Mobile Telecommunications Mergers in the EU – Remedies Revisited
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Concurrences REVUE DES DROITS DE LA CONCURRENCE | COMPETITION LAW REVIEW Mobile telecommunications mergers in the EU – Remedies revisited Article l Concurrences N° 1-2020 www.concurrences.com Bernd Langeheine [email protected] Senior Consultant Cleary Gottlieb Steen & Hamilton, Brussels Former Deputy Director-General for mergers European Commission, Brussels Beatriz Martos Stevenson [email protected] Associate Cleary Gottlieb Steen & Hamilton, Brussels Jan Przerwa [email protected] Associate Cleary Gottlieb Steen & Hamilton, Brussels Article Bernd Langeheine* [email protected] Senior Consultant Cleary Gottlieb Mobile Steen & Hamilton, Brussels Former Deputy Director-General for mergers European Commission, Brussels telecommuni- Beatriz Martos cations mergers Stevenson [email protected] Associate Cleary Gottlieb in the EU – Steen & Hamilton, Brussels Jan Przerwa Remedies [email protected] Associate Cleary Gottlieb Steen & Hamilton, Brussels revisited ABSTRACT The present article looks at key recent decisions on mobile mergers and examines the development of the Commission’s assessment of the respective remedies offered to overcome the competitive harm I. Introduction identified during the investigation. It describes the marked shift in the approach to remedies 1. In a much-noticed recent decision the EU Commission, for the first time which occurred since 2015 and analyses in eleven years,1 cleared unconditionally a four-to-three merger between two the considerations put forward by mobile operators when it authorised the acquisition of Tele2 by T-Mobile in the Commission in the assessment of remedies for mobile mergers. The article the Netherlands. This is in contrast to a number of previous decisions where sets out the circumstances in which access mobile mergers were either prohibited or only cleared with various, sometimes remedies can be successful and draws far-reaching remedies. a comparison to ex-ante telecom regulation. The article concludes with an outlook for future Commission decisions on mobile 2. The present article looks at key recent decisions on mobile mergers and examines Art. Intellectuelle). Personal use of this document is authorised within the limits Art. Intellectuelle and DRM protection. L. 335-2 Code de la Propriété L 122-5 Code de la Propriété mergers and highlights obstacles which the development of the Commission’s assessment of the respective remedies the parties must consider when planning offered to overcome the competitive harm identified during the investigation. a mobile merger in Europe. It then concludes with an outlook on possible future Commission decisions and Cet article s’intéresse aux importantes et highlights red flags that the parties must consider when planning a mobile merger récentes décisions sur des concentrations dans le secteur de la téléphonie mobile et in Europe. il examine le développement de l’évaluation rendue par la Commission sur les engagements proposés pour résoudre le préjudice concurrentiel identifié pendant l’enquête. Il décrit le changement considérable II. The European mobile dans l’approche des engagements qui est survenu à partir de 2015 et il analyse les réflexions proposées par la Commission industry dans l’application de remèdes pour les concentrations du secteur. L’article 3. Mobile communications are becoming increasingly important in Europe. énonce les circonstances où des remèdes With total revenues of €143 billion in 2017, mobile technologies and services en matière d’accès peuvent être une réussite et fait une comparaison avec une represented an important economic weight in the European economy; in 2017, réglementation ex-ante. Il se termine the European mobile industry generated 2.5 million jobs, it represented 3.3% of avec des prévisions de futures décisions European GDP, and had an economic value of €550 billion.2 de la Commission sur les concentrations de téléphonie mobile et il souligne les obstacles que les différentes parties devront considérer en planifiant de telles concentrations en Europe. 1 Interestingly, the previous unconditional clearance of a four-to-three merger in telecommunications also concerned the Dutch * The authors are thankful to Beatriz Aliende for market, see European Commission, dec. Art. 6(1) R. 139/2004 of 20.8.2007, T-Mobile/Orange NL, case COMP/M.4748. her research assistance. The views expressed are the authors’ own and they bear sole 2 See GSMA, The Mobile Economy Europe 2018 (2018), available at: https://www.gsmaintelligence.com/ responsibility for any error or omission. research/?file=884c77f3bc0a405b2d5fd356689be340&download, pp. 2 and 9. délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende (art. utilisation non autorisée constitue une contrefaçon, d'auteur par les conventions internationales intellectuelle du 1er juillet 1992. Toute du droit en vigueur et le Code de la propriété au titre Ce document est protégé by copyright laws and internationalNon-authorised use of this document pouvant accompagner ce document. This document is protected copyright treaties. personnelle est strictement autorisée dans les limites de l’article techniques de protection L. 122 5 CPI et des mesures L. 335-2 CPI). L’utilisation constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment € 300 000 fine ( Concurrences N° 1-2020 I Article I Bernd Langeheine et al. I Mobile telecommuni-cations mergers in the EU – Remedies revisited 1 4. By the end of 2017, 85% of the European population (that 8. Over the last ten years, the European mobile sector has is, 465 million people) had subscribed to mobile services, gone through a consolidation process whereby around 20 the highest regional rate of unique subscriber penetration mobile operators have either closed down or merged with just above North America.3 This higher penetration rate a rival. This process seems to be slowing down—whereas is in part due to the EU regulators’ decision to impose in previous years mobile mergers were cleared with a the GSM standard, which allowed a rapid spread of the variety of remedies, certain proposed mergers could industry throughout the continent in a very short period not take place due to a lack of the necessary regulatory of time, as opposed to US regulators, who left it to the approvals (see the mergers in the UK and in Denmark, market to determine the prevailing standard.4 described below). 5. At the EU level, fixed voice telephony is declining both 9. Although deployment of own networks still is in terms of volume and revenues, and is increasingly being an important competitive advantage in the market, replaced by voice over broadband services as well as by operators might seek to combine with rivals to expand mobile telephony.5 In 2018, in Europe there were 238 million their individual footprint, increase their subscriber fixed-telephone subscriptions (the number has been base and/or spectrum holdings, or achieve synergies. decreasing since 2009) as opposed to 815 million mobile- Furthermore, there have been combinations of fixed and telephone subscriptions (the number has been increasing mobile operators in Spain (Orange/Jazztel),10 the UK since 2005). Furthermore, in 2018, there were 212 million (BT/EE),11 and Germany (Vodafone/Liberty Global)12. fixed broadband subscriptions in Europe as opposed to Such fixed-mobile convergence (triple play or quadruple 636 million active mobile-broadband subscriptions (with play) can improve the revenue mix and reduce customer both numbers also increasing over the past ten years).6 churn.13 Spain is a good example of this trend, with almost 12 million fixed-mobile bundle subscriptions 6. The mobile sector is a high-investment industry: it by the end of 2017 according to the Spanish national is estimated that between 2010 and 2017, more than regulatory authority (NRA).14 Belgium and France have €193 billion was spent on capital expenditure. Most of seen similar developments. these projects were related to 4G upgrades to deliver faster connections, as well as to network densification. However, 10. The next step for converged players is to move into the focus will increasingly shift towards the investment content, and in particular adding pay TV to their bundles in fibre networks that will serve as the backhaul element has the potential of becoming another source of growth of future 5G architectures.7 As regards 5G roll-out, it is for operators. In addition, telecom operators may move clear that it will require far more spending than previous towards integrating horizontally into content production. mobile technologies, and the European Commission has estimated that the cost will amount to €500 billion if its 11. While the Commission as the EU’s competition 2025 connectivity targets are to be met.8 authority takes a benign approach towards cross-border mergers, MNOs in Europe appear more interested in 7. The EU telecommunications market counts around achieving within-country consolidation, as they see 40 mobile network operators (MNOs), and although the more scope for synergies and cost savings.15 However, Art. Intellectuelle). Personal use of this document is authorised within the limits Art. Intellectuelle and DRM protection. L. 335-2 Code de la Propriété L 122-5 Code de la Propriété biggest players are present in various countries, most of competition authorities seem to have paid more attention them only operate in one or two countries. In the US, to the potential effects of mergers on prices than to on the other hand, there are only four nationwide mobile efficiencies and investments. Indeed, operators need operators (AT&T, Verizon, Sprint and T-Mobile)9. continued investment in their networks in order to meet ever more ambitious customer demand. This will increase with the arrival of 5G technology while their revenues are declining due to price regulation and to increasing competition from online players (so-called OTTs) offering 3 Ibid., p. 3. similar services. Hence, synergies gained from mergers 4 M. Cave et al. (2019), The European Framework for Regulating Telecommunications: could be viewed as a way for MNOs to continue with the A 25-year Appraisal, Review of Industrial Organization 55(1), p.