Recent EU practice in telecoms mergers

Transcription

1 Recent EU practice in telecoms mergers Sophie Moonen Head of Unit C5 Information, Communication and Media DG Competition European Commission The views expressed in this presentation are personal and do not necessarily reflect the views of the European Commission

2 Consolidation trends By type of infrastructure Mobile + mobile Mobile + cable E.g. M.7231 Vodafone/Ono (2014); M.6990 Vodafone/Kabel Deutschland (2013) Fixed: cable + cable E.g. M.7000 Liberty Global/Ziggo (2014); leased lines; retail business connectivity E.g. M.7109 Deutsche Telekom/GTS (2014) By geography Cross-country E.g. M.6948 Telenor/Globul/ Germanos (2013) In-country E.g. M.7018 Telefonica Deutschland/E-Plus (2014), M.6992 H3G/Telefonica Ireland (2014)

3 Past mobile telecom cases of the Commission Case Description/Outcome T-Mobile/tele.ring (2006) 5 to 4 in Austria Cleared with remedies in Phase II T-Mobile/Orange NL (2007) 4 to 3 in the Netherlands Cleared unconditionally in Phase I T-Mobile/Orange UK (2010) 5 to 4 in the UK Cleared with remedies in Phase I H3G Austria/Orange Austria (2012) 4 to 3 in Austria Cleared with remedies in Phase II H3G UK/Telefónica Ireland (2014) 4 to 3 in Ireland Cleared with remedies in Phase II Telefónica Deutschland/E-Plus (2014) 4 to 3 in Germany Cleared with remedies in Phase II 3

4 Issues examined Market definition mobile v. non-mobile; segments national dimension Market positions market shares, also at segment level Closeness of competition Important competitive force Counterfactual Coordinated effects Efficiencies (verifiability, merger-specificity and pass-on) Remedies 4

5 Overview H3G/O2 Ireland Main findings Vodafone [~40]% Three [~10]% O2 (incl. Tesco Mobile) [~30]% Merging Parties Eircom [~20]% Non-coordinated effects ("gap" case) Existing network sharing agreements (O2/Eircom and Three/Vodafone) Three is an important competitive force (e.g. attractive data offers) Counterfactual: the parties would continue to invest and compete absent the merger Competitors likely to follow price increases MNO entry highly unlikely (high investment costs and low profitability) Weakening of Eircom due to degradation of network sharing Efficiencies not proven to a large extent (in particular could be generated with the existing 5 network sharing agreements)

6 Telefonica DE/E-Plus Overview T-Mobile (DTAG) [20-25]% Vodafone [20-25]% E-Plus [15-20]% O2 Deutschland [15-20]% Merging Parties Freenet [10-15]% Drillisch [0-5]% 1&1 [0-5]% Main findings E-Plus and O2 are close competitors with a focus on prepaid customers Loss of competition between E- Plus and O2 Both E-Plus and O2 are important competitive forces (especially E- Plus growing) Competitors would likely follow price increases Entry of MNOs post-merger depending on entry conditions Efficiencies not proven (e.g. in particular could be generated with network sharing agreements) 6

7 Remedies Innovative capacity-based MVNO model: MVNOs commit to purchase a fixed share of the merged entity's network capacity for an upfront fee: Incentive to compete aggressively: no incremental cost to acquire new customers Access to new technologies Flexibility to offer retail products Option for MVNO entrants to become an MNO by acquiring spectrum from the merged entity Other remedies: offer to prolong the network sharing agreement with Eircom (H3G/O2 Ireland) and improving commercial terms for MVNOs (Telefonica/E- Plus) 7

8 Conclusions and outlook Case-by-case analysis showing there is no magic number of mobile network operators Markets can be usefully analysed by zooming in on different segments In oligopolistic markets such mobile telecoms markets, the Commission is attentive to closeness of competition and the particular important role of some mobile operators such as recent entrants keen on gaining market share for the competitive dynamics Although each case is reviewed based on its specific facts, recurring issues likely to arise in the context of future mobile telecoms merger; useful experience gained