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Brussels, 19 January 2001

Commission allows Italian competition authority to examine the impact of Enel's acquisition of Infostrada on Italy's electricity market

The European Commission has decided to refer to the Italian competition authorities Autorità Garante della Concorrenza e del Mercato --, at their request, the examination of the impact of the proposed acquisition of Infostrada by Enel and France Telecom on the Italian electricity sector. The electricity market is currently being liberalised in the whole of the European Union, but Enel still has a dominant position in Italy, leading the Italian authority to fear that it might be able to protect its position in the electricity market by offering joint utility services. The Commission's one-month review of the case, on the other hand, showed that the deal would pose no competition problems on the telecommunications and Internet markets. The Commission has, therefore, adopted a decision clearing these aspects of the deal.

The deal concerns the acquisition by Enel Holding SpA of Infostrada SpA from Vodafone Plc and the subsequent merger of Infostrada into Wind Telecomunicazioni SpA, a full function joint venture between Enel and France Télécom. France Télécom provides a full range of telecommunications and Internet services, primarily in France. The transaction will not change the present joint control over Wind since Enel and France Télécom will continue to jointly control the merged company.

Enel is the principal provider of electricity in Italy, both to domestic and industrial users. It is also active in the Italian telecommunications market through Wind.

Wind provides a full range of fixed and mobile telecommunications services and Internet services in Italy. Infostrada is a provider of fixed line telecommunications services, including voice telephony, data transmission capacity and Internet services in Italy. The transaction therefore creates overlaps in the fixed line telecommunications and Internet services markets in Italy. However, the overlaps are not such as to lead to any creation or strengthening of a dominant position, irrespective of the market definitions chosen, given the parties' low market shares and the existence of a number of significant competitors in these areas. For these reasons the Commission has adopted a decision not to oppose the transaction as regards any telecommunications and Internet markets.

The Italian competition authority on December 20 asked the European Commission to refer the examination of certain aspects of the concentration to Italy, using Article 9 of the Merger Regulation 4064/89. Article 9 allows for such referrals if a national competition authority is concerned a merger could present a threat to effective competition on its own market.

The Autorità has argued that the acquisition of Infostrada would give to Enel the possibility to defend or strengthen its dominant position in the market for the supply of electricity. Enel, by jointly offering utilities and telecommunications services, and in particular using strategies such as joint billing and joint promotion of the bundled services, would be able to "lock in" its current electricity customers, reducing substantially the impact of the liberalisation on the Italian electricity markets. According to the Autorità, Infostrada has a non-negligible share of small and medium enterprises (SMEs) as customers. These customers would be particularly attracted by a "one stop shop" offer of utilities services and telecommunications services.

In referring the case, the Commission has taken the view that the Italian Competition Authority is best placed to carry out this investigation and has, therefore, not taken a final position on this issue.

Under Italian merger control law, the Autorità has 30 days to decide whether to clear the deal or extend its probe for another 45 days.

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