CN12 - Italian court annuls competition authoritys EUR 228 million fines on telecom operators

On 12 July 2021, the Italian administrative court of first instance ("TAR Lazio"), published its judgments annulling the decision of the Italian Competition Authority ("ICA") to fine TIM, Vodafone, Wind and Fastweb for allegedly coordinating their billing and pricing strategies.  According to the court, the alleged collusion was in fact the outcome of the companies' independent choices to comply with legislation imposing an obligation to issue customer bills on a monthly basis (rather than on the basis of a 28-day billing cycle).

Key takeaways

• According to the TAR Lazio, the "exogenous" elements upon which an antitrust decision is based (e.g. evidence of systematic contacts between competitors) must be sufficient and fall within the relevant time-frame.
• If the unlawfulness of parallel conduct can be proven only on the basis of indicia, these must be reliable, precise and consistent, as otherwise the companies under investigation can rebut the allegations by providing a plausible alternative explanation for their conduct.
• In the telecoms sector, the alignment of competitors' strategies must be assessed, not only in light of their pricing policies, but in relation to other components of the offer (e.g. volume of data, minutes, etc.).

On 18 January 2020, the ICA fined four national telecom operators EUR 228 million, alleging that they had participated in a secret, single, complex and continuous agreement aimed at maintaining existing price levels and hindering customers' mobility in the markets for mobile and fixed communication services, thereby infringing Article 101 TFEU (the prohibition on anti-competitive agreements).

According to the ICA, the telecom operators illegally coordinated their billing and pricing strategies when adopting specific regulation by the Italian Telecom Authority ("ITA") of March 2017 and of Law Decree no. 148/2017, which imposes a duty on all telecom service providers to renew their offers and bills monthly, or in periods of multiple months, instead of periods of 28 days.  When amending the billing cycle from 13 bills per year (roughly every 28 days) to 12 bills each year (every month), the telecom operators increased the monthly price by a corresponding level, i.e. 8.6%. 

The TAR Lazio annulled the ICA's decision for lack of evidence.  In particular, the court noted that the ICA's assessment was not based on sufficient "exogenous" evidence, since the documents gathered fell outside the relevant time-frame of the alleged infringement, whereas the only "inculpatory" document falling within the relevant period could be justified by an alternative explanation, notably the legitimate market intelligence activities of the telecom operators.

According to the TAR Lazio, without exogenous evidence, the ICA had not been able to provide an explanation for the parallel conduct between the telecom operators that was more plausible than the alternative explanation provided by the parties, namely that the repricing was the result of adjusting the cost of the products when moving to 12 monthly bills per year (instead of 13 bills per year on a 28-day cycle), with no increase to the annual cost of the offer.  This explanation was also confirmed to the ICA by the ITA, which emphasised that when evaluating a possible alignment of commercial strategies in the telecoms sector, the ICA should also examine the other components of the offer (e.g. volume of data or minutes) which, in the case at hand, TIM and WindTre decided to increase, thus offering a better deal than the other two rival operators. 

These rulings are an interesting example of case law from the Italian courts confirming the importance that a national competition authority bases its assessment on sufficiently strong "exogenous" elements, such as contemporaneous documents.  When such evidence is not available, any so-called "endogenous" elements (i.e. indicia showing that there is no other explanation for the collusive conduct) must be more plausible than any alternative justifications put forward by the parties.