On 10th March 2015, the Italian Competition Authority (the “ICA”) opened an in-depth investigation into the proposed acquisition of the Italian company Rai Way S.p.A. (“Rai Way”) by another Italian company EI Towers S.p.A. (“EI Towers”).
Pursuant to Section 16 (1) of Law No. 287 of 1990, all mergers and acquisitions having effect in Italy, which fall within certain thresholds, must be notified to the ICA for approval.
Approval could be withheld if the acquisition or merger is capable of creating or strengthening a dominant position in the relevant market.
In this case, Rai Way is a company controlled by the state owned Italian broadcasting company Rai – Radiotelevisione Italiana S.p.A. (“Rai”) and EI Tower is controlled, by its parent Finanziaria di Investimento Fininvest S.p.A. (“Fininvest”).
Rai and Fininvest are the two main competitors in Italy for television broadcasting services and Rai Way and EI Towers are the companies which own the relevant vertical infrastructures (i.e. “towers” etc.) and provide services needed in order to broadcast television, radio and telephone signals to the public.
In this scenario, the ICA identified three main markets on which the proposed acquisition may have negative competitive affect.
The first was the infrastructures market for television broadcasting services. In such a market, the ICA found that the proposed acquisition may eliminate the only national competitor of EI Tower (i.e. Rai Way) and have negative effects on competition in the downstream markets, making it more difficult for other operators to obtain the relevant services in these markets.
The second market taken into account by the ICA was the infrastructures market for radio broadcasting. According to the ICA, after the proposed acquisition EI Tower would have approx. 45% to 50% of the relevant market share, increasing its chance to create or strengthen a position of dominance.
Finally, the ICA examined the infrastructures market for mobile telecommunications which appeared not to be affected by the proposed acquisition as the mobile operators are characterized by the self-production of services and infrastructures, necessary for broadcasting.
In light of the above, the ICA decided not to clear the proposed acquisition during its intial investigation phase and to open up an in-depth investigation.
In our view, the investigation is welcome as it the move from a two competitor market to a single monopoly poses serious competition law questions.