Hutchison Whampoa’s acquisition of Irish mobile operator O2 Ireland could be more problematic than a similar deal it recently closed in Austria, according to competition experts. The Hong Kong conglomerate already owns Ireland’s fourth largest…
Hutchison Whampoa’s acquisition of Irish mobile operator O2 Ireland could be more problematic than a similar deal it recently closed in Austria, according to competition experts.
The Hong Kong conglomerate already owns Ireland’s fourth largest operator and, as in Austria, its plans will reduce the number of mobile players in the country from four to three.
However, the merged company will have a market share of 37.5% – putting it in second place behind Vodafone. In Austria, the combination of Hutchison’s assets with those of France Telecom gave the merged company 27% of the market.
Norton Rose Fulbright partner Michael Grenfell said the higher market share could make the Irish deal harder to clear than the Austrian one.
“What Austria has shown us is that four to three mergers are possible, so there’s no absolute red flag,” he said.
“But there’s likely to be a price to pay for them in terms of remedies.”
In Austria, the European Commission forced Hutchison to dispose spectrum and offer better terms to MVNOs – a price Grenfell pointed out it was willing to pay.
Grenfell also highlighted how Hutchison has already been around the block with the EC, and should have a sense of what the Commission is looking for.
Europe to kick off regulatory review
Because of the turnover of the parties, the regulatory process for the O2 deal will once again start off in Europe.
But once the EC is formally notified of the merger, Ireland’s competition authority will have three weeks to request to handle the case.
Austria’s antitrust regulator, the BWB, made such a request last year, but it was rejected by the EC, which took more than half a year to review the case.
Having already done a four-to-three mobile player analysis, it is possible the EC could hand over the responsibility to Ireland, although this is seen as unlikely in some circles.
Peter Alexiadis, a lawyer at Gibson, Dunn & Crutcher, agreed that Europe would likely be unwilling to pass the case to Ireland’s competition authority – should it request to do so.
He said: “Consistent with clear practice, the EC should hold on to this case. It has in every other mobile case.”
According to Alexiadis, the deal should also avoid the delays seen in Austria, which he put down to the posturing of the local regulatory authorities.
He expressed the view that, although a four-to-three merger in a smaller economy such as Ireland might be less problematic than in Austria, the issue of whether the deal creates a potential complex oligopoly will be something that will inevitably need to be examined, given that this issue was also raised some years ago in Ireland.
Irish remedies likely
Private advisory firm CompetitionRX was given the task of monitoring access-related remedies imposed by the EC on the Hutchison/Orange Austria deal.
For Ireland its remedies could once again include measures aimed at beefing up MVNOs – in effect creating a viable ‘fourth mobile player’.
They could also force Hutchison to honour existing network sharing agreements, ensuring a company is not frozen out following the merger. Hutchison has an infrastructure partnership with Vodafone, while O2 holds one with Eircom, Ireland’s incumbent telco.
Hutchison was unable to comment on the possible remedies, but said it expects to close its €850m deal for O2 Ireland in six to nine months.
The Hong Kong group is thought to be advised by JP Morgan, with O2 Ireland owner Telefonica bringing in BofA Merrill Lynch and Barclays for the deal.
