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IP/06/535

Brussels, 26th April 2006

Mergers: Commission clears acquisition of Austrian mobile phone operator tele.ring by T-Mobile, subject to conditions

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Austrian mobile phone operator tele.ring by T-Mobile Austria, subject to conditions and obligations. The Commission’s in-depth investigation showed that the concentration, as initially notified, would have led to a substantial impediment of effective competition on the Austrian market for the provision of mobile telephony services to final consumers. However, in the light of the commitment by the merging parties to divest UMTS frequencies and mobile telephony sites of tele.ring to operators with lower market shares than T-Mobile Austria, the Commission has now concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or a significant part of it.

Competition Commissioner Neelie Kroes stated: “The Commission is determined to ensure that ongoing consolidation in the mobile telephony industry does not harm consumers’ interests. In this particular case I am satisfied that the remedies we have obtained will allow Austrian consumers to continue to benefit from favourable mobile telephony offers.”

The Commission found that the proposed acquisition of tele.ring by T-Mobile, in its original form, would have removed from the Austrian mobile telephony market the operator which has offered consumers the most advantageous prices in recent years. On the basis of price comparisons and an analysis of the switching behaviour of customers, the Commission concluded that tele.ring has exerted considerable competitive pressure, in particular on the two largest operators, namely Mobilkom and T-Mobile Austria. Following the proposed transaction, in its original form, although T-Mobile would not have become the market leader in Austria, the concentration would have significantly impeded effective competition on the Austrian market for the provision of mobile telephony services to final consumers.

With a view to removing the Commission’s competition concerns, the merging parties committed to divest UMTS frequencies and mobile telephony sites of tele.ring to operators with lower market shares than T-Mobile Austria. In particular, T-Mobile will sell two 5 MHz 3G/UMTS frequency blocks, which are currently licensed to tele.ring, to competitors with smaller market shares, subject to approval by the Austrian telecommunications regulator and the Commission. At least one frequency package will go to Hutchison 3G (a framework agreement has been signed between T-Mobile and H3G). These commitments should, in particular, enable Hutchison 3G, which recently entered the market as a UMTS operator to expand its network all over Austria and thereby to compete without being dependent on its current national roaming agreement with Mobilkom. The Commission found that Hutchison 3G has sufficient incentives to continuously offer low tariffs in order to gain additional customers and thereby increase its network utilisation and realise economies of scale. The Commission’s decision to approve the proposed concentration is conditional upon the full respect of the commitments.

T-Mobile Austria is part of the group Deutsche Telekom, and tele.ring is controlled by Western Wireless Corporation from the U.S. Other mobile network operators in Austria are Mobilkom, ONE and Hutchison 3G.


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