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EU: Vestager cautions about telecom mergers

 |  October 4, 2015

European Union antitrust chief Margrethe Vestager fired a warning shot at telecom executives Friday, saying mobile- phone mergers in the region could lead to higher prices without boosting investment in networks.

The comments, made at a conference of antitrust experts in New York, are the strongest indication yet that Ms. Vestager would impose tougher conditions than her predecessor on future deals in the region’s rapidly consolidating telecommunications industry. Several mergers are in the works, notably planned deals in Italy and the UK.

“Research seems to suggest that a reduction of the number of players from four-to-three in a national mobile market in the EU can lead to higher prices for consumers…but not that it leads to more investment per subscriber,” Ms. Vestager said, according to a copy of her speech.

Europe’s telecom operators have argued for years that they need to merge with rivals in the same country in order to increase investment in networks and share costs. Some recent deals would reduce the number of mobile-telecom operators in particular countries to three from four.

The commissioner said she didn’t question her predecessor’s decision to approve the earlier mergers, but added it was “probably too early” to judge whether the conditions he imposed on the companies had successfully protected consumers. The concessions in those cases focused on the creation of so-called mobile virtual network operators, which don’t own networks of their own but piggy-back off others’.

Ms. Vestager said she favors so-called structural remedies, such as the sale of assets or rights, over other types of concession, which could include agreements to access infrastructure or to license rights.

“What I can say is this: The more structural the remedy, the better,” Ms. Vestager said. Other types of concessions, she said, “generally present more risks…can be particularly difficult to monitor [and] are also in place only for a defined period of time.”

Full content: The Wall Street Journal

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