95/489/EC: Commission Decision of 4 October 1995 concerning the conditions imposed on the second operator of GSM radiotelephony services in Italy (Only the Italian text is authentic)
Date: 1995-10-04
Institutions: European Commission
Subjects: Italy, competition, domestic market, interpretation of the law, public sector, radio telecommunications













EUR-Lex - 31995D0489 - EN






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31995D0489

95/489/EC: Commission Decision of 4 October 1995 concerning the conditions imposed on the second operator of GSM radiotelephony services in Italy (Only the Italian text is authentic)  


Official Journal L 280 , 23/11/1995 P. 0049 - 0057 





COMMISSION DECISION of 4 October 1995 concerning the conditions imposed on the second  operator of GSM radiotelephony services in Italy (Only the Italian text is authentic) (95/489/EC)THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, and in particular Article 90 (3)  thereof, Having given the Italian authorities, by letter of 3 January 1995, and Telecom Italia SpA, by  letter of 30 January 1995, notice to submit their comments on the Commission's objections to the  intitial payment imposed on Omnitel Pronto Italia, Whereas: THE FACTS The national measure in question (1)  The Italian Government has imposed an initial  payment for the grant of a second concession for the establishment and operation on Italian  territory of a network for the provision of a public mobile radiotelephony service using the  pan-European digital system, GSM (global system for mobile communications). This requirement was  laid down in the specifications and does not apply to the public operator, Telecom Italia. The undertaking and services concerned (2)  Telecom Italia SpA is controlled by the Società  Torinese Esercizi Telefoni (STET), which owns 55  % of its capital. STET is in its turn controlled  by the Istituto per la Ricostruzione Industriale (IRI) and thus by the Italian Government. Telecom  Italia thus constitutes a 'public undertaking` within the meaning of Article 90 (1). In terms of its turnover, Lit 26  700 billion, Telecom Italia is the sixth largest  telecommunications operator in the world. It has a workforce of 101  000 employees and over 25  million subscribers. When Telecom Italia was set up in August 1994, it took over the exclusive rights to operate the  public telecommunications network and the voice telephony service granted to Società Italiana per  l'Esercizio Telefonico (SIP) in 1984 for a period of 20 years. (3)  Cellular digital mobile telephony complying with the GSM standard has been developed recently  in Europe and enables subscribers both to send and to receive calls anywhere in the Community, as  well as in some other European countries. This system, which used digital technology, a compact  telephone and a subscriber identity module card, has greater potential than traditional analogue  radiotelephony systems. Digital technology provides higher quality, high-speed data transmission  and encryption enhancing the confidentiality of communications, and is more economical in its use  of frequencies than analogue systems. Furthermore, the GSM system is based on common Community  standards regarding common frequency bands approved at Community level and, unlike analogue systems  which are often incompatible from one Member State to another, has the makings of one of the  pan-European services, whose promotion is one of the main objectives of the Community's policy on  telecommunications  (1). Lastly, the emerging market for GSM services is particularly dynamic:  according to some studies, the number of users in western Europe could grow from a little over 1  million in 1993 to 15 to 20 million in the year 2000  (2). (4)  The Council has adopted a directive reserving the 890 to 915 and 935 to 960 MHz frequency  bands for the introduction of a common system of digital GSM radiotelephony  (3). These common  frequency bands allow several competing operators to coexist. The GSM service began operating  commercially in the Community in late 1992: since which time the great majority of the Member  States (Belgium, Spain, Italy, the Netherlands, Finland, Denmark, Germany, France, Greece, Portugal  and the United Kingdom) have each granted licences to two operators, while the other Member States  (Austria and Ireland) have announced that they will follow the same path or have already initiated  the necessary procedures to that effect. Sweden has granted three GSM licences. Germany, France,  the Netherlands and the United Kingdom have authorized or decided to authorize a third operator to  offer cellular digital radiotelephony services, on a higher frequency band, on the basis of the DCS  1800 specifications. The European Conference of Postal and Telecommunications Administrations (CEPT), the forum for the  national regulatory authorities of 36 countries (including Italy), has recommended that competition  between operators of GSM services be actively encouraged and the regulatory barriers which are  restricting such competition be abolished  (4). Background (5)  By letter of 29 July 1993, the Commission requested the Italian Government either  to terminate the monopoly enjoyed by Telecom Italia (at that time, SIP) in GSM radiotelephony or to  present arguments meeting the Commission's objections to that monopoly. In response, the Italian  Government decided to put out to tender a second concession for 15 years for the operation of a GSM  network. A notice to that effect was published in the Gazetta Ufficiale della Repubblica Italiana,  No 294 of 16 December 1993. No provision was made for an initial payment. On 29 January 1994, the Italian Government sent the specifications to the businesses which had  responded. They state that tenders must indicate 'the lump sum, in billions of lire, which the  tenderer will pay when the concession is granted` (Article 4.9.1, page 44). The specifications also  indicate that that amount will constitute one of the selection criteria (p. 51), without mentioning  the weighting to be attached to it. The deadline for submitting tenders was 1 March 1994 (Article  3.9, page 19). The specifications were sent to the Commission only on 2 March 1994, after the expiry of the  deadline. By letter of 1 April 1994, the Commission expressed its regret that the specifications  for selecting a second operator imposed on the firm to be selected conditions less favourable than  those enjoyed by SIP, in particular the requirement of an initial payment (the bid) and a minimum  annual charge to be paid by the operator for the first five years irrespective of turnover, while  for SIP this charge is only 3,5  % on the amount of its actual income. The Commission then suggested to the Italian Government that these two requirements should be  deleted and the bids of the two remaining consortia be considered solely in the light of the other  criteria mentioned in the specifications - that is to say, qualitative criteria. On 18 April 1994, the Italian Government officially announced the consortium selected, Omnitel  Pronto Italia, together with the weighting used in making the selection. The tenderers did not know  the weighting. The consortium selected obtained the better score on every one of the selection  criteria. In its letter of 11 May 1994, the Commission replied that it continued to have reservations  concerning the initial payment. Since Omnitel had been successful on all the other selection  criteria, the Commission requested that the intitial payment be reconsidered but without calling in  question or delaying the start of the operator's service. Since there was no reply to this letter, the Commission sent a reminder on 27 July 1994 pointing  out that it could not terminate the infringement procedure before the licence had been formally  granted and again inquired what the Italian Government's current intentions were concerning the  initial payment. Given the lesser impact of the minimum annual charge imposed solely on the second  operator as compared to the initial payment, the Commission decided to concentrate solely on this  latter aspect, without, however, accepting the former. By letter of 8 August 1994, the Italian authorities replied to this last point to the effect that  the tenderers, and therefore the consortium selected, were well aware of that obligation since it  was expressly included in the specifications, adding that in the course of meetings between  officials of the Ministry of Posts and Telecommunications and senior management of Omnitel Pronto  Italia, the problem appeared to have been resolved. On 31 October 1994, the Commission replied that  the acceptance by the applicant second operator of the conditions for obtaining the licence had no  effect on whether these conditions were discriminatory or not, and it continued to press its  request for the views of the Italian Government. On 3 January 1995, the Commission gave formal notice to the Italian Government either to annul the  second operator's obligation to make an initial payment or to submit its comments on the  Commission's arguments. The Italian authorities replied on 28 February, 17 May and 10 August 1995. THE COMMISSION'S ASSESSMENT Article 90 (1) (6)  Article 90 (1) of the Treaty provides that, in  the case of public undertakings to which Member States grant special or exclusive rights, Member  States must neither enact nor maintain in force any measure contrary to the rules contained in the  Treaty, in particular those relating to competition. Telecom Italia is a public undertaking which has been granted exclusive rights to operate the fixed  telecommunications network and offer voice telephony (within the meaning of Article 1 of Commission  Directive 90/388/EEC  (1)) and mobile analogue radio telephony services. On 22 December 1994, the  Italian Government also granted it the right to operate a GSM radiotelephony network, which  qualifies as a special right, since the operator had been designated otherwise than according to  objective and non-discriminatory criteria. In accordance with the case-law of the Court of Justice  (2), the compatibility of this monopoly  with the Treaty must be assessed in the light of Article 90 and the provisions to which it refers -  in this instance, Article 86. Article 86 The relevant market (7)  The relevant market is the market for cellular digital mobile radiotelephony services. This  should be distinguished from the market in voice telephony and that (or those) in other mobile  telephone communications services. (8)  The Commission has defined the market in voice telephony in Directive 90/388/EEC. The  Directive draws a distinction between 'services whose provision consists wholly or partly in the  transmission and routing of signals on the public telecommunications network` and mobile radio  telephony services, which are excluded from its scope. (9)  Voice telephony within the meaning of that Directive is the principal service provided on the  fixed public network, meaning between given network termination points. These termination points  are defined as 'all physical connections and their technical access specifications`. In mobile  communications, on the other hand, the termination point is located at the radio interface between  the base station of the mobile network and the mobile station, which means that there is no  physical termination point. The definition of voice telephony services in Article 1 of the  Directive therefore does not apply to mobile telephony services. (10)  According to the case-law of the Court of Justice, for a product to be regarded as forming a  market which is sufficiently differentiated from other markets, it must be possible for it to be  singled out by such special features distinguishing it from other products that it is only to a  limited extent interchangeable with them and is only exposed to their competition in a way that is  hardly perceptible  (3). Clearly, there is very little interchangeability between mobile radiotelephony and telephony using  the fixed network: users taking out a subscription for a carphone or portable telephone do not  normally cancel their previous subscription for a telephone installed at their home or workplace.  Therefore, mobile radiotelephony is indeed a new, additional service, not a substitute for  traditional telephony. This distinction is also reflected in a very significant price differential: according to a study  conducted by the Organization for Economic Cooperation and Development (OECD) and based on a basket  of services, the cost of mobile telephony to the user is, on average in the OECD area, four times  that of the same services offered on the fixed network  (1). Admittedly, wider dissemination of mobile radiotelephony might ultimately lead to a single  telecommunications system catering for markets that are for the time being separate. However, the  conditions on which Article 86 is to apply must be assessed on the basis of present demand and not  of developments that could take place at some unspecified time in the future. (11)  It having been established, for the above reasons, that mobile radiotelephony should not be  regarded as forming part of the market voice-telephony services offered using the fixed network, it  remains to be seen whether, and to what extent, there might be grounds for distinguishing between  the cellular mobile radiotelephony services based on the GSM standard which are the subject of this  Decision and cellular radiotelephony services using analogue technology. The GSM system of cellular mobile radio telephony is more than just a technical refinement of the  earlier analogue technology. In addition to the advantages offered by GSM in terms of the quality  of voice reproduction and more efficient use of the available spectrum (thus accommodating  substantially more users on a given frequency allocation), this service provides new facilities  that cater for the needs of only some users of mobile radiotelephony: (i)  based as it is on a Community standard, GSM can become a pan-European service. Under 'roaming`  agreements between network operators, the system permits any user to make calls from his phone  outside the national territory of the operator with which he has taken out a subscription; this  facility is available throughout the territory of the parties to the GSM Memorandum of  Understanding in Europe and other parts of the world. Some users who, for business purposes, use  mobile radiotelephony services only within the country or within a particular region, are not  interested in this new feature. For others, however, this may be a reason for deciding to  subscribe; (ii)  in addition to voice transmission, the GSM service can be used to transmit large quantities  of data; again, this feature meets the specific needs of only some of the existing or potential  customers for mobile radiotelephony services; (iii)  the digital coding of messages means that a far greater degree of security can be achieved  than via the analogue system - again an advantage of interest to only some users (particularly  business customers); (iv)  digital technology makes it possible to offer a whole range of advanced telecommunications  services which are not available (or which can be made so only at considerably higher cost) via an  analogue network; (v)  in the majority of the Member States, the tariffs applicable to GSM services currently remain  higher than those for analogue mobile telephony. In view of the above, the simple replacement of analogue radiotelephony by the GSM system is not  generally envisaged, in the short term. On the contrary, it is likely that, even if there is a  discernible drift of customers from one to the other, the two systems will continue to exist in  parallel for several years to come, meeting largely different needs. It has been found that, even  in countries where the GSM system is fully operational, some operators are continuing to invest in  the analogue network. (12)  On the basis of the abovementioned considerations and the current circumstances, and taking  into account the possible evolution of the market, GSM radiotelephony services should therefore  probably be regarded as also constituting a market separate from the market for analogue mobile  telephony. In any event, the conclusions of the legal analysis would not be different, even if analogue mobile  telephony and GSM constituted two segments of the same market. (13)  In accordance with judgments of the Court of Justice this market, which currently extends  over the whole of Italy, is a substantial part of the common market. The dominant position (14)  The Court of Justice has held that an undertaking which has a legal monopoly in the provision  of certain services may occupy a dominant position within the meaning of Article 86 of the Treaty   (1). This applies in the case of Telecom Italia and its subsidiary, Telecom Italia Mobile, created  in July 1995, which together are the only undertakings permitted by law to offer the  telecommunications networks for the public, voice telephony and analogue radiotelephony in Italy,  three markets in which they therefore enjoy a dominant position. The abuse of a dominant position (15)  The Court of Justice has ruled that 'a system of undistorted competition, as laid down in the  Treaty, can be guaranteed only if equality of opportunity is secured as between the various  economic operators` (2). Such equality of opportunity is particularly important for new entrants to a market in which a  dominant operator on a related but separate market is in the course of establishing itself, like  Telecom Italia and its subsidiary, Telecom Italia Mobile. (16)  Telecom Italia Mobile already enjoys the following major advantages for acquiring a dominant  share of the market in GSM radiotelephony: -  a head start: it is already in a position to market its service while the second operator will  not be ready until the second half of 1995, -  potential customers: Telecom Italia Mobile's analogue radiotelephony service, TACS, had more  than 2,2 million subscribers (February 1995) and is acquiring 100  000 new subscribers each month. However, this service will become less attractive in future in view of GSM's superior facilities.  In addition, TACS operates in wavebands reserved to GSM radiotelephony. With time some TACS  subscribers will therefore change to GSM. Accordingly, Telecom Italia Mobile already has potential  customers for its GSM service, -  an existing distribution network: the network is known to the public, since Telecom Italia  Mobile can market its GSM service through its TACS distributors, -  specific information: through its experience with TACS, it has specific information on the  calling habits of Italian subscribers, by consumer categories and region. Moreover, since it also  enjoys a monopoly in the supply of fixed links for the networks of GSM operators  (3), it will  continue to obtain important information on traffic flows, -  economies of scale for infrastructure: since it is at present the sole operator of fixed and  analogue mobile telephony, it has available sites and aerials for establishing its GSM network  which are not available to its competitor. Telecom Italia would be unable to extend its dominant position on the market in wire telephony or  analogue mobile telephony into the market in GSM radiotelephony by increasing the costs of its  rival, for example by imposing interconnection charges which were not justified by the costs  involved, without infringing Article 86 of the EC Treaty. (17)  Pursuant to Article 90 (1) of the EC Treaty, Italy must at the same time refrain from  enacting measures which would, by increasing the costs of access of the sole rival of a public  undertaking on a market newly opened to competition, significantly distort this competition. Given  the additional financial burden imposed on its only competitor, Telecom Italia Mobile will indeed  have the choice between two commercial strategies, of which each would be in breach of Article 90  (1) read in conjunction with Article 86 of the Treaty. (i)  Extension of the dominant position  (1) of the public undertaking The initial payment of Lit 750 billion made by the second operator on this market will necessarily  have to be covered by income. The second operator will therefore have difficulties in competing  with the first operator through lower tariffs. The first operator, Telecom Italia Mobile, which  must not depreciate the same payment and which moreover is aware of the second operator's cost  structure through its monopoly of the infrastructure  (2), could be encouraged by reducing its  tariffs, to extend its current dominant position on the fixed infrastructure market and the  analogue mobile telephony market into the market in GSM radiotelephony. It is a question of the  extension of a dominant position thanks to the competitive advantange provided by the distortion of  the cost structure due to the intitial payment, rendering the State measure contrary to Article 90,  read in conjunction with Article 86. (ii)  Limitation of production, markets or of technical development within the meaning of Article  86 (b) Moreover, the need to finance Lit 750 billion will also delay the investments of the new entrant,  which will have to use part of its initial capital to cover the initial payment, which will  therefore not be available for investment in the development of its network, quite apart from the  capital needed for establishing its service in compliance wiht the minimum requirements set out in  the licence. This will delay the development of the network and could also encourage Telecom Italia  Mobile to delay marketing its GSM service  (3). The TACS system is more attractive in that it  guarantees Telecom Italia Mobile a definite income since the services are operated as a monopoly  and moreover the bulk of the investments have already been amortized. The Telecom Italia group, which, as has been pointed out, is aware of the second operator's cost  structure through its infrastructure monopoly, would therefore be encouraged to retain higher  tariffs for its GSM services than it would otherwise do, in the absence of the State measure in  question. In so doing, it would limit production, output or technical development at the expense of  the users within the meaning of Article 86 (b) as regards GSM, which involves a more advanced  technology, so as to benefit the older analogue service. In addition, this would delay the move towards personal communication combining mobile and fixed  networks, which will only be possible if the tariffs for mobile communications fall substantially. As the Court of Justice has held  (4), Article 90 (1) precludes Member States from enacting  measures likely to cause an undertaking to infringe the provisions to which it refers - in  particular, in the case in point, those contained in Article 86. In conclusion, on either hypothesis, the State measure concerned is therefore contrary to Article  90 (1), read in conjunction with Article 86 (b) of the Treaty. (18)  The responsibility of Member States pursuant to Articles 86 and 90 (1) of the Treaty only  arises where the improper behaviour of the company in question is capable of affecting trade  between Member States. Such a potential effect exists in this instance because the commercial  activity of the Italian GSM operators may affect the residents of other Member States, who may  acquire the 'SIM` cards in Italy just as in the territories of the other Member States, thanks to  the roaming agreement with the operators covering those Member States. The reply of the Italian authorities (19)  In its letter of 28 February 1995, the Italian  Government emphasized that the initial payment had been one factor in selecting the second  operator. The sum proposed by the second operator would therefore be determined as part of its  strategic choice, since the specifications do not mention either a minimum or a maximum figure. Moreover, the specifications allow the tenderer to propose further conditions, such as waiving the  initial payment or spreading it over a number of years. In addition, the tenderers knew that  Telecom Italia Mobile was not required to make an initial payment. It was impossible to oblige Telecom Italia Mobile to make the same payment since it had already  made its investments and thereore relied on amortizing them by operating the service as a  monopoly. By determining the amount of the initial payment which it would be prepared to make, the second  operator of necessity took into account positive factors such as the investments already made by  Telecom Italia Mobile and its right to use Telecom Italia Mobile network through national roaming. It therefore denies that the dominant positions of Telecom Italia and its subsidiary Telecom Italia  Mobile have been strengthened. It also denies that the initial payment produced a negative impact  on investments or on the level of tariffs, in so far as the second operator's concession fixes  specific obligations on this point. Lastly, it refuses to abolish the initial payment. In its view, relinquishment of this criterion  would mean that the selection procedure would have to be begun again if the principles of  transparency and non-discrimination were to be respected. According to the Italian Government, the  removal of an element such as the offer to pay a sum in order to enter the GSM market would  necessarily lead to the opening of a new bidding process. Without the requirement of the initial  payment, the competitors might well have made different bids. This argumentation was confirmed by  the Italian authorities by letter of 10 August 1995. (20)  In its letter of 17 May 1995, the Italian Government distinguished between the question of  the initial payment and the risk of extending the dominant position. As far as the initial payment is concerned, the Italian Government maintains that, in the past,  Telecom Italia Mobile has spent larger sums than that on developing the new service and that  furthermore the opening up of the GSM service to competition has had a negative effect on the  expected profits of Telecom Italia Mobile for running the service. Moreover, to reimburse the  initial payment would allow the candidate who was not chosen to attrack Omnitel's concession, and  the selection procedure would have to start again. On this point, the Italian Government reaffirmed  that the abolition of the obligatory initial payment on the part of the second operator would  necessitate the opening of a new selection process. As for the risk of extending the dominant position of Telecom Italia and its subsidiary, Telecom  Italia Mobile, the Italian Government emphasized that, following its intervention, agreements had  been concluded between Telecom Italia and Omnitel relating to the interconnection of Omnitel's GSM  network to the fixed telephone network of Telecom Italia, to experimental roaming of Omnitel's  service via Telecom Italia Mobile's GSM network, to the distribution system of Telecom Italia  Mobile's GSM and to the keeping of separate accounts for GSM and Telecom Italia's other  activities. The Commission's rebuttal (21)  The Commission has not challenged the Italian Government's  decision to use two distinct procedures in awarding the GSM concessions. Nevertheless, it has  repeatedly urged the Italian Government to ensure that the procedures used and the criteria adopted  in granting the second licence should not have the effect of increasing the costs of access by the  new entrant to the GSM market, as compared with those of the public operator. The initial investment for establishing a GSM network in Italy amounts to about Lit 2  000 billion.  The initial payment, when added to the initial investment, therefore increases the second  operator's need for financing by more than one-third. Since Telecom Italia mobile does not have to  make the same payment, it is wrong to say that the initial payment has not stengthened its  position. It can use the money thereby saved to extend its distribution network or make special  offers to potential subscribers. Moreover, Telecom Italia Mobile possesses a temporal advantage to recoup the major sums invested  for the development of GSM. When it puts its network at the disposal of the second national  operator, in the context of national roaming, the latter will not benefit freely from this  investment but will have to participate in financing it. (22)  The fact that applicants for the second licence were aware of the future distortion of  competition on the GSM market in Italy in favour of Telecom Italia Mobile does not mean that there  is any less of an imbalance here. Moreover, firms which did wish to enter the market had no choice  but to take this handicap into account in their business plan. It is therefore wrong to say that the initial payment will have no impact on prices charged or the  coverage offered. The second operator's concession adopts the objectives which it has itself  undertaken to attain after making allowance for the initial payment. The Italian Government itself  concedes that, without the initial payment, tenderers 'could have modified their economic  objectives for each of the valuation parameters`. Moreover, the mere fact that the specifications  make provision for national roaming is certainly not sufficient compensation for the second  operator's disadvantage. The Italian Government has not as yet informed the Commission of an  agreement on this matter with the second operator. (23)  Lastly, the argument that, if the initial payment were waived, the tendering procedure would  have to be repeated in order to comply with the principles of transparency and non-discrimination  is not convincing. Bearing in mind the fact that the consortium chosen submitted the better tender on all other  selection criteria, the Commission, in its letter of 11 May 1994, determined that it was possible  and necessary to reconsider this initial payment without calling in question or delaying the  commencement of the second operator's service. Moreover, the weighting of the various selection criteria was not communicated to the various  applicants. The candidates could not therefore say that they would have made a better offer it they  had known that the initial payment would be abandoned. The weighting attached to the initial  payment could, in fact, have been very slight or zero. In any case, in order not to interfere in a question which relates in part to the internal law of  Italy, the Commission leaves to the Italian Government the choice of the means of remedying the  breach, without expressly envisaging the reimbursement of the initial payment. Such reimbursement  is not the only conceivable means of redressing the imbalance that it creates. The Italian  Government could either impose an identical payment on Telecom Italia Mobile, or it could adopt  corrective measures such as those mentioned in the context of contacts between the Commission and  the Italian authorities, for example: -  a grant without delay to any operator of an unconditional right to establish its own  infrastructure (the provision of the radio frequencies necessary for microware links) or to use the  existing infrastructure of other undertakings such as the national railways, the motorways or ENEL  (the national electricity agency), -  the effective application of the roaming agreement between the two GSM-radiotelephony operators,  which from a technical and tariff standpoint would compensate for the second operator's delay, -  the grant of access to Telecom Italia's TACS 900 customer database, while maintaining the  confidentiality of personal data, -  the revision of the tariff conditions for interconnection with Telecom Italia's switched  telephone network, -  the grant to any operator of the right to apply alternative technologies such as DCS-1800 or  DECT to provide its service. The revocation of the concession already granted can in no circumstances be considered to be an  appropriate remedy for the breach, bearing in mind that that would eliminate the only existing  comeptitor to the public company Telecom Italia Mobile on the GSM market, and also bearing in mind  the current monopoly of Telecom Italia as regards fixed telephony and GSM during the whole period  necessary for the opening of a new call for offers, thus rendering competition even more difficult  because of the additional time-lead. (24)  The Commission's objections to the initial payment imposed on the second operator but not on  Telecom Italia Mobile are not based on Article 6 of the Treaty. In this procedure the issue is not  the discrimination in itself but the effect of the State measure which is, as has been shown at  points 17 and 18, to lead the telecommunications agency to extend its dominant position or to limit  production, markets or technical development. The aim of this procedure is to cause the Italian Government to take the necessary steps to  preclude that effect; the most obvious would be a requirement that Telecom Italia Mobile make an  identical payment. (25)  Likewise, if the Italian Government so requests, the Commission would be prepared to examine  whether the infringement could be terminated by adopting other measures, provided that they offset  properly the second operator's disadvantage. It is incumbent upon the Italian Government to make proposals in this matter. The Italian  Government should in any case provide figures for these proposals, showing that they properly  offset the Lit 750 billion paid by Omnitel. Article 90 (2) (26)  Article 90 (2) of the Treaty provides that undertakings entrusted with the  operation of services of general economic interest are subject to the rules on comeptition, in so  far as the application of such rules does not obstruct the performance, in law or in fact, of the  particular tasks assigned to them. The Italian Government has not relied on this provision to  justify imposing the initial payment on the second operator alone. (27)  The Commission considers for its part, that in this case Article 90 (2) does not apply,  because there are no factors which would permit the conclusion that the initial payment is  justified by the performance in law or in fact of a service of general economic interest. CONCLUSION (28)  In view of the above the Commission considers that the competitive disadvantage  in the form of the initial payment imposed on the second operator alone for its concession to  operate a GSM network in Italy constitutes an infringement of Article 90 (1) of the Treaty, read in  conjunction with Article 86, HAS ADOPTED THIS DECISION: Article 1 Italy shall take the steps necessary to abolish the distortion of  competition resulting from the initial payment imposed on Omnitel Pronto Italia and to secure equal  conditions for operators of GSM radiotelephony on the Italian market at the latest by 1 January  1996, by means of the following: -  a requirement that Telecom Italia Mobile make an identical payment, or -  the adoption, after receiving the agreement of the Commission, of corrective measures equivalent  in economic terms to the payment made by the second operator. The measures definitively adopted may not impair the competition created by the licensing of the  second GSM operator on 2 December 1994. Article 2 Italy shall inform the Commission within three months of notification of this Decision  of the steps it has taken to comply therewith. Article 3 This Decision is addressed to the Italian Republic. Done at Brussels, 4 October 1995. For the Commission Karel VAN MIERT Member of the Commission (1)  OECD study, published 24 February 1993.  (1)  Case 311/84, Centre belge d'études de marché - Telemarketing (CBEM) SA v. Compagnie  luxembourgeoise de télédiffusion SA and Information publicité Benelux SA, [1985] ECR, p. 3261.  (2)  Case C-202/88, France v. Commission, [1991] I, p. 1223, paragraph 51, p. 1271.  (3)  Telecom Italia and its subsidiary Telecom Italia Mobile operate the fixed network and mobile  services. On the other hand, Omnitel Pronto Italia can only establish radio links if it can show  that Telecom Italia cannot provide it with the leased lines requested within a reasonable time.  (1)  See, for example, judgment of the Court of Justice of 17 November 1992, Joined Cases C-271/90,  C-281/90 and C-289/90, The Kingdom of Spain, the Kingdom of Belgium and the Italian Republic v.  Commission, [1992] ECR I, p. 5833, paragraph 36.  (2)  The specifications provide for a reduction of 50  % of the public tariff for lines leased by  SIP to the second operator. Despite this reduction, the cost of leased lines for the second GSM  operator in Italy remains three times higher than that applied by BT in the United Kingdom to  cellular telephony operators.  (3)  As the Commission has already emphasized in its letter of 29 June 1993, 'since the public  undertaking holds a monopoly in the supply of mobile radiotelephony services, it has no great  interest in introducing an alternative, the GSM service, quickly`.  (4)  See, for example, Case C-41/90, Hoefner v. Macrotron [1991] ECR I, p. 1979 as well as the  judgments of 18 June 1991, Case C-260/89, Dimotiki Etairia Pliroforissis v. EPT, [1991] ECR I, p.  2925, and of 5 October 1994, Case C-323/93, Société civile agricole d'insémination de la Crespelle  v. Coopérative d'élevage et d'insémination artificielle du département de la Mayenne [1994] ECR I,  p. 5077.  (1)    (2)    (3)    (4)    (1)    (2)    (3)    (1)    (1)    (2)    (3)    (1)    (2)    (3)    (4)