Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC approves joint venture between mobile network operators Hutchison and VimpelCom, (Sep 1, 2016)

By Michael Menzhuber, J.D., LL.M.

The European Commission (EC) has approved under the European Union (EU) merger regulation a proposed telecommunications joint venture that would combine VimpelCom Ltd.’s subsidiary WIND with CK Hutchison Holdings Ltd.’s subsidiary H3G, the agency announced today.

The Italian mobile market is currently competitive with four mobile network operators (H3G, WIND, TIM, and Vodafone) and a limited number of mobile "virtual" operators. WIND and H3G are the third and fourth largest operators in the Italian retail mobile market and the EC had concerns that the transaction, as notified, would have reduced competition in the market and hampered the ability of mobile virtual operators to compete.

To remedy the EC’s competition concerns, the parties offered to divest sufficient assets to allow a new entrant to enter the Italian market as a fourth mobile network operator. The parties have proposed, and the EC has approved, the French telecommunications operator Iliad SA as a purchaser for these assets.

These remedies proposed by the parties include: (1) divesture of a certain amount of the joint venture’s mobile radio spectrum from different frequency bands; (2) sharing of several thousand mobile base station sites; and (3) a transitional agreement for access to 2G, 3G, and 4G, and new technologies. The EC determined that these remedies addressed its competition concerns because they would ensure a new entrant to the Italian mobile market, thereby preserving effective competition, maintaining incentives to invest in innovative technologies, and enabling consumers to continue to benefit from effective competition.

In a statement from Commissioner Margrethe Vestager, in charge of competition policy, "… today’s decision reflects our consistent policy to ensure that telecoms mergers do not reduce effective competition at the cost of consumers."

Companies: CK Hutchison Holdings Ltd.; Iliad SA; VimpelCom Ltd.

News: AcquisitionsMergers Antitrust