Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC to scrutinize proposed Orange S.A. acquisition of Jazztel, (Dec 4, 2014)
Organizations Mentioned:Jazztel p.l.c. | Orange S.A.
By Edward L. Puzzo, J.D.
The European Commission has opened an in depth investigation into whether the proposed acquisition of telecommunications company Jazztel by its competitor Orange S.A. of France complies with the EU Merger Regulation, the Commission announced today.
French company Orange S.A.’s subsidiary, Orange Espagne S.A.U., operates mobile and fixed telecommunications networks in Spain. Jazztel p.l.c., registered in the United Kingdom but primarily active in Spain, through its subsidiary Jazz Telecom S.A.U., provides telecommunication services at both the retail and wholesale level in Spain.
The Commission expressed concern that proposed acquisition of Jazztel by Orange may reduce competition in the retail market for fixed Internet access, where Orange and Jazztel currently compete. Both companies are important competitive forces with a stronger influence on the competitive dynamics in these markets than suggested by their market shares, the Commission stated. The Commission has concerns that the transaction would change the merged entity's incentive to exert significant competitive pressure on the remaining two nationwide providers of fixed telecommunications services in Spain, Telefónica and Vodafone.
The Commission noted that fixed-mobile “triple-play” offers (fixed voice, fixed Internet and mobile telecommunications services) became the most popular telecommunications product in Spain in 2013 and were expected to continue significant growth. Only integrated providers with fixed and mobile networks would be able to compete in this market, and the Commission is concerned that the loss of Jazztel as an important competitive force could lead to price increases for fixed Internet access services and fixed-mobile multiple play offers for Spanish customers.
Under the EU Merger Regulation, the Commission now has 90 working days, or April 24, 2015, to make a decision on the proposed merger.
Companies: Orange S.A.; Jazztel p.l.c.
News: AcquisitionsMergers Antitrust