EN This text is made available for information purposes only. A summary of this decision is published in all EU languages in the Official Journal of the European Union. Case No COMP/M.6314 – Telefónica UK/ Vodafone UK/ Everything Everywhere/ JV Only the EN text is authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 8 (1) Date: 4/09/2012 EUROPEAN COMMISSION Brussels, 4.9.2012 C(2012) 6063 final PUBLIC VERSION COMMISSION DECISION of 4.9.2012 addressed to: - Telefónica UK - Vodafone Group - Everything Everywhere declaring a concentration to be compatible with the internal market and the functioning of the EEA Agreement (Case No COMP/M.6314 – Telefónica UK / Vodafone UK / Everything Everywhere / JV) (Only the EN version is authentic) TABLE OF CONTENTS COMMISSION DECISION addressed to: - Telefónica UK - Vodafone Group - Everything Everywhere declaring a concentration to be compatible with the internal market and the functioning of the EEA Agreement (Case No COMP/M.6314 – Telefónica UK / Vodafone UK / Everything Everywhere / JV) ............................................................................................ 7 1. NOTIFICATION.......................................................................................................... 7 2. THE NOTIFYING PARTIES ...................................................................................... 8 3. THE OPERATION AND THE CONCENTRATION ............................................... 10 4. UNION DIMENSION ............................................................................................... 11 5. PROCEDURE ............................................................................................................ 11 6. INVESTIGATION OF THE OPERATION .............................................................. 11 7. BACKGROUND INFORMATION........................................................................... 13 7.1. Introduction to mCommerce ...................................................................................... 13 7.1.1. The rise of smartphones and tablets ........................................................................... 13 7.1.2. Retail mobile telephony in the United Kingdom ....................................................... 17 7.1.3. Mobile Transactions................................................................................................... 18 7.1.3.1. Online payments......................................................................................................... 19 7.1.3.2. NFC technology ......................................................................................................... 21 7.1.4. Other mPayments initiatives across the world ........................................................... 25 7.2. Mobile Advertising .................................................................................................... 27 8. THE RELEVANT MARKETS.................................................................................. 29 8.1. Relevant Product Markets .......................................................................................... 30 8.1.1. Market for wholesale supply of mobile wallet platforms .......................................... 30 8.1.1.1. The View of the Notifying Parties ............................................................................. 30 8.1.1.2. The Commission's assessment ................................................................................... 30 8.1.2. Market for secure storage........................................................................................... 33 8.1.2.1. The View of the Notifying Parties ............................................................................. 33 8.1.2.2. The Commission's assessment ................................................................................... 33 8.1.3. Market for retail distribution of mobile wallets services to customers ...................... 36 8.1.3.1. The View of the Notifying Parties ............................................................................. 36 8.1.3.2. The Commission's assessment ................................................................................... 37 EN 2 EN 8.1.4. Market for advertising services .................................................................................. 41 8.1.4.1. Market for mobile advertising intermediation services ............................................. 42 8.1.5. Market for retail and wholesale bulk SMS services................................................... 51 8.1.5.1. The view of the Notifying Parties .............................................................................. 51 8.1.5.2. The Commission's assessment ................................................................................... 51 8.1.6. Market for data analytics services.............................................................................. 52 8.1.6.1. The view of the Notifying Parties .............................................................................. 53 8.1.6.2. The Commission's assessment ................................................................................... 53 8.1.7. Market for retail mobile telephony services............................................................... 55 8.2. The Relevant Geographic Markets............................................................................. 55 8.2.1. Market for wholesale supply of mobile wallet platforms .......................................... 56 8.2.1.1. The view of the Notifying Parties .............................................................................. 56 8.2.1.2. The Commission's assessment ................................................................................... 56 8.2.2. Market for secure storage........................................................................................... 57 8.2.2.1. The view of the Notifying Parties .............................................................................. 57 8.2.2.2. The Commission's assessment ................................................................................... 57 8.2.3. Market for retail distribution of mobile wallet services to customers ....................... 57 8.2.3.1. The view of Notifying Parties .................................................................................... 57 8.2.3.2. The Commission's assessment ................................................................................... 58 8.2.4. Market for advertising services .................................................................................. 59 8.2.4.1. The view of the Notifying Parties .............................................................................. 59 8.2.4.2. The Commission's assessment ................................................................................... 59 8.2.5. Market for retail and wholesale bulk SMS services................................................... 60 8.2.5.1. The view of the Notifying Parties .............................................................................. 60 8.2.5.2. The Commission's assessment ................................................................................... 60 8.2.6. Market for data analytics services.............................................................................. 61 8.2.6.1. The view of the Notifying Parties .............................................................................. 61 8.2.6.2. The Commission's assessment ................................................................................... 61 8.2.7. Market for retail mobile telephony services............................................................... 62 9. COMPETITIVE ASSESSMENT............................................................................... 62 9.1. Introduction ................................................................................................................ 62 EN 3 EN 9.2. Non-horizontal effects – vertical effects .................................................................... 63 9.2.1. Mobile Wallet Services .............................................................................................. 63 9.2.1.1. Preliminary remarks ................................................................................................... 63 9.2.1.2. Assessment of technical foreclosure .......................................................................... 64 9.2.1.3. Assessment of commercial foreclosure...................................................................... 92 9.2.2. Bulk SMS services ................................................................................................... 120 9.2.2.1. The view of the Notifying Parties ............................................................................ 121 9.2.2.2. The Commission's assessment ................................................................................. 122 9.3. Non-horizontal effects – conglomerate effects ........................................................ 124 9.4. Horizontal effects ..................................................................................................... 125 9.4.1. Introduction .............................................................................................................. 125 9.4.2. The framework for the Commission's assessment ................................................... 125 9.4.3. Wholesale supply of mobile wallet platform services and secure storage............... 126 9.4.4. Data analytics