Brussels, 4th December 2007
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the BSG Group's wireless business, providing data and financial clearing services to wireless telecommunication companies around the world, by the US technology group Syniverse. The Commission's in-depth investigation, opened in July 2007 (see IP/07/1059), has shown that the acquisition would be unlikely to result in competition concerns in the market for the provision of GSM roaming data clearing services. The Commission has therefore concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or a significant part of it.
Syniverse is a global provider of technology services to wireless telecommunications companies. The BSG Group is a global provider of payment processing, data clearing, financial settlement and risk management solutions for fixed-line and wireless communication service providers. The proposed transaction only relates to the acquisition of the BSG Group's wireless business, mainly providing data and financial clearing services to mobile network operators (MNOs). The BSG Group retains its wireline business operating in North America.
The activities of Syniverse and of the BSG Group's wireless business overlap only in the market for GSM roaming data clearing services. With these services, data clearing houses provide for the exchange of roaming data between MNOs, allowing for the billing of roaming services provided to end–users.
With the proposed transaction, the number of competitors currently active in Europe in the market for clearing services for roaming data would be reduced from three to two. However, the Commission's in-depth investigation revealed that Syniverse has not exerted strong competitive pressure on BSG's prices and that switching between BSG and Syniverse (or vice-versa) has been very rare, but that both, BSG and Syniverse, have faced strong competition from the market leader Mach. It is therefore likely that the combined Syniverse/BSG would be in strong competition with Mach in the future.
Furthermore, other data clearing companies, not yet active in Europe, would have the possibility to provide such services to European MNOs as there are no capacity constraints and several MNOs clearly consider them as credible bidders, such as the US company VeriSign. In addition, up-coming technological developments may give other players, in particular providers of software for the billing of roaming services, the ability and incentive to enter the market for data clearing services. The Commission's market investigation has also shown that MNOs would remain sufficiently strong to exclude the likelihood of unilateral price increases by the merged entity, in particular by sponsoring the entry of new competitors.
The in-depth market investigation also confirmed that the reduction of the
number of currently active data clearing service providers operating in Europe
would be unlikely to result in the co-ordination of competitive behaviour
between the remaining service providers. In particular, the dynamic nature of
the market and the tendering process, which customers predominantly use for
procuring these services, would limit the transparency of the market and thus
the possibility of monitoring the coordination of prices or other market
conditions.New contracts also come up relatively infrequently. This would make
retaliation against competitors which are perceived to have disobeyed a
potential common understanding much more difficult and less effective.
Furthermore, new entrants would most likely jeopardise the outcome of any
potential co-ordination of competitive behaviour.