On Thursday 1 September, the European ommissioner with responsibility for competition, Margrethe Vestager, announced that her services had conditionally approved the planned joint venture in the telecommunications sector in Italy between Hutchison and VimpelCom.
The European Commission's investigations flagged up three major concerns. Firstly, the transaction would have removed competition between two major players, Hutchison and WIND. "With the transaction, Italian consumers would likely have faced reduced choice and lower quality mobile services", plus increased prices in retail mobile telephony, Vestager explained.
Secondly, the transaction would have changed the market structure by creating three similar-sized competitors, leading to concerns that this could have made it easier and more likely for these three operators to coordinate their behaviour on the market.
Finally, it would have reduced the number of mobile network operators willing to host mobile virtual network operators, which offer mobile services to end users through the physical network of mobile network operators.
Given a reduced choice of host networks, the virtual network operators would have seen their positions weakened when negotiating access conditions at wholesale prices.
The parties have proposed to divest sufficient assets to allow a new operator to enter the Italian market as fourth mobile network operator – in this case, the French operator Iliad. The Commission feels that these commitments will overcome its concerns.
Telecommunication companies in Europe "can grow by consolidating within the same country, if the conditions are right. They can also grow by expanding cross-border. This is the case for Iliad. It will increase its footprint in another member state as a new European player", Vestager told a press conference. (Original version in French by Élodie Lamer)