Short Reads

Commission blocked Hutchison's proposed acquisition of Telefónica UK

Commission blocked Hutchison's proposed acquisition of Telefónica UK

Commission blocked Hutchison's proposed acquisition of Telefónica UK

02.06.2016

On 11 May 2016, the European Commission blocked Hutchison's proposed acquisition of Telefónica UK ("O2"), despite remedies offered by the parties. The Commission's full decision will be published later this year.

The concentration would have reduced the number of mobile network operators ("MNOs") active in the UK from four to three. After the takeover, Hutchison would have been the largest mobile player in the UK, with a combined market share exceeding 40%. In addition, Hutchison and Telefónica have existing network sharing agreements with Vodafone and BT/EE, respectively. This would grant the combined entity access to both physical network infrastructure operations in the UK. The Commission had serious concerns that the transaction would have:

  • significantly reduced the incentive to compete with the two remaining players Vodafone and BT/EE, resulting in reduced choice and quality of service for consumers, as well as higher prices;
  • hampered the development of mobile infrastructure, because the combined entity would have had access to the network development plans of its two remaining competitors; and
  • reduced the willingness of the network operators to host mobile virtual network operators ("MVNOs"). 

The Commission dismissed Hutchison's proposed remedy package. Hutchison offered various commitments aimed at strengthening the position of existing and new MVNOs, including granting access to its network capacity. The Commission, however, found that even with the commitments the MVNOs would remain commercially and technically dependent on the combined entity. The other commitments were intended to address the Commission's second and third concerns relating to its ties with Vodafone and BT/EE. However, the Commission considered that the proposed behavioural (i.e. non-structural) commitments would be difficult to implement and monitor effectively, and did not allay the Commission's structural concerns. In addition, the behavioural remedies aimed at granting MVNOs access to future technologies were considered commercially unattractive.

The Commission's approach highlights its continued scrutiny of mobile telecommunication mergers in concentrated markets. Although there is "no magic number" of MNOs to ensure effective competition, the Commission will continue to place high importance on the structural nature of remedies (e.g. full divestment of fixed capacity and/or spectrum) as well as offering concrete assurances to ensure swift and sufficient entry of new competitors. The Commission is also close to finalizing a second-phase investigation into a four-to-three deal between Hutchison and VimpelCom Holdings in Italy, which might face the same fate unless the parties manage to offer a viable remedy package.

This article was published in the Competition Law Newsletter of June 2016. Other articles in this newsletter:

  1. General Court rejects Trioplast's action for annulment of a Commission notice to pay interest
  2. General Court confirmed that German law on renewable energy amounts to State aid
  3. European Commission publishes guidance on the notion of State aid
  4. District Court of Rotterdam upheld the ACM's unconditional clearance decision in telecoms merger KPN/Reggefiber
  5. Rotterdam District Court considered "franchise agreements" in breach of competition law in launderette cartel case
  6. UK High Court held that territorial limits apply to EU cartel damages claims

Team

Related news

09.01.2020 NL law
Deleting WhatsApp chats during dawn raids may cost you dearly

Short Reads - Companies should be aware that the Dutch competition authority (ACM) will not only examine electronic records and emails, but can also check WhatsApp messages during dawn raids. The ACM recently imposed a fine of EUR 1.84 million on a company for non-cooperation with a dawn raid; its highest fine so far for non-cooperation. Several of the company’s employees had left WhatsApp groups and deleted chats before handing over their mobile phones for inspection.

Read more

16.01.2020 NL law
De Amsterdamse milieuzone voor brom- en snorfietsen: voertuigen van een bepaald jaar weren is mogelijk bij ontbreken van een redelijk alternatief

Short Reads - ABRvS 20 november 2019, ECLI:NL:RVS:2019:3865 Deze blog is het vierde deel in een reeks Stibbeblogs over gemeentelijke milieuzones. In 2017 oordeelde de Afdeling over de milieuzone voor personen- en bestelauto’s met dieselmotoren in Utrecht. In 2018 presenteerde de staatssecretaris van Infrastructuur en Waterstaat haar beleid voor harmonisatie van uiteenlopende gemeentelijke milieuzones. Een jaar geleden maakten wij in een FAQ de balans op over de harmonisatie van milieuzones.

Read more

09.01.2020 NL law
Access to the file in Dutch competition procedures: too little too late?

Short Reads - Companies beware: the ACM’s and European Commission’s approach to access to the file are not aligned. According to an interim relief judge, the ACM cannot be forced to grant a company access to a broader set of documents in competition procedures. A potential error in the administrative procedure can be remedied before a court at a later stage. This is different to the right to access to the Commission’s file during administrative procedures, as acknowledged in EU case law.

Read more

10.01.2020 NL law
Is het mededingingsrecht de reddingsboei van zwakke zzp’ers?

Articles - Het toenemende aantal zzp'ers heeft ook mededingingsrechtelijke gevolgen. Volgens de ACM werkt de markt namelijk niet goed als zzp'ers door lage uurtarieven onder het bestaansminimum komen. Jan Truijens Martinez en Simone Evans bespreken in het Tijdschrift voor Arbeidsrecht in Context hoe eventuele belemmeringen die het mededingingsrecht opwerpt bij de bescherming van zzp'ers kunnen worden beperkt en of het mededingingsrecht eigenlijk wel het juiste instrument daarvoor is? 

Read more

09.01.2020 NL law
Competition rules and globalisation to face off in 2020

Short Reads - 2020 will likely revolve around the question whether competition rules should yield to globalisation and digitisation, with suggestions ranging from mere tweaks to competition rules to complementary regulation. Greater cooperation across data protection, consumer protection and competition law appears inevitable. Speedier solutions in more informal settings may become a reality, alongside more frequent use of behavioural remedies.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring