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Tuesday, August 6, 2013

Italy: Vodafone launches billion-Euro dominance abuse case against Telecom Italia - Competition Policy International (CPI)

This is an interesting situation - the first case in Europe (as far as I know) when a big telecom company brings a follow-on legal action against another big telecom company, which was found to have abused its market position.  The case is interesting also for the fact that Vodafone Italy was not among the plaintiffs which addressed their complaint against Vodafone Italy in front of AGCM - Autorita Garante della Concorrenza e del Mercato (the Italian competition authority). These included smaller players in the Italian market - Wind and Fastweb.  There are rumours regarding a possible acquisition of Fastweb by Vodafone, which engaged in several acqusitions of large internet providers and fix-networks holders in UK (Cable & Wireless) and in Germany (Kabel Deutschland) in the recent years. 
I would highligt that Vodafone is seeking damages amounting to 1,3 billion EUR, 10 times more than the fine applied by AGCM to Telecom Italia and is doing these when ”the ink did not dry out on the sanctioning decision”, i.e. before the decision of the competition authority is confirmed by a final court decision. Although the claim might end up in a settlement, the costs for Telecom Italia from its infringement of the competition rules, as assesed by AGCM, is likely to be considerable.  
The reason for asking damages might be related to the move towards integrated networks by the large telecom operators (and Vodafone is a champion of this trend), as noted by Professor  Carlo Alberto Carnevale-Maffe, of Bocconi University in Milan on Bloomberg, but another possibility could be also taken into acount - Vodafone and Telecom Italia are the main competitors in the Italian market and this legal challenge gives Vodafone the opportunity to ”push its competitor on the ropes”. If this is one of the goals of Vodafone, the court should be cautious in awarding high levels of damages - although it is correct for infringers to pay the damages they produced and competitors should not be barred from claiming these, the court should look for the right balance and avoid undue outcomes for the market. 

Italy: Vodafone launches billion-Euro dominance abuse case against Telecom Italia - Competition Policy International (CPI)