Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC to investigate acquisition of BASE Belgium by Liberty Global, (Oct 5, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has opened an in-depth investigation under the European Union (EU) merger regulation to assess whether the proposed €1.3 billion acquisition of BASE Company NV by Liberty Global would harm effective competition, the EC announced today. The Commission was notified of the transaction on August 17, 2015.

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 cable operator Telenet, which 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.

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 had 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. Second, the EC had 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 EC stated.

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 will now investigate the transaction in-depth in order to determine whether its competition concerns are confirmed.

The EC will also investigate whether the transaction would increase Telenet's ability to sell its fixed line services to BASE's mobile customers by bundling them together and whether this would increase the merged entity's market power and allow it to exclude competitors. The Commission now has until February 18, 2016, to take a decision.

"Consumers increasingly depend on reliable and competitive telecoms services to keep in touch and to access information,” said Margrethe Vestager, EU Commissioner in charge of competition policy. “We want to make sure that consumers in Belgium do not suffer higher prices and less choice as a result of this proposed takeover."

Companies: BASE Company NV; Liberty Global plc

News: AcquisitionsMergers Antitrust