The European Commission has approved unconditionally, under the EU Merger Regulation, the proposed acquisition of joint control over Prosegur Alarmas by Telefónica and Prosegur. The Commission concluded that the transaction would raise no competition concerns in the European Economic Area.
Under the proposed acquisition, Telefónica will acquire half of the shares of Prosegur Alarmas from Prosegur, which leads to joint control over Prosegur Alarmas by Telefónica and Prosegur.
Telefónica mainly provides fixed and mobile telecommunication services, including machine-to-machine (“M2M”) SIM cards. These cards are deployed in a number of “connected” devices, including alarm devices. Prosegur Alarmas provides alarm installation services and connection to alarm reception centres for both residential customers and small and medium-sized enterprises (SMEs). Prosegur will continue to provide alarm and other security services, but only for business customers. All three companies are active in Spain.
The Commission’s investigation
During its investigation, the Commission found a number of examples of alliances between telecom operators and alarm providers, as well as examples of telecom operators developing security solutions, both in Spain and worldwide. The Commission found that telecommunication services and alarm services are considered to be closely related markets, at least for residential customers in Spain.
The Commission assessed in particular:
- whether Telefónica could stop supplying M2M SIM cards or could degrade the conditions of supply to alarm providers competing with Prosegur Alarmas;
- whether there would be a risk of weakened competition if Telefónica or Prosegur Alarmas tried to leverage their respective positions into neighbouring markets by bundling telecommunication, TV and alarm services.
The Commission’s investigation found that the transaction is unlikely to hinder effective competition in the concerned markets, as the companies would not have the ability to engage in any of the practices mentioned above, and even if they did, there would be no appreciable effect on these markets. The Commission therefore concluded that the transaction would raise no competition concerns in any of the markets examined.
Companies and products
Telefónica, based in Spain, is a global telecommunications operator and mobile network provider, operating under a number of brands, including Movistar, O2 and Vivo. In Spain, Telefónica mainly provides fixed and mobile telecommunication services, including M2M SIM cards.
Prosegur, based in Spain,is a provider of security services to business customers, whose operations are divided in three business lines, namely alarms, security and cash.
Prosegur Alarmas, based in Spain,is a provider of alarm installation services and connection to alarm reception centres for both residential customers and SMEs in Spain.
Merger control rules and procedures
The transaction was notified to the Commission on 15 January 2020. 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 competition in the European Economic Area or any substantial part of it.
The vast majority of 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).