Brussels, 28/05/2014 (Agence Europe) - On Wednesday 28 May, the European Commission gave a conditional go-ahead to the planned acquisition of the mobile telephone network of Telefonica Ireland (O2 Ireland) by Hutchison 3G (H3G).
The merger will combine the second and fourth largest mobile network operators in Ireland. Since its entry in 2005, H3G - through of its subsidiary Three - has been an important competitive force on the Irish market, for instance by offering attractive data offers to consumers. The merger would remove this force and create a larger company facing only two competitors: Vodafone and Eircom. In addition, the market is characterised by high entry barriers for new competitors and no countervailing buyer power from end consumers. Ireland is a relatively small telecoms market, with around 4.6 million inhabitants and 5.5 million mobile telecoms subscriptions. H3G says new competitors will be able to set up in Ireland. In a press release, Competition Commissioner Joaquin Almunia said: “In a context of increased data consumption on their mobile devices, European consumers should continue to benefit from improved services at attractive prices. To achieve this, it is essential that healthy competition is preserved in mobile telecoms markets. The commitments offered by Hutchison 3G ensure that Irish consumers will continue to enjoy these benefits”.
A relatively high proportion of inhabitants live in rural areas, raising challenges for the roll out of mobile telecoms networks. All mobile network operators in Ireland already share networks to reduce the cost of their roll-out. H3G offered a package aimed at ensuring the short-term entry of two mobile virtual network operators (MVNOs), with an option for one of them to become a full mobile network operator by acquiring spectrum at a later stage. To facilitate this, H3G committed to divest five blocks of spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands. The spectrum will be available for ten years, starting from 1 January 2016.
Secondly, H3G has offered a package aimed at ensuring that Eircom stays a competitive mobile network operator in Ireland. The Commission had concerns that, after the merger, Three could frustrate or terminate the network sharing agreement that Eircom, the third and smallest network competitor after the merger, currently has with O2 Ireland. H3G has promised to offer Eircom to continue the network-sharing agreement on improved terms. Given the importance of network-sharing in Ireland, this will secure Eircom's options to achieve its roll-out plans.
Until 10 July 2014, the Commission will be continuing its investigations into the planned acquisition of E-Plus, the German subsidiary of Dutch company KPN, by Telefonica Deutschland (see EUROPE 11078). Fragmentation of telecoms markets was a campaign issue during the European elections. Commissioner Almunia rejected the call by Germany's chancellor, Angela Merkel, and the EPP party's candidate to become the president of the European Commission, Jean-Claude Juncker, for reform of EU competition policy (see EUROPE 11080). (MB)