Europe to probe Three/Wind merger amid competition concerns

The European Commission will probe the proposed Hutchison-VimpelCom Italian subsidiary merger of Three and Wind, citing concerns over the effect it may have on the competitive market.

While European telco consolidation is a trend continuing to gather pace, the Commission is apparently eager to ensure market conditions aren’t negatively affected by domestic M&A activity, in this case VimpelCom’s Wind merging with Hutchison’s Three. The regulator worries a reduction in the number of Italy’s MNOs will force up prices, stifle innovation and see the industry’s telcos lose incentive to continue much-needed investment in infrastructure.

Competition and policy commissioner Margrethe Vestager explained how the market is so delicately poised and why decisions such as this need much deliberation.

“Mobile telecom services are increasingly important in our daily lives,” she said. “We use our mobile phones not only to get in touch with our family and friends but also to read the news, shop online or check the train schedule. We need to make sure that the proposed transaction will not lead to higher prices or less choice in mobile services for Italian consumers”.

One of the biggest concerns the EC has is the reduction in the number of competitors as a result of the joint venture would increase “the likelihood that MNOs would coordinate their competitive behaviour and raise prices on a sustainable basis on the retail and wholesale markets.”

The EC is expected to have come to a conclusion by the 10^th August. It is also in the process of mulling over Hutchison’s proposed takeover of Telefónica’s O2 UK business, which has seen similar concerns over market conditions raised. In each case, Hutchison would be reducing the number of market players while simultaneously creating the country’s largest mobile operator, as the Hong Kong-based telco makes aggressive expansion efforts across Europe.

Meanwhile, Orange has postponed any decision making on its Bouygues acquisition efforts until 3rd April. In a short and sweet statement, the operator said there’s still a lot more to discuss before any conclusions can be drawn.

“The Board of Directors of Orange met on 30 March 2016 to discuss the talks regarding a possible consolidation with Bouygues Telecom,” it said. “The Board acknowledged that the negotiations were not yet sufficiently advanced. Orange’s Board of Directors will meet again by 3 April 2016 to examine the result of these discussions.”