On 16 November 2016, the Italian Competition Authority (the “ICA”) opened an in-depth investigation into Vodafone Italia S.p.A. and Telecom Italia S.p.A. (the “Accused Companies”), two leading Italian companies providing services for SMS bulk sending.
The ICA alleged that the conduct of the Accused Companies could amount to an abuse of dominance in contravention of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”).
In particular, the ICA stated that the Accused Companies -- which enjoy a dominant market position into the telecommunications sector -- were using this monopolistic power to gain the same market power in the downstream market of services for sending bulk SMS messages.
The ICA believes that the Accused Companies would disadvantage their competitors by applying high prices in the upstream market for the use of their network, so that in the SMS bulk market, the margin of profit of the other competitors would be not sufficient to cover the costs necessary to provide the SMS bulk services to the final clients.
The alleged wrongdoing has yet to be proven at this stage and the investigation continues. However, the ICA has opined that such conduct, if proven, would amount to an infringement of Article 102 TFEU on the grounds that it would adversely affect both trade within the EU and the development of the downstream market by creating a margin squeeze for the competing operators.