Brussels, 1 March 2010
Mergers: Commission approves proposed merger between UK subsidiaries of France Telecom and Deutsche Telekom, subject to conditions
The European Commission has cleared the proposed merger of Orange UK and T-Mobile UK, respectively France Télécom's (FT) and Deutsche Telekom's (DT) UK subsidiaries. The decision is conditional upon the amendment of an existing network sharing agreement with Hutchison 3G UK (3UK), to ensure that there remain sufficient competitors in the market, and the divestiture of a quarter of the combined spectrum of the merging parties in the 1800 MHz band, which is one of three frequency bands currently used for mobile communications in the UK. In light of these commitments, the UK Office of Fair Trading (OFT) withdrew its request to refer the case for review by the UK Competition Authorities.
" I am happy that we managed to resolve the competition issues in this case quickly in close cooperation with the Member State concerned," said European Competition Commissioner Joaquín Almunia.
Orange UK is a wholly-owned subsidiary of the French incumbent telecommunications operator France Telecom. It provides mobile telephony services in the UK and, to a lesser extent, broadband internet access services on a fixed network. T-Mobile UK is a wholly-owned subsidiary of the German incumbent telecommunications operator Deutsche Telekom. It provides mobile telephony services in the UK.
In the course of the investigation, the Commission identified no direct concerns in relation to the market for the provision of mobile telecommunications services to end-consumers, the wholesale market for access and call origination on public mobile telephone and the wholesale market for international roaming and related markets.
However, the Commission investigation showed that the transaction, as initially notified, could put at risk the future of T-Mobile's Radio Access Network sharing agreement with 3UK (the Radio Access Network being one of the main infrastructure elements of a mobile network), which is the smallest mobile network operator (MNO) in the UK, owned by Hutchison Whampoa. This could threaten 3UK's viability on the market and possibly eliminate a competitor. With the merger of the subsidiaries of FT and DT there will be only four players in the UK, hence the concerns about the fate of 3UK.
Second, the investigation also revealed that the combined amount of contiguous spectrum held by the parties at the 1800 MHz level (60 MHz) would be significantly larger than that of their competitors. This could result in the new entity being the only MNO in the UK able to offer next-generation mobile data services through Long Term Evolution (LTE) technology at the best possible speeds within the medium term.
In order to address the competition concerns identified by the Commission, the parties concluded a revised agreement with 3UK which will secure its position as a competitive force on the market, and offered to divest 15 MHz of spectrum at the 1800 MHz level. The Commission concluded that the commitments offered by the parties remedy the identified competition concerns.
The Commission cooperated closely with both the OFT and the UK's telecommunications regulator OFCOM throughout the investigation. On 2 February 2010, the OFT submitted a request to the Commission to refer to it the examination of the proposed transaction pursuant to Article 9 (2) (a) of the EU Merger Regulation. In light of the commitments offered by the parties, the OFT withdrew its referral request on 1 March 2010.
The transaction was notified to the Commission for regulatory clearance under the EU Merger Regulation on 11 January 2010. More information on the case will be available at: