Out-Law / Your Daily Need-To-Know

Telecoms mergers must not raise consumer prices, EU competition chief says

09 Mar 2015, 2:26 pm

European telecoms mergers must not lead to a rise in prices for consumers, the European Union's new anti-trust head Margrethe Vestager has said.

"I have one interest and that is to make sure that European consumers —citizens or businesses — can enjoy relatively innovative markets at affordable prices," she told the Financial Times.

Past consolidation has not led to improved infrastructure, Vestager said. In fact, she told the Financial Times, "I have seen a number of examples of the opposite. So far it seems as if it is still competition that will lead to investment and not the other way round."

The same holds true in the US, Vestager said, where consumers have "little choice and higher prices than we do in Europe".

Vestager is likely to have to rule on three upcoming mergers, the Financial Times said: Orange's purchase of Jazztel in Spain; Hutchison Whampoa's acquisition of Telefonica UK; and the merger of Telenor and TeliaSonera in Denmark.

Also in the UK, BT has agreed terms to buy EE from current owners Orange and Deutsche Telekom. Both businesses will gain a stake in BT as well as cash as part of the deal. Deutsche Telekom will have a 12% stake in BT and Orange a 4% stake post-transaction.

When the deal was announced, competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said that he expects competition regulators reviewing the BT-EE deal to determine "whether fixed voice, broadband and mobile should be considered as separate markets, given current and future customer practices". He said there would also be "intense scrutiny of whether the transaction would put BT in such a strong position that other, less integrated, competitors could not in practice compete effectively."

Vittorio Colao, chief executive of Vodafone, said that the larger incumbent groups were seeking to benefit from their fixed-line monopolies, the Financial Times reported.

"It is clear that fewer players will emerge in the telecoms industry," said Colao. "What worries me is the temptation among some of these guys to use their big customer base in fixed line to make better investment in fibre better for them than others, which would lead to re-monopolisation."