TeliaSonera (OMX:TLSN) and Telenor (OSL:TEL) have scrapped plans for a Danish joint venture after failing to agree antitrust remedies with the European Commission.
TeliaSonera (OMX:TLSN) and Telenor (OSL:TEL) have scrapped plans for a Danish joint venture after failing to agree antitrust remedies with the European Commission.
In a statement the companies said: “The merger discussions have now reached a point where it is no longer possible to gain approval for the proposed transaction.”
The transaction was the first to be reviewed by new competition commissioner Margrethe Vestager, with the decision a significant departure from the more liberal approach taken by her predecessor Joaquín Almunia.
The former commissioner had established a framework for four-to-three mobile consolidation, focused on MVNO remedies, paving the way for successful deals in Austria, Ireland and Germany. The EC must next review similar transactions in the UK and Italy, both led by Hong Kong’s Hutchison Whampoa, which opposed the proposed Danish combination.
Vestager was quoted by Reuters as saying no conclusions should be drawn on the outcomes of those mergers based on the collapse of the Denmark deal.
“Every case has to be assessed on its own facts and merits,” Vestager said in statement.
“In this specific case, based on the Commission’s in-depth analysis and evidence gathered, we are convinced that the significant competition concerns required an equally significant remedy. This means the creation of a fourth mobile network operator.”
In their final (4 September) remedy proposal, seen by TelecomFinance, TeliaSonera and Telenor proposed to sell a minority stake in their network infrastructure unit to create a beefed-up MVNO.
“What the parties offered was not sufficient to avoid harm to competition in Danish mobile markets,” Vestager said.
“I believe that ensuring that markets are competitive is key both to spur much needed innovation and investment in European telecoms markets, as well as to offer affordable prices to consumers.”
TeliaSonera and Telenor contended that their Danish subsidiaries needed to merge in order to increase network investment. They announced the merger last December, prompting little to no concern that the tie-up would be blocked.
Robert Andersson, TeliaSonera’s head of Europe, said: “Since the beginning, we have been strong advocates for the need to increase investment levels in Denmark.
“In our view, creating a market player with the scale and ability to compete and invest would ensure that customers and businesses would benefit from better quality, speed and coverage.”
Following the EC’s decision TeliaSonera and Telenor have said they will continue to assess strategic options in the Danish market.
Vestager has repeatedly said she is not convinced by the case that a reduction in the number of market players leads to greater investment, suggesting that in fact the opposite is true. Operators, for their part, argue that fierce competition hurts their bottom line and prevents them from investing.
