H3G/Orange Austria – Mobile consolidation and regulatory reaction

In this moth’s Europe column, Antonio Bavasso and Dominic Long (Allen & Overy LLP) discuss the EU Commission’s landmark clearance of the Orange Austria acquisition by H3G. The much-awaited decision came down last week, reaffirming the EC’s traditional approach to merger control with a central focus on short to medium term price competition. This case marks the EC’s first use of GUPPI methodology in a Phase II assessment of unilateral effects .The EC ultimately cleared the transaction subject to a package of commitments (including divestment of mobile telecoms spectrum) agreed after lengthy discussions between the parties, the EC and the Austrian national telecoms regulator, the TKK. In so doing, the EC has sent a strong signal that it will not wave through future consolidations in this sector on the strength of investment-related efficiency arguments alone: in announcing the EC’s decision to clear the transaction, Vice President and Competition Commissioner Almunia cautioned “When consolidation takes place within the boundaries of an already concentrated national market, we should be careful about the potential harm to consumers…we do not have evidence that operators will invest more if they reach a bigger size, as long as markets will remain fragmented along national borders.” We shall be waiting for the EC’s published full decision to look for any hidden surprises.

Meanwhile, we hope you enjoy this month’s Europe column!

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H3G / Orange Austria – Mobile consolidation and Regulatory Reaction