On Tuesday, Orange S.A. of France received European Commission (EC) clearance to proceed with its planned acquisition of Spanish fixed line broadband and wireless service provider Jazztel after committing voluntarily to divest certain network assets in Spain. Announced in September, the US$3.87 billion transaction represents Orange’s largest corporate takeover in nearly a decade. The transaction would enable Orange to bundle fixed line services with its mobile offerings in direct competition with Telefonica and Vodafone, respectively, the first and second-ranked wireless operators in Spain. The deal would also reduce the number of wireless broadband competitors in Spain from four to three and would enable the merged entity to leapfrog Vodafone as the second-largest provider of wireless broadband services in Spain.
Citing competitive concerns and fears that the deal will lead to higher subscriber costs, the EC launched an in-depth investigation into the proposed transaction in December. To assuage EC concerns, the parties offered a package of proposed remedies that included the divestiture of one of Orange’s optical fiber networks in Spain and an agreement to allow the future purchaser of that network to access Jazztel’s national ADSL network for a period of eight years.
EC competition commissioner Margrethe Vestager confirmed to the press that the commitments were sufficient to terminate the EC investigation and thus induce the EC to approve the acquisition. Stressing that the EC’s goal “was to make sure that consumers in Spain would not suffer from higher prices for fixed Internet access service,” Vestager voiced confidence that, “with the remedies in this merger, a new player may enter the market and compete as strongly as Orange and Jazztel do today.”