The European Commission has opened an in-depth investigation under the EU Merger Regulation to assess whether the proposed acquisition of BASE Company NV by Liberty Global would harm effective competition.
On the basis of its initial investigation, the Commission has concerns that the transaction could lead to higher prices, less choice and less innovative services for customers in the Belgian telecommunications market. The Commission now has 90 working days, until 18 February 2016, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Commissioner Margrethe Vestager, in charge of competition policy, commented: "Consumers increasingly depend on reliable and competitive telecoms services to keep in touch and to access information. We want to make sure that consumers in Belgium do not suffer higher prices and less choice as a result of this proposed takeover".
The transaction would combine BASE, Belgium's third largest mobile network operator by revenue and second largest by number of subscribers, with Telenet, Liberty Global's subsidiary and the largest mobile virtual network operator in Belgium. Telenet does not have its own mobile network and currently uses the Mobistar network to offer mobile services to its customers. It would also combine a strong fixed line telecommunications company (Telenet) with a mobile network operator (BASE).
The Commission’s initial market investigation presented two main concerns:
- First, the transaction may reduce competition in the retail mobile telephony market in Belgium, where Telenet and BASE currently compete against each other. The Commission has concerns that the transaction would remove an important competitive force and that the merged entity would have limited incentives to exercise significant competitive pressure on the two main remaining competitors in the retail mobile market (Proximus and Mobistar).
- Moreover, the Commission has concerns that the transaction would significantly reduce the incentives for BASE to offer virtual operators access to its mobile network. This would probably lead to worse conditions for mobile virtual network operators needing access to mobile networks and therefore to less competition in the retail mobile telephony market.
The Commission will also investigate whether the transaction would increase Telenet's ability to sell its fixed line services to BASE's mobile customers (notably by bundling them together) and whether this would increase the merged entity's market power and allow it to exclude competitors.
The Commission will now investigate the transaction in-depth in order to determine whether its competition concerns are confirmed.
The transaction was notified to the Commission on 17 August 2015.
Companies and products
BASE, a subsidiary of the Dutch telecoms group KPN, is one of Belgium’s three mobile network operators, together with Proximus and Mobistar. It offers retail mobile telecommunications services to consumers and businesses in Belgium.
Liberty Global controls the cable operator Telenet that offers fixed telecommunications services (TV, fixed broadband and fixed line telephony) in Flanders and parts of Brussels. Telenet also offers mobile services as a virtual operator, using the network of Mobistar.
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 notified 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).
In addition to the current transaction, there are 5 other on-going phase II merger investigations.
- the proposed acquisition of UK beverage can manufacturer Rexam by the US-Ball Corporation, with a provisional decision deadline of 9 December 2015
- the proposed acquisition of the package delivery provider TNT Express by FedEx with a provisional decision deadline of 13 January 2016
- the proposed acquisition of parts of Walki's industrial packaging division by Mondi with a provisional decision deadline of 18 January 2016
- the proposed acquisition of office supplies distributor Office Depot by its competitor Staples, with a provisional decision deadline of 10 February 2016
- the proposed acquisition of the Greek gas transmission system operator DESFA by the Azeri state oil company SOCAR