Monday, September 14, 2015

Will EC Block Mobile Mergers in U.K. and Italy?

Will the European Commission disrupt planned mobile mergers in the United Kingdom and Italy? 

Some think that is a possibility, in the wake of the EC’s refusal to support a planned merger of Telenor and TeliaSonera in Denmark.

In Italy, Hutchison and VimpelCom have agreed to form a 50-50 joint venture combining their operations (3 Italia and Wind).

In the United Kingdom, there is the proposed acquisition of O2 by Hutchison. France is another market where there is local support for consolidation. But that runs against the possible EC trend of resisting mergers.

The European Commission refused to allow Scandinavian operators Telenor and TeliaSonera to combine their Danish operations, a move that would have reduced the leading number of providers in Denmark from three to two.

In fact, the European commission wants to see formation of a fourth provider in Denmark.

That is a continuing reminder that the most-important numbers in the global mobile industry arguably are “four” and “three,” the reason being the resistance of national regulators in North America and Europe to allow market consolidation from four leading mobile providers to three.

In other cases, regulators want to increase the number of national competitors from three to four.

The European Commission confirmed that “the discussions with the parties thus far were not able to fully address the Commission's competition concerns created by the proposed merger.”

"EU merger control has to make sure that company tie-ups do not lead to reduced innovation, higher prices or reduced choice for consumers and do not restrict competition in the internal market,” said Commissioner Margrethe Vestager, competition policy executive.

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