The Portuguese Competition Authority (AdC) has opened an in-depth investigation into Vodafone’s acquisition of Nowo Communications.
In a statement, it says that as a result of its investigation to date it considers that the merger is likely to generate a set of unilateral effects and coordinated effects, with adverse impacts for telecommunications customers in Portugal.
It goes on to say that as regards unilateral effect, it considers at this stage merger:
• results in the acquisition of the operator that currently presents offers with comparatively lower prices in a significant set of fixed and mobile telecommunications services (affectation of current competition);
• not only results in the elimination of an operator which, despite its size, exerts a not insignificant competitive constraint in the market, but which is expected to be reinforced in the future as a result of the spectrum acquired at the 2021 5G Auction (potential competitive constraint);
• is likely to reinforce barriers to entry and expansion in the market, since Vodafone will “inherit” control over spectrum reserved for new entrants, such as Nowo, thus eliminating the possibility of its use by operators other than those already present in the market.
In terms of coordinated effects, it considered:
• that the necessary conditions for an increase in the probability, sustainability and degree of coordination of behaviours by Meo, Nos and Vodafone are met, resulting in the potential alignment of offers of these operators with adverse impacts for telecommunications customers in Portugal.
• that market characteristics create a favorable context for the verification of the aforementioned conditions for coordination.
• that the elimination of Nowo, as an independent operator, has a potential impact or, at the very least, strengthens the conditions for the external sustainability of coordination between MEO, NOS and Vodafone.
AdC concludes by saying that by its very nature, this decision does not constitute a final decision in the proceedings. The AdC decides to open an in-depth investigation into the merger when it deems additional diligence necessary. Pursuant to the Competition Law, after the in-depth investigation, the AdC may decide:
• Not to oppose the deal if it concludes that the merger, as notified or following changes made by Vodafone in the meantime (i.e., the so-called commitments or remedies), is not likely to create significant impediments to competition in the market concerned; or
• Prohibit the deal, if it concludes that the concentration is likely to significantly impede competition in the market, to the detriment of intermediate and/or end users, who constitute the demand in this market
As previously reported by Broadband TV News, last October Vodafone Portugal agreed to buy Nowo Communications, the country’s fourth largest convergent operator, for an undisclosed fee.