The European Commission has opened an in-depth investigation under the EU Merger Regulation to assess the proposed creation of a joint venture between Orange and Más Móvil. The Commission has concerns that this venture could reduce competition in the retail marketing of mobile and fixed broadband services and in the offer of multiple service packages in Spain…
Orange and MásMóvil are the second and fourth largest operators with retail and wholesale activities in fixed broadband and mobile telephony services in Spain. There are four mobile network operators in Spain: Telefónica, Vodafone, Orange and MásMóvil. There are also fixed and mobile virtual network operators that use the network operator’s infrastructure to provide fixed and mobile telecommunications services to their customers.
Commission clears creation of a joint venture by Deutsche Telekom, Orange, Telefónica and Vodafone |
The Commission’s preliminary concerns
The preliminary investigation indicates that Orange and MásMóvil are close competitors in the Spanish markets for the retail provision of: (i) mobile telecommunications services; (ii) fixed broadband access services; and (iii) bundled services, e.g. convergent mobile and fixed telephony services.
In particular, the Commission has found the following:
The transaction would decrease the number of network operators in Spain, thereby eliminating an innovative and significant competitor. This could lead to higher prices and lower quality of telecommunications services for customers.
As a result of the transaction, Orange and MásMóvil would have the ability and incentive to restrict virtual operators’ access to wholesale mobile network and wholesale fixed network access services. This could reduce the ability of these operators to compete, which in turn may result in higher prices and lower quality of services for end-customers in Spain.
The Commission 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 Commission on 13 February 2023. On 2 March 2023, the Spanish competition authority requested referral of the case under Article 9 of the EU Merger Regulation. This referral request is pending.
The Commission currently has 90 working days until 21 August 2023 to adopt a decision. The opening of a full investigation does not prejudge the outcome of the procedure.
Companies and products
Orange, based in France, is a global telecommunications operator present in the Spanish telecommunications market through its subsidiary OSP. OSP provides mobile and fixed telecommunications services to residential, business and wholesale customers in Spain. It operates under three brands: Orange, Jazztel and Simyo.
UK-based Lorca is a holding company controlled by MásMóvil. MásMóvil provides fixed and mobile telecommunications services mainly to residential customers in Spain. It operates under a wide variety of brands, such as Yoigo, MásMóvil and Virgin, as well as the digital brand Pepephone, the regional brands Euskaltel, R., Guuk, Embou and Telecable, and the international customer brands Llamaya, Lebara and Lycamobile.
Merger control and procedure
The Commission has the obligation to assess concentrations and acquisitions involving undertakings 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 concentrations do not raise competition concerns and are cleared following a routine review. From the moment the transaction is notified, the Commission generally has 25 working days to decide whether to approve it (Phase I) or to initiate an in-depth investigation (Phase II).
However, in the context of the present case, the Phase I deadline has been extended by 10 working days following a request submitted by the Spanish competition authority under Article 9 of the EU Merger Regulation.
Leave a Reply