The European Commission (EC) has opened an in-depth investigation into proposed merger of Orange and MasMóvil in Spain.
In a statement, it says that it is concerned that the transaction may reduce competition in the retail supply of mobile and fixed broadband services as well as of multiple-play bundles in the country.
The EC goes on to say that Orange and MasMóvil are the second and fourth largest operators active in Spain at retail and wholesale level for fixed broadband and mobile services. There are in total four active mobile network operators, namely Telefónica, Vodafone, Orange and MasMóvil. There are also several mobile and fixed virtual network operators which use the network operators’ infrastructure to offer mobile and fixed telecoms services to their consumers.
The EC says that its preliminary investigation indicates that Orange and MasMóvil are close competitors in the Spanish markets for the retail supply of: (i) mobile telecommunications services; (ii) fixed broadband access services; and (iii) multiple-play bundles, including fixed mobile convergent services.
In particular, it found that:
The transaction would reduce the number of network operators in Spain, thereby eliminating an innovative and significant rival. This could lead to higher prices and lower quality of telecom services for customers.
As result of the transaction, Orange and MasMóvil would have the ability and incentive to restrict access of virtual operators to wholesale mobile network and wholesale fixed network access services. This could reduce the ability of such operators to compete, and in turn lead to higher prices and lower quality of services for end customers in Spain.
The EC will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether its initial competition concerns are confirmed.
The proposed transaction was notified to the EC on February 13 this year. On March2 , the Spanish Competition Authority requested a referral of the case under Article 9 of the EU Merger Regulation. This referral request is pending.
The EC now has 90 working days, until August 21 , to take a decision.
It concludes by saying that the opening of an in-depth inquiry does not prejudge the outcome of the investigation.
