points of complaint highlighted in the initial reports have been fully accepted and the Company’s responsibility for hindering the conduct of tenders under the Government’s National Ultra-Wideband Strategy has been established. On the other hand, the point relating to the alleged pricing strategy put in place by the Company together with the alleged use of insider information on the customers of the alternative operators has completely fallen.
For these reasons, the AGCM has decided to fine the Company of a significant financial burden in order to provide the necessary deterrent to possible future anti-competitive conduct. In any case, in quantifying the fine, the Antitrust Authority has positively assessed the Company’s conduct in the final phase of the investigation procedure, aimed at ensuring that the promotional offers submitted had overall economic conditions that were fully replicable by other competing operators.
With respect to the payment of this fine, the AGCM has also specified that it has postponed the deadline for compliance to October 1, 2020, “in view of the serious difficulties facing our country’s production system, resulting from the extraordinary epidemiological emergency from COVID-19, as well as the high amount”.
Finally, the Company immediately communicated its doubts about the severe ruling, defining as unjustified the fine imposed by the Antitrust Authority and also announcing a clear willingness to appeal to the Regional Administrative Court (“TAR”).

[1] It is possibile to find out the full measure at the following link: https://www.agcm.it/dotcmsdoc/allegati-news/A514%20chiusura.pdf
[2] The areas with market failure are commonly defined as “white areas”, due to their characteristics of low population density and jagged location on the territory for which only direct public intervention can guarantee the resident population a connectivity service. Without public subsidies, in fact, the market in itself would not justify the innovative infrastructure in these areas.

Paolo Rovera e Alessandro Bura