European Commission to investigate proposed acquisition of Tele2 NL by T-MobileTuesday, June 12th, 2018
Mergers: Commission opens in-depth investigation into proposed acquisition of Tele2 NL by T-Mobile NL in the Netherlands
BRUSSELS — The European Commission has opened an in-depth investigation to assess the proposed acquisition of Tele2 NL by T-Mobile NL under the EU Merger Regulation. The Commission is concerned that the merger could lead to higher prices, and reduce choice and innovation for customers in the Netherlands.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Access to affordable and good quality mobile telecom services has become increasingly important in modern life. We are opening this in-depth investigation to ensure, that the proposed transaction between T-Mobile NL and Tele2 NL will not lead to higher prices or less choice in mobile services for Dutch consumers”.
The proposed transaction would combine Deutsche Telekom’s subsidiary T-Mobile NL with Tele2’s subsidiary Tele2 NL, respectively the third and fourth largest operators in the Dutch retail mobile telecommunications market. This would reduce the number of mobile network operators in the Netherlands from four to three. The merged entity would be the third largest player on the Dutch market after KPN and VodafoneZiggo.
The Commission’s preliminary competition concerns
The Commission’s initial market investigation identified the following main concern:
- T-Mobile NL and Tele2 NL currently compete against each other in the retail mobile telecommunications market in the Netherlands. The Commission has concerns that the transaction would have a negative impact in two ways: through a reduction in the number of players and by limiting the merged entity’s incentives to compete effectively with the remaining operators. This could lead to higher prices and less investment in mobile telecommunications networks.
There are also two other issues that the Commission intends to investigate further:
- The reduction in the number of mobile network operators following the merger may weaken competitive pressure and increase the likelihood that operators would coordinate their competitive behaviour, and raise prices on the retail markets.
- In addition to the four mobile network operators, there are also a number of mobile virtual network operators active in the market, which use the physical network of mobile network operators to offer mobile telecoms services to consumers. The Commission is concerned that prospective and existing mobile virtual network operators may face more difficulties in obtaining favourable wholesale access terms from mobile network operators.
The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed. The Commission will in particular assess: the extent to which the parties are close competitors, the potential response of the merged entity’s competitors, and investigate the importance of fixed/mobile bundles in the Netherlands.
The transaction was notified to the Commission on 2 May 2018. The Commission now has 90 working days, until 17 October 2018, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Companies and products
T-Mobile NL provides telecommunication services to private and business customers in the Netherlands. It owns a mobile network with nationwide coverage over which it provides 2G, 3G, 4G and NarrowBand-Internet of Things (NB-IoT) mobile communication services. It also provides retail fixed services, including broadband Internet, TV and fixed telephony services based on wholesale access services.
Tele 2 NL is a telecommunications provider that operates as a 4G-only mobile network operator, providing voice, data and messaging services, and also fixed broadband services in the Netherlands. Tele2 NL provides services to business and residential customers and to a limited extent to other telecommunications providers.
Merger control rules and procedures
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 effective competition in the EEA or any substantial part of it.
The vast majority of notified 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).
There are currently three other on-going Phase II merger investigations: the proposed merger between Praxair and Linde, the proposed acquisition of Cristal by Tronox, and the proposed acquisition of Shazam by Apple.
More information will be available on the Commission’s competition website, in the public case register under the case number M.8792.