Telecom Italia Obtains Annulment of Three Administrative Decisions on Promotional Offerings

May 6, 2008

Cleary Gottlieb successfully appealed three separate decisions by the Italian Communications Authority (“AgCom”) on behalf of Telecom Italia S.p.A. The first decision, adopted on February 19, 2007, established a regulatory framework for Telecom’s promotional offerings on telephone access services and the other two decisions, adopted respectively on September 25 and November 13, 2007, fined Telecom for not complying with the new rules.

The first decision required Telecom to match each promotional offering at the retail level on wholesale access prices, as well as to give both AgCom and the competitors a 60-day prior notice. Without conducting an economic analysis of Telecom’s retail promotional offerings nor inquiring on the savings which made them possible, AgCom maintained as a matter of general principle that competitors could not compete with Telecom’s retail promotions, unless wholesale access prices were automatically adjusted as required. The new rules were also applied to extensions of previous promotional offers authorized by AgCom.

The Latium Regional Administrative Court agreed with Cleary Gottlieb’s arguments that the remedy imposed on Telecom was vexatious and disproportionate in light of the limited impact of promotional offerings on competition. The fines were also annulled on other grounds, i.e. because AgCom should have distinguished new offers from the mere extension of previous offers and had wrongfully accused Telecom of committing repeated infringements.