The European Commission has unconditionally approved, on the basis of the EU Merger Regulation, the proposed creation of a joint venture between Vodafone, Telefónica and Everything Everywhere in the field of mobile commerce in the UK.
“Mobile commerce is a nascent sector that may radically change the consumer buying experience in the next few years. The proposed joint venture is one of several initiatives to develop the sector in Europe. The Commission is keen on promoting innovation in this area and ensuring that the markets remain open so that a number of competing solutions can emerge without undue obstacles, to the benefit of consumers.” said Joaquín Almunia, Commission Vice President in charge of Competition policy.
The Commission’s preliminary investigation had indicated potential competition concerns in the nascent markets of mobile payment applications supply (so-called “mobile wallets”), mobile advertising and related data analytics services. On this basis, the Commission opened an in-depth inquiry on 13 April 2012 (IP/12/367).
As a result of its in-depth investigation, the Commission concluded that the joint venture will not likely lead to a significant impediment to effective competition in the EEA within the meaning of the Merger Regulation.
The transaction was notified to the Commission on 06/03/2012.
The market investigation revealed that a number of alternatives already exist and much more are very likely to emerge in the near future to ensure adequate competitive pressure on the joint venture’s mobile wallet platform. Some of these alternatives may rely on a secure access to the SIM card of the mobile handsets in order to store sensitive data like bank account numbers, etc. This access will be controlled by the mobile network operators, including in particular the three parents of the joint venture. However, other alternatives exist which do not store sensitive data on SIM-cards and it is unlikely that the creation of the joint venture will allow the parent mobile network operators to block these alternative routes to market using technical or commercial means.
As regards the joint venture’s advertising and data analytics activities, the market investigation revealed that there will be various other players who have access to a comparable set of data and who will offer services in competition with the joint venture.
Telefónica UK, Vodafone UK, and Everything Everywhere – a joint venture created by the merger of T-Mobile UK and Orange UK that was cleared by the Commission in March 2010 – are three of the four mobile network operators in the UK.
The newly created joint venture would provide various mobile commerce services to businesses, including mobile payment transaction services, mobile marketing services, and associated data analytics services.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
There are currently five other phase II investigations. The first one concerns the planned acquisition of EMI’s recorded music business by Universal (see IP/12/311), with a deadline set for 27 September 2012. The second phase II investigation relates to the proposed acquisition of Inoxum, the stainless steel division of ThyssenKrupp of Germany, by the Finnish stainless steel company Outokumpu (see IP/12/495), with a deadline until 24 October 2012. The third ongoing phase II investigation was opened in June 2012 into the proposed acquisition of Orange Austria by Hutchinson (see IP/12/726). The deadline for this investigation is 30 November 2012. The fourth one concerns the planned acquisition of TNT Express by UPS (see IP/12/816), with a deadline until 20 December 2012. Finally, the fifth phase II investigation relates to the proposed acquisition of Aer Lingus, an Irish-based airline, by Ryanair (see IP/12/921), with a deadline until 16 January 2013.