The European Commission to investigate the proposed joint venture between Danish operators TeliaSonera AB and Telenor ASA

Posted on 9, April 2015 by | This entry was posted in Business, Denmark, European Union, Management, Technology, Telecom and tagged , , , , . Bookmark the permalink.

BRUSSELS, 9-4-2015 — /EuropaWire/ — The European Commission has opened an in-depth investigation to assess whether the proposed joint venture between the Danish operators TeliaSonera AB and Telenor ASA is in line with the EU Merger Regulation. Both companies provide telecommunications services in several European countries. The Commission has concerns that on the Danish mobile telecommunications markets, the merged entity would face insufficient competitive constraint from the only two remaining players. This could lead to higher prices and less innovation. The opening of an in-depth investigation does not prejudge the outcome of the investigation. The Commission now has 90 working days, until 19 August 2015, to take a decision.

In Denmark, TeliaSonera and Telenor both provide mobile and fixed telecommunications services, as well as broadband and television services. TeliaSonera provides mobile telecommunications services under its main brand Telia, as well as under two sub-brands Call Me and DLG Tele. Telenor provides mobile telecommunications services under its main brand Telenor, as well as under two sub-brands CBB Mobil and BiBoB.

Margrethe Vestager, Commissioner in charge of competition policy commented: “Telecoms constitute an important service in many people’s daily life. My aim is to make sure that the proposed transaction will not lead to higher prices to Danish consumers and businesses”.

The proposed transaction would combine the number two and number three operators in the mobile retail market, and would reduce the number of Mobile Network Operators (MNOs) in Denmark from four to three. It would create the largest player both in terms of revenue and number of subscribers, followed by a similar-sized TDC and smaller player Hi3G.

The Commission therefore has concerns that the transaction could reduce the merged entity’s and its competitors’ incentives to compete, leading to higher prices, loss of innovative offers and lower quality on the Danish retail mobile telecommunications market. The transaction would also lead to a reduction in the number of MNOs able to offer wholesale services, thus reducing the choice of alternative host networks, and weakening the negotiating position of wholesale customers (other companies wanting to provide mobile telecommunications services without owning their own network). Finally, the merger would result in a highly concentrated market structure with two large and symmetric operators at the retail and wholesale level. The Commission has concerns that this could lead to coordination between the remaining operators.

The Commission will now investigate the proposed transaction in-depth in order to determine whether its competition concerns are confirmed or not. The transaction was notified to the Commission on 27 February 2015.

Companies and products

TeliaSonera is a telecommunications operator based in Sweden. It is a provider of fixed and mobile telecommunications services, as well as broadband and television services in Denmark, Estonia, Finland, Lithuania and Sweden. It provides mobile telecommunications services in Latvia, Norway and Spain. TeliaSonera also provides telecommunications services in a number of countries outside of the EEA.

Telenor is a telecommunications operator based in Norway. In the EEA, the Telenor group provides mobile and fixed telecommunications services, as well as broadband and television services in Norway, Sweden and Denmark, and also provides mobile telecommunications services in Hungary and Bulgaria. The Telenor group also provides telecommunications services in a number of countries outside the EEA.

TeliaSonera and Telenor are already cooperating in Denmark through a network-sharing agreement, which was approved by the Danish competition authority in 2012.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

In addition to the current transaction, there are 7 other on-going phase II merger investigations.

–     the proposed joint venture between two of world’s leading coffee manufacturers, Douwe Egberts Master Blenders 1753 B.V. (DEMB) of the Netherlands and Mondelēz International Inc. (Mondelēz) of the US, with a decision deadline on 1 June 2015 (IP/14/2682);

–     the proposed acquisition of telecommunications company Jazztel by rival Orange (IP/14/2367 and IP/15/3680), with a decision deadline on 1 June 201;

–     the proposed creation of a joint venture between the collective rights management organisations PRSfM of the UK, STIM of Sweden and GEMA of Germany in the online licensing of musical works, with a decision deadline on 26 June 2015 (IP/15/3300);

–     the proposed acquisition of the industrial chocolate business of Archer Daniels Midland by Cargill, with a decision deadline on 23 July 2015 (IP/15/4479);

–     the proposed acquisition of rotating equipment manufacturer Dresser-Rand of the US by Siemens of Germany with a decision deadline on 24 July 2015 (IP/15/4429);

–     General Electric’s proposed acquisition of the thermal power, renewable power & grid businesses of Alstom, with a decision deadline on 6 August 2015 (IP/15/4478),

–     the proposed acquisition of the Greek gas transmission system operator DESFA by the State Oil Company of Azerbaijan Republic (SOCAR) (IP/14/1442)

More information will be available on the competition website, in the Commission’s public case register under the case number M.7419.

 

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