The European Commission (EC) has approved, under the EU Merger Regulation, the proposed acquisition of Telekom Romania Communications (TKR) by Orange.
In a statement, it says that the approval is conditional on the divestiture of TKR’s 30% minority shareholding in Telekom Romania Mobile Communications (TRMC), which is a direct competitor of Orange.
Commenting on the decision, executive VP Margrethe Vestager, in charge of competition policy, said: “Europeans need access to fast and reliable communication services, with sufficient alternatives on the market. With this decision, and the commitments offered by Orange, the Romanian telecommunications market will continue to offer high quality communication services at competitive prices”.
The EC notes that Orange, through its Romanian subsidiaries, and TKR provide telecommunications services in Romania, both at the retail and the wholesale level. Orange’s main activities are related to mobile telecommunications, while TKR is mainly active in fixed telecommunications and TV. TKR is indirectly controlled by Deutsche Telekom (DT) and owns a 30% minority stake in TRMC, one of the four main mobile operators active in Romania.
Following its investigation the EC found that the transaction, as initially notified, would have raised serious competition concerns on the market for retail mobile telecommunications services. In particular, Orange would have acquired TKR’s 30% minority shareholding in TRMC, one of its key competitors on this market. This may have reduced Orange’s incentives to compete with TRMC, would have given Orange access to commercially sensitive information about its competitor, and allowed it to block important investments by TRMC or the operator’s acquisition by a strategic buyer.
In addition, EC investigated potential competition concerns in other markets, such as the provision of fixed-mobile convergent (FMC) services, the retail market for business connectivity services and the wholesale market for the supply and acquisition of TV channels.
In all these markets, EC found that the merged entity would continue to face significant competition from other players and customers would have sufficient alternatives. In particular with regard to FMC services, the transaction would bring benefits, allowing the merged entity to offer this type of services more efficiently.
In order to address the competition concerns identified by the EC in relation to Orange’s proposed acquisition of the 30% minority shareholding in TRMC, Orange offered to:
• secure the divestment of TKR’s 30% minority shareholding in TRMC to OTE which is the current controlling shareholder of TRMC and a subsidiary of DT;
• not to implement the transaction before TKR and OTE have reached a binding agreement on the divestment, before the Commission has approved both OTE as a suitable purchaser, and the divestment agreement, and finally before the minority stake has been transferred to OTE.
As previously reported by Broadband TV News, last November Greece’s OTE agreed to sell its 54% stake in TKR to Orange Romania for €268 million.
