The European Commission has approved under the EU Merger Regulation the proposed acquisition of Orange’s mobile telephony business in Austria by Hutchison 3G (H3G). The approval is conditional upon the implementation of a commitments package that will facilitate the entry of new players into the Austrian mobile telecommunications market. The Commission had concerns that the elimination of one out of only four mobile network operators in Austria could have led to less competition and higher prices, to the detriment of end consumers. To address these concerns, H3G submitted remedies, offering in particular to divest radio spectrum and related rights and to provide wholesale access to its network. In light of these commitments, the Commission concluded that the transaction would no longer raise competition concerns.
“European consumers increasingly use their mobile phones to upload and transfer data and new mobile data services are a major contribution to growth. The risks posed by more concentration in national mobile telephony markets cannot be ignored. The commitments proposed by H3G ensure that competition is preserved so that Austrian consumers continue to enjoy the benefits of innovation and fair prices.” said Commission Vice-President in charge of competition policy Joaquín Almunia.
The Austrian mobile telecoms market is highly concentrated. The proposed merger would bring together two of the four mobile network operators in Austria and the merged entity would face competition only from Telecom Austria with its mobile telephony brand A1 and from T-Mobile as primary physical network operators.
This market is characterised by high barriers to entry for competitors and consumers have little bargaining power when it comes to negotiating contracts with operators. The economic analysis conducted by the Commission, taking into account the parties’ particular strength in the private customer and data market segments, has shown that the market power of the merging parties would have been higher than what their market shares suggested. Here to read more.
