The European Commission has informed Orange and MasMovil of its preliminary view that their proposed joint venture may reduce competition in the retail supply of mobile and fixed internet services as well as of multiple-play bundles in Spain.
Orange and MasMovil are the second and fourth largest providers of retail mobile and fixed internet services in Spain. There are in total four mobile network operators active in Spain (i.e. Telefónica, Vodafone, Orange, and MasMovil). There are also several mobile and fixed virtual network operators which use network operators' infrastructure to offer mobile and fixed telecoms services to consumers.
The Statement of Objections
On 3 April 2023, the Commission opened an in-depth investigation to assess if the proposed transaction may restrict competition in the Spanish markets for the retail supply of: (i) mobile telecommunications services; (ii) fixed internet access services; and (iii) multiple-play bundles, including fixed mobile convergent ones.
The Commission has conducted a wide-ranging investigation to understand the affected markets and the potential impact of the transaction. This investigation included, among others, analysing internal documents provided by the parties and gathering views from competitors, suppliers, as well as customers.
As a result of this in-depth investigation, the Commission is concerned that the proposed transaction may reduce the number of network operators in Spain, thereby eliminating a significant competitive constraint and innovative rival in the Spanish retail markets for mobile telecommunications services, fixed internet services and multiple-play bundles (including fixed mobile convergent ones). The Commission is concerned that this may lead to significant price increases for affected retail customers across the Spanish market. Predicted anticompetitive effects are substantial even after taking potential cost savings into account, in a context where competition has been a driving force for investment and quality of services in the Spanish market.
Companies and products
Orange, headquartered in France, is a global telecommunications operator active in the Spanish telecommunications market through its subsidiary OSP. OSP provides mobile and fixed telecommunication services to residential customers, business customers and wholesale customers in Spain. It operates under three brands: Orange, Jazztel, and Simyo.
Lorca, headquartered in the United Kingdom, is a holding company controlling MasMovil. MasMovil provides fixed and mobile telecommunications services mainly to residential customers in Spain. It operates under a wide variety of brands, such as Yoigo, MásMóvil, and Virgin, as well as digital-focused brand Pepephone, regional brands Euskaltel, R., Guuk, Embou and Telecable and international customers brands Llamaya, Lebara, Lycamobile.
Background
A Statement of Objections is a formal step in an investigation, where the Commission informs the companies concerned in writing of the objections raised against them. The sending of a Statement of Objections does not prejudge the outcome of the investigation. Orange and MasMovil now have the opportunity to reply to the Commission's Statement of Objections, to consult the Commission's case file and to request an oral hearing.
The transaction was notified to the Commission on 13 February 2023. The Commission opened an in-depth investigation on 3 April 2023 and now has until 4 September 2023 to take a final decision.
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 European Economic Area 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 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 currently three on-going Phase II merger investigations: (i) the proposed acquisition of eTraveli by Booking; (ii) the proposed acquisition of VMware by Broadcom; and (iii) the proposed acquisition of Asiana by Korean Air.
