Mergers: Commission opens in-depth investigation into Hutchison's take-over of Orange Austria
European Commission - IP/12/726 29/06/2012
Brussels, 29 June 2012
The European Commission has opened an in-depth investigation under the EU Merger Regulation into the planned acquisition by Hutchison 3G Austria ("3") of its competitor Orange. Both companies provide mobile telephony services in Austria.
The Commission’s initial market investigation has found that the proposed acquisition may create significant competition problems by removing Orange as a competitor in the retail market for end consumers and on the wholesale market for network access and call origination.
"The merger will reduce the number of network operators from 4 to 3 in Austria. Therefore, the Commission must make sure that this concentration does not lead to higher prices for end consumers", commented the Commission's Vice-President Joaquín Almunia.
The Commission will now investigate the proposed acquisition in-depth to determine whether these initial concerns are confirmed or not. The decision to open an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has up to 90 working days to take a final decision on whether the concentration would significantly impede effective competition within the Common Market.
The transaction was notified to the Commission on 7 May 2012.
Hutchison 3G Austria and Orange are both mobile network operators and provide mobile telecommunication services to end consumers in Austria, as well as in related markets such as wholesale of network access and call origination. In Austria, only two further mobile network operators are present in these markets, namely A1 Telekom Austria and T-Mobile.
The H3G / Orange deal is closely interlinked to 2 further transactions. First, H3G will sell-on 700 000 customers currently served under the Yesss! brand to A1 Telekom Austria. This constitutes a separate transaction for merger control purposes that was notified to the Austrian competition authority (BWB). Second, A1 Telekom Austria will acquire from H3G certain assets currently owned by Orange, such as sites, spectrum frequencies and intellectual property rights. According to H3G/Orange the transfer of spectrum frequencies has to be approved by the Austrian Telecom Regulator (RTR/TKK).
The deals take place in the context of an upcoming spectrum auction and the roll-out of the new fourth-generation mobile communications protocol LTE.
On 29 May 2012 the BWB requested a referral of the H3G/Orange transaction from the Commission to the BWB.
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).
The Commission is currently conducting four other phase II merger investigations. The first one is about the proposed acquisition of Goodrich by United Technology in the aviation equipment sector (see IP/12/308), with a deadline for a final decision on 31 August. A second investigation concerns the proposed acquisition of the recorded music business of EMI by Universal Music Group (see IP/12/311). The deadline here is 6 September. The third ongoing phase II investigation examines the proposed creation of a joint venture in the UK between Vodafone, Telefónica and Everything Everywhere in the field of mobile commerce (see IP/12/367). The Commission has until 19 September to reach a final decision. The last phase II relates to the proposed acquisition of Inoxum, the stainless steel division of ThyssenKrupp of Germany by the Finnish stainless steel company Outokumpu (see IP/12/495), with a deadline until 26 September 2012.
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