WRITTEN QUESTION E-3335/00

by Benedetto Della Vedova (TDI) to the Commission

(25 October 2000)

Subject: Take-over of Infostrada S.p.A. by Enel S.p.A.

Enel S.p.A. and Vodafone AirTouch plc have just reached a preliminary agreement whereby the Italian State-controlled company is to pay almost 12 billion for Infostrada S.p.A., Italy's second largest fixed-line telephony and Internet operator.

The Italian Government has a 68 % stake in Enel, and the company still benefits from a statutory reservation enabling it to control some 70 % of electricity consumption in Italy.

Because of its dominant position, Enel has been able to charge prices consistently higher than the average in the Union, adversely affecting Italian families and industry. There is no sign of an end to the monopoly-scale profits, despite the transposition of the Community legislation to liberalise the electricity market, since the liberalisation in question is proceeding extremely slowly.

The huge financial resources which have thus accumulated will enable Enel to finance the purchase of Infostrada, with the result that the distortion stemming from its dominant position on the electricity market will extend to the telecommunications market.

Enel's partner in the Infostrada take-over will be the French State-owned France Télécom, another erstwhile monopoly operator (the two companies have 56 % and 44 % stakes respectively in the telecommunications company Wind S.p.A., into which Infostrada S.p.A. is likely to be absorbed).

In the light of the foregoing, does the Commission not believe that what is happening in the situation described above is that State aid is being granted indirectly, contrary to Article 87 of the EC Treaty, or a dominant position abused, contrary to Article 82?

Answer given by Mr Monti on behalf of the Commission

(10 January 2001)

The operation by which Enel S.p.A and France Télécom will purchase Infostrada S.p.A. from Vodafone AirTouch plc was notified to the Commission on 28 November 2000. In assessing the proposed transaction, the Commission is obliged to consider the operation against the criteria set out in the Merger Regulation i.e. whether the operation creates or strengthens a dominant position on any market.

It is too early at this stage to take any final position on the proposed transaction. However, prima facie, it appears that the only overlap between the activities of Enel and France Telecom, through the jointly controlled Wind, and Infostrada, are on telecommunications and related markets in Italy. The deadline for the Commission to take a decision whether to approve the operation or to open a second phase procedure is 10 January 2001. It should be noted that France Télécom no longer holds a legal monopoly in France, as the French telecommunications markets were fully liberalised on 1 January 1998.

When examining, in accordance with the Merger Regulation, whether an operation creates or reinforces a dominant position, the Commission takes into account each element which might contribute to the market power of the new entity. This is not limited to the undertakings directly concerned by the operation (i.e. the acquired company or the company resulting from the merger) but also extends to the parent company or companies.

As far as Italian energy prices are concerned, it should be noted that captive clients are supplied by ENEL through the established distributors until Acquirente Unico becomes active. Prices applied to captive clients are fixed not by ENEL, but by the Italian regulator, the Autorità per l'energia elettrica e il gas. Currently the Commission has no elements allowing it to establish an abuse of a dominant position.