TeliaSonera and Telenor pull out of Danish merger

The merger of the Danish business units of TeliaSonera and Telenor, which was announced in December 2014, had been abandoned following the failure to come to an agreement with the European Commission.

Telenor and TeliaSonera are the second and third largest Danish operators and their combination would have taken them to number one. The biggest reservation held by the EC seems to have been the reduction in the number of Danish operators from four to three and it seems that no amount of promises to play nice were sufficient. The two companies are inevitably disappointed.

“Since the beginning, we have been strong advocates for the need to increase investment levels in Denmark,” said Robert Andersson, Head of Region Europe in TeliaSonera. “In our view, creating a market player with the scale and ability to compete and invest would ensure that customers and businesses would benefit from better quality, speed and coverage.”

“In the interests of both companies, we felt it necessary to act decisively,” said Kjell Morten Johnsen, Head of Telenor Region Europe. “TeliaSonera and Telenor will continue to compete and deliver products and services in the Danish market through our respective original, and still fully up-and-running Danish operations.”

“EU merger control has to make sure that company tie-ups do not lead to reduced innovation, higher prices or reduced choice for consumers and do not restrict competition in the internal market,” said Commissioner Margrethe Vestager in charge of competition policy.

“I believe that ensuring that markets are competitive is key both to spur much needed innovation and investment in European telecoms markets, as well as to offer affordable prices to consumers. Every case has to be assessed on its own facts and merits.

“In this specific case, based on the Commission’s in-depth analysis and evidence gathered, we are convinced that the significant competition concerns required an equally significant remedy. This means the creation of a fourth mobile network operator. What the parties offered was not sufficient to avoid harm to competition in Danish mobile markets.”

The statement from the EC seems to be ‘four good, three bad’, which it should now be expected to apply to other operator consolidation activity.