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European Commission - Press release
Mergers: Commission opens in-depth investigation into the creation of a mobile commerce joint venture by UK mobile operators Telefónica, Vodafone and Everything Everywhere
Brussels, 13 April 2012 - The European Commission has opened an in-depth investigation under the EU Merger Regulation into the proposed creation of a joint venture in the UK between Vodafone, Telefónica and Everything Everywhere in the field of mobile commerce. The Commission’s preliminary investigation indicated potential competition concerns in the nascent markets of mobile payment applications supply (so-called "mobile wallets"), mobile advertising and related data analytics services, where the joint venture may have very high market shares. The opening of an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days, until 27 August 2012, to take a final decision on whether the proposed transaction would reduce effective competition in the European Economic Area (EEA).
“The Commission is in favour of any initiative that will develop the promising mobile commerce sector in Europe and bring new and innovative payment and interactive advertising experience to consumers. At the same time, we need to make sure that competing services can keep emerging on this market, so that incentives to innovate remain and customers get the best mobile commerce services at the best cost." said Joaquín Almunia, Commission Vice President in charge of Competition policy.
The Commission’s initial investigation revealed that the joint venture and its three parent companies may have the technical and commercial ability and incentive to block future competitors from offering their own mobile wallet services to customers in the UK, or to degrade the quality of these competing mobile wallets so that they become less attractive.
The Commission will now investigate the proposed acquisition in-depth to determine whether these initial concerns are confirmed or not.
The transaction was notified to the Commission on 6 March 2012.
Background on companies and markets
Telefónica UK, Vodafone UK, and Everything Everywhere – a joint venture created by the merger of T-Mobile UK and Orange UK that was cleared by the Commission in March 2010 - are three of the four mobile network operators in the UK.
The newly created joint venture would provide various mobile commerce services to businesses, including mobile payment transaction services, mobile marketing services, and associated data analytics services.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
There are currently five other phase II investigations. The first one concerns the planned acquisition of Synthes by Johnson and Johnson, both US companies active in the area of orthopaedic medical devices (see IP/11/1306), with a deadline set for 26 April 2012. The second was opened in November 2011 into the proposed acquisition of control over the sugar trader ED&F MAN by the German sugar and molasses producer Südzucker (see IP/11/1327), with a deadline set for 22 May 2012. The third ongoing phase II investigation relates to the planned acquisition of joint control over a branch of the Italian state-owned ferry group Tirrenia by Compagnia Italiana di Navigazione of Italy (see IP/12/29). The deadline for a decision in the latter case was suspended under Article 11(3) of the Merger Regulation from 13 February 2012 to allow the parties to submit the necessary information for the assessment of the transaction. The fourth ongoing phase II investigation was opened in March into the proposed acquisition of EMI's recorded music business by Universal (see IP/12/311). The deadline for this investigation is 8 August 2012. The fifth ongoing phase II investigation, also opened in March, concerns the proposed acquisition of control over Goodrich by United Technology in the aviation equipment sector (see IP/12/308), with a deadline set for 9 August 2012.