On January 28, 2020, the Italian Competition Authority (the “ICA”) issued a decision finding that four telecom operators, namely Fastweb S.p.A. (“Fastweb”), Telecom Italia S.p.A. (“TIM” or “Telecom”), Vodafone Italia S.p.A. (“Vodafone”) and Wind Tre S.p.A. (“Wind Tre”) (together, the “Operators”), participated in a cartel aimed at coordinating their commercial strategies, with a view to keeping prices high during the transition from four-week (28 days) billing to monthly billing (so-called repricing), thus impeding competition and limiting the risk of customers migrating to other competitors.[1]

The ICA opened the investigation in February 2018 (the “Investigation”). In April 2018, following the opening of a sub-proceeding to adopt interim measures, the ICA (i) ordered the Operators to suspend, pending the Investigation, the coordination concerning the repricing of the tariffs communicated to their customers, and (ii) required each Operator to define the terms of its own offers independently from its competitors (the “Interim Measures”).[2] Interestingly, this is the first time that the ICA has adopted interim measures in the context of an investigation into restrictive practices.

Background

Starting in 2015, the Operators informed their customers that the billing and renewal of services provided would be carried out on a four-week basis (i.e., every 28 days), as opposed to on a monthly basis, as before. This change triggered a number of complaints from consumer associations, which argued that it was designed to mask, in a non-transparent manner, price increases in both mobile and landline phone fees.[3]

On March 15, 2017, the Italian Communications Authority (“AGCom”) issued a resolution, requiring (i) the billing period for landline telecommunications services to be brought back to one month, and (ii) the billing period for mobile telecommunications services to be no less than 28 days. The AGCom granted the Operators 90 days to comply with these requirements.[4] The substance of this resolution was subsequently confirmed by Article 19 quinquiesdecies of Law Decree No. 148/2017 (then converted into Law No. 172/2017). Accordingly, the new provision established invoicing periods of a month (or multiples of a month) for television network operators, telecommunications operators, and providers of services of electronic communications.

Nonetheless, the Operators initially maintained the 28-day invoicing system. As a consequence, in June 2018, the AGCom adopted measures against the Operators, establishing the users’ right to obtain reimbursement (by December 30, 2018) of the eroded days in the period between June 23, 2017 and the day of return to billing on a monthly basis, which had taken place between February and April 2018.[5]

The Operators applied to the Regional Administrative Court of Lazio (the “TAR Lazio”) against the AGCom resolution of June 2018, seeking the suspension of the measures adopted therein. In November 2018, the TAR Lazio rejected their application;[6] furthermore, on appeal, the Council of State confirmed the right of customers to the automatic reimbursement of the days unlawfully eroded by the 28-day billing system.[7]

The ICA’s findings

The above-mentioned practices were subject to the ICA’s assessment in the context of the Investigation.

The ICA found that the alleged coordination between the Operators led to the adoption of identical implementation methods for the provision in Law No. 172/2017. More specifically, in the ICA’s view, the contested behavior consisted of: (i) the adoption of identical repricing in the transition to monthly billing, and (ii) simultaneous communications to clients, informing them that phone services were soon going to be invoiced on a monthly basis (without entailing any change in the annual price for the services, even though monthly subscription fees would be increased by 8.6%). The ICA found that the contested practices constituted a restriction by object under Article 101 TFEU, amounting to a secret, single, complex and continuous collusive scheme aimed at preserving the existing price level (i.e., the 8.6% increase achieved as a result of the billing adjustments), and preventing customer mobility. Indeed, in the ICA’s view, the coordination among the Operators was intended to suppress any incentive for customers to exercise their right of withdrawal and, therefore, to freeze the Operators’ respective market shares by limiting competition on the market.

With respect to repricing, the ICA noted that – following the implementation of Law No. 172/2017 – the Operators were required to issue monthly invoices, but were free to determine whether and how to reprice the services offered to customers.

However, the ICA found that – despite several alternative options being available – the Operators consciously opted for the same strategy, by applying identical repricing of 8.6%. In light of this “ focal point” of the anticompetitive coordination, the ICA deemed that the remaining divergences in the amendments to the content of the Operators’ offers (by which, for example, Telecom and Wind Tre increased the contents included in their offers, whereas Fastweb and Vodafone did not) could not call into question the existence of the collusion.

In addition, the ICA found that, following an initial period in which the Operators began to have legitimate contacts (aimed at lobbying and taking actions to protect their rights and business strategy against AGCom’s decision to change the invoicing system), such contacts continued to occur also afterwards, with the aim of coordinating the Operators’ business strategies with regard to the implementation of Law No. 172/2017. According to the ICA, the Operators were fully aware of their misconduct: in several emails they stressed the potential anticompetitive risks of their practices, and suggested adopting precautions, such as exchanging as few emails as possible.

Calculation of the fines

With regard to the fines imposed on the Operators, the ICA granted a 5% reduction to each of Telecom, Vodafone and Wind Tre to reward them for the introduction of amendments to their antitrust compliance programs, following the opening of the Investigation (while Fastweb did not submit any compliance program). In addition, a 5% reduction was granted to Vodafone in light of the specific measures adopted to comply with the Interim Measures, given that it (i) fully suspended the 8.6% repricing, and (ii) allowed consumers to exercise their right of withdrawal during longer periods.

Moreover, the ICA took account of the fact that the effects of the cartel were avoided by the application of the Interim Measures, which forced the Operators to review (and differentiate) their business strategy. In particular, the Interim Measures led to a differentiated reduction in the prices applied by the Operators prior to the completion of the repricing. Secondly, the ICA took into account the specific nature of the conduct within the legal, economic and historical context of the landline and mobile telecom markets, as well as their competitive conditions, in terms of both prices and the technological investments necessary to ensure their development. Accordingly, in light of the specific circumstances of the case, the ICA deemed it appropriate to depart from the general methodology for the setting of fines, as set out in its Fining Guidelines,[8] and reduced all fines by 70%.


[1]              ICA Decision of January 28, 2020, No. 28102, Case I820 – Fatturazione mensile con rimodulazione tariffaria.

[2]              ICA Interim Decision of April 11, 2018, No. 27112.

[3]              For the sake of completeness, it should be noted that in 2016 the ICA fined TIM, Wind and Vodafone for breach of Articles 20, 24 and 25 of the Italian Consumer Code. In particular, the ICA found the unilateral reduction of the billing period from 30 to 28 days to be an aggressive practice, since it was likely to limit the consumers’ freedom of choice and their right of withdrawal, thus resulting in an economic burden for all consumers who did not agree on this change (see ICA Decision of July 27, 2016, No. 26134 , Case PS10246 – Telecom-Rimodulazione piani tariffari 28 giorni; ICA decision of July 27, 2016, No. 26135, Case PS10247 – Wind-Rimodulazione piani tariffari 28 giorni; and ICA Decision of December 21, 2016, No. 26307, Case PS10497 – Vodafone- Rimodulazione tariffaria da 30 a 28 giorni).

[4]              AGCom Resolution No. 121/17/CONS of March 15, 2017.

[5]              Resolution No. 269/18/CONS of June 6, 2018.

[6]              TAR Lazio, Judgments Nos. 11303, 11304, 11305 and 11306/2018.

[7]              Council of State, Judgment No. 4913/2019.

[8]              Guidelines on the method of setting pecuniary administrative fines pursuant to Article 15, paragraph 1, of Law No. 287/90, §34.