Ex-post analysis of two mobile telecom mergers: T-Mobile/tele.ring in Austria and T-Mobile/Orange in the Netherlands Competition EUROPEAN COMMISSION Directorate-General for Competition CET E-mail: [email protected] European Commission B-1049 Brussels Ex-post analysis of two mobile telecom mergers: T-Mobile/tele.ring in Austria and T-Mobile/Orange in the Netherlands Luca Aguzzoni1, Benno Buehler1, Luca Di Martile1, Georg Ecker2, Ron Kemp3, Anton Schwarz2, Robert Stil3 1 European Commission, DG Competition. 2 Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR). 3 Netherlands Authority for Consumers and Markets (ACM). Europe Direct is a service to help you find answers to your questions about the European Union. Freephone number (*): 00 800 6 7 8 9 10 11 (*) The information given is free, as are most calls (though some operators, phone boxes or hotels may charge you). LEGAL NOTICE This document has been prepared for the European Commission, the Netherlands Authority for Consumers and Markets (ACM) and the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR) but reflects the views only of the authors, and the Commission, ACM and RTR cannot be held responsible for any use which may be made of the information contained therein. More information on the European Union is available on the Internet (http://www.europa.eu). Luxembourg: Publications Office of the European Union, 2015 ISBN 978-92-79-52739-5 Doi: 10.2763/464634 © European Union, 2015 Reproduction is authorised provided the source is acknowledged. Acknowledgements We are very grateful for the feedback received from Eugenio Miravete and Matthew Weinberg on an interim version of this study and for their continuous support in improving this study thereafter. We thank Gabor Koltay for important contributions to the project and Francesco Decarolis for several very helpful discussions and comments. Otto Toivanen, Tommaso Valletti, Frank Verboven and Christine Zulehner also provided valuable comments and suggestions. We are also grateful for the support and suggestions provided by many colleagues from the Austrian Regulatory Authority for Broadcasting and Telecommunications, the Netherlands Authority for Consumers and Markets, and DG COMP. 5 Ex-post analysis of two mobile telecom mergers: T-Mobile/tele.ring and T-Mobile/Orange Contents EXECUTIVE SUMMARY ...................................................................................... 8 1 INTRODUCTION ....................................................................................... 15 2 THE EFFECTS OF MERGERS ....................................................................... 17 3 DATA ..................................................................................................... 18 3.1 Tariff data ...................................................................................... 20 3.1.1 Tariff data sources ......................................................................................................................................... 20 3.1.2 Tariff data issues ............................................................................................................................................ 21 3.2 Usage data and definition of price baskets .......................................... 22 3.3 Calculation of price indexes ............................................................... 23 3.4 Other data ...................................................................................... 25 4 ECONOMETRIC APPROACH ........................................................................ 26 4.1 Difference-in-differences methodology ............................................... 27 4.2 The synthetic control group approach ................................................. 31 5 ANALYSIS OF THE MERGER T-MOBILE/TELE.RING IN AUSTRIA ...................... 33 5.1 The T-Mobile/tele.ring merger proceeding ........................................... 33 Commitments ........................................................................................................................................................................... 35 5.2 The Austrian mobile telecom market .................................................. 35 5.2.1 Evolution of retail market shares ......................................................................................................... 35 5.2.2 Retail prices within Austria........................................................................................................................ 37 5.2.3 Retail prices compared to control countries ................................................................................... 41 5.3 Econometric analysis ........................................................................ 44 5.3.1 Difference-in-differences approach: Base specification ........................................................ 45 5.3.2 Difference-in-differences approach: Trend specification ...................................................... 48 5.3.3 Synthetic control approach ....................................................................................................................... 50 5.4 Conclusions on the T-Mobile/tele.ring merger ...................................... 54 6 ANALYSIS OF THE T-MOBILE/ORANGE MERGER (NETHERLANDS) .................. 56 6.1 The T-Mobile/Orange merger proceeding ............................................ 56 6.2 The Dutch mobile telecom market ..................................................... 57 6.2.1 Evolution of retail market shares ......................................................................................................... 57 6.2.2 The MVNO segment ....................................................................................................................................... 59 6.2.3 Retail prices within the Netherlands ................................................................................................... 61 6.2.4 Retail prices compared to the control countries .......................................................................... 63 6.3 Econometric analysis ........................................................................ 65 6.3.1 Specificities of the econometric analysis ........................................................................................ 65 6.3.2 Difference-in-differences approach: Base specification ........................................................ 67 6.3.3 Difference-in-differences approach: Trend specification ...................................................... 70 6.3.4 Synthetic control approach ....................................................................................................................... 72 6.4 Conclusions on the T-Mobile/Orange merger ....................................... 76 7 CONCLUSIONS ........................................................................................ 78 REFERENCES ................................................................................................. 82 6 ANNEX A AUSTRIA ........................................................................................... 85 A.1 Comparison between Teligen and AK Vienna data ............................................. 85 A.2 Descriptive Statistics ............................................................................. 87 A.3 DiD robustness checks ........................................................................... 88 A.4 Synthetic control group .......................................................................... 91 A.5 MNO-specific analysis ............................................................................ 94 ANNEX B THE NETHERLANDS ............................................................................... 99 B.1 Comparison between Teligen and Telecompaper data ........................................ 99 B.2 Descriptive Statistics ........................................................................... 102 B.3 Exclusion of Q2/2007 from the analysis...................................................... 102 B.4 DiD robustness checks ......................................................................... 104 B.5 Synthetic control group approach ............................................................. 108 B.6 MNO-specific analysis .......................................................................... 111 ANNEX C - FURTHER DESCRIPTION OF MINOR DATA ISSUES ........................................... 115 7 Ex-post analysis of two mobile telecom mergers: T-Mobile/tele.ring and T-Mobile/Orange Executive Summary Introduction Recently increased attention is being paid to ex-post evaluation of competition policy enforcement decisions, and in particular merger decisions. In the United States there is already an established and voluminous body of studies that covers several industries and several types of decisions. In Europe, too, in the last decade a limited, but growing, number of ex-post assessments have contributed to our understanding of the effects of consummated mergers. These studies have traditionally been the outcome of academic research, but more recently are becoming part of the agenda of competition authorities. This report is the outcome of a joint project of the European Commission (DG Competition), the Netherlands Authority for Consumers and Markets (ACM) and the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR). The primary aim of the study is twofold: to identify methodological