Broadband: Italian Antitrust Authority opens investigation on Flash Fiber

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On 9 February, the Italian Antitrust Authority opened a formal investigation on Telecom Italia and Fastweb with regard to the creation of the joint venture Flash Fiber.

The Authority will examine whether the joint venture is capable of restricting competition in breach of Article 101 TFUE by way of coordination of the Parent companies’ strategies in two Italian markets: the market for fixed broadband wholesale access and the market for broadband and ultrafast-broadband retail telecommunication services.

The Authority launched the investigation following the notification of the joint venture by Telecom and Fastweb on 14 September 2016.

Flash Fiber, which has not started operating yet, was established in 2016 with the aim of developing the optic fiber infrastructure in FTTH (fiber-to-the-home) in 29 Italian cities.

In the decision to open the investigation, the Authority clarified that, although the joint venture aims at the deployment of the broadband network in the general interest of innovation (in line with the objectives of the Italian Ultrabroadband Strategy), Flash Fiber may entail the coordination of the Parent companies with regard to their strategic commercial decisions on the markets.

During the investigation (which should end by 31 December 2017), the Authority will establish whether the joint venture may be exempted of the prohibition of Article 101(1)TFEU since it generates objective economic benefits that outweigh the negative effects of the restriction of competition. In order to benefit from such derogation, the joint venture shall meet four cumulative conditions under Article 101(3) TFUE, providing that:

(a) the agreement contributes to improving technical or economic progress;

(b) it allows consumers a fair share of the resulting benefits;

(c) it restricts competition to an extent that is indispensable to the attainment of the aforementioned objectives;

(d) it does not eliminate competition in respect of a substantial part of the  services in question.

In a first statement on the launch of the investigation, Telecom Italia upheld the correctness and validity of the joint venture “which enables the acceleration of the dissemination of FTTH services, in line with the objectives of the National Ultrabroadband Strategy, increasing competition and bringing about benefits for consumers”.

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