Following our recent post on the failed merger between Telenor and TeliaSonera, new details have emerged which provide a better insight on the European Commission’s concerns and why it was on course to prohibit the deal.
It is understood that, although the transaction was billed as a “four to three” merger between MNOs in Denmark, it would in practice have reduced the number of MNOs providing wholesale access to mobile virtual network operators (MVNO) from three to two. Although TDC and Hutchison are active in the Danish market, it seems the Commission considered that Hutchison is not an effective competitor in the wholesale market.
When details of Telenor and TeliaSonera’s abandoned merger first became public, it was seen as indicating a change in the Commission’s thinking on “four to three” mergers in the MNO sphere, which have previously been given the green light (although typically with conditions attached). However, with the new details emerging which suggest the deal was in fact a “three to two” in the wholesale market, the outcome is perhaps less surprising, as “three to two” mergers have historically always faced tough scrutiny and struggled to gain approval from competition authorities.
While there is limited information in the public domain, this clarification is likely to be welcomed by Three and Telefonica UK, who are currently seeking approval from the Commission for their “four to three” merger.