Joaquín Almunia, European competition commissioner, is unlikely to be taking his holidays in Italy this year.

His decision on Tuesday to relax the merger undertakings the European Union Commission currently imposes on Sky Italia – the Newscorp-owned pay-TV operator that remains the only real challenger to prime minister Silvio Berlusconi’s domination of the Italian TV landscape – will have been as popular with Italy’s current ruler as the country’s early exit last month from the World Cup.

The undertakings – essentially a series of binding restrictions on Sky’s Italian business that were imposed back in 2003 in return for EU approval of the merger of two loss-making Pay-TV businesses acquired by Newscorp – included a block on Sky, a satellite operator, owning digital terrestrial (DTT) spectrum.

At the beginning of the decade the Commission’s logic was that other operators needed time to build up competing Pay-TV services on the still nascent DTT platform to rival Sky’s satellite business.

But eight years on, times and the TV market in Italy have changed out of all recognition. Prompted by Sky Italia’s unexpected success in building a business of approaching 5m subscribers, Mr Berlusconi’s Mediaset was forced to revise its own business model from an exclusively free-to-air advertising funded format. In the past four years Mediaset has thus established itself as an important albeit cheap and cheerful player in pay-TV over DTT.

Today, Mediaset boasts more than 4m customers, a third of which are estimated to be fully paid-up subscribers. A survey of the state of the Italian market, such as the one the European Commission conducted last year, could only come to the conclusion that conditions have changed significantly compared with 2003 when Sky Italia was first formed.

This seems obvious to all but the Italian government, Mediaset and its other allies. Together they have been engaged in a high-profile campaign to convince Mr Almunia that nothing in the Italian market has changed and that Sky’s request to be considered for inclusion in a “beauty contest” to assign new DTT spectrum should be ruled offside under the terms of the undertakings.

This week’s decision in Sky’s favour to the contrary is therefore significant. Not so much because it allows Sky to bid for spectrum to be used for up to eight free-to-air channels over DTT. But more because Brussels has now decreed that the Italian TV market has changed to such an extent that the Commission is willing to relax a set of merger conditions before the end of their term for the first time in any sector.

By his willingness to establish a new precedent with his first important decision in the job – and after such heavy duty lobbying from Rome on behalf of the Italian prime minister’s prize asset – Mr Almunia is sending the strongest signal that he is determined to be his own man.

The synchronised reactions of Mediaset and Italy’s communications minister Paolo Romani following Tuesday’s announcement betrayed the full extent of Rome’s anger at Brussels trespassing on this most personal of territories. But Mr Almunia is to be congratulated for his bold decision.

While he may have to pass on Italian holidays while Mr Berlusconi remains in power, the Spanish commissioner can at least console himself that his country is the soccer world champion. And the way things are going for Mr Berlusconi on the political field of play, it might not be all that long before Mr Almunia is able to book a trip to Rome – for pleasure.

Marchionne’s war chest

For all the talk, the long anticipated wave of fresh consolidation in the car industry has yet to happen. But that does not seem to be stopping Fiat’s Sergio Marchionne, now busily bringing together the Italian car group and Chrysler, continuing to preach for big capacity cuts in the industry.

Mr Marchionne would have liked to lay his hands on GM’s European operations as well as Chrysler. That bid failed but that does not mean he is not keeping an eye open for possible alternatives. Indeed, he seems to be building up quite a substantial war chest while at the same time moving forward with plans to split Fiat’s industrial, agricultural equipment and truck businesses from its car operations.

At the end of the first quarter this year, Fiat was already sitting on a €11.2bn ($14.3bn) cash pile. This has grown to €13.5bn. So Mr Marchionne is well equipped should he need to move quickly. Meanwhile, his war chest is also a useful financial safety net should the general economic climate take a turn for the worse with the ever present risk of a double-dip recession.

european.view@ft.com

Get alerts on Companies when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article