The recent validation on September 1st by the European Commission of the merger mobile deal proposed between the second and third Italian mobile operators (Wind and 3), albeit imposing a series of remedies on involved operators stands out as a strange exception to the general rule of unconditional niets recently expressed on merger deals in the telecoms industry.

The EU Antitrust imposed operating remedies to merging companies in light of ensuring the new entry into the market of newcomer Iliad as new fourth mobile operator, with particular emphasis on infrastructure and scarce resource dismissal. Competitive level playing field appears to imply also access to distribution markets by the newcomer and use or co-sharing of commercially strategic and viable frequencies (possibly 800 Mhz, where Wind holds two 5-Mhz blocks or 2600 Mhz, where 3 is entitled to 2 blocks previously allocated) for convergent services.

On the contrary of its partner 3, Wind is the third largest fixed line-convergent operator, and clearance of the operation by the EU Commission has involved a series of side-impact evaluations also on MVNO’s access (oligopoly-risk was behind the corner), consumer choice and quadruple play offering. The Italian market in the mobile segment is still much household-centric and the value proposition and success of a possible new entrant (Iliad still needs to file for authorizations, frequencies, facility site sharing, etc.) depends much on a realistic success in ensuring quadruple play offering, digital convergence, e-wallet and mobile payments perspectives (where data transfer deals or big data access correspond to a company asset) and access to the distribution chain (as the recent failure of low cost virtual operator Bip clearly testifies).

The clearance by the EU Antitrust follows a series of negative assessments done by the same Commission recently with regards to other possible mobile deals in Europe (last of which the O2/Three UK deal sacked in May following also a negative opinion by the UK Trade Commission and the Telenor/Telisonera deal previously proposed in Denmark), where positive details of the proposed operations such as cost reductions or future infrastructure investments were easily trumped by detrimental effects on reduced consumer choice or shimmering of prices. In this respect the Italian clearance appears to stand out of a lengthy negative trackrecord (3 Group Europe has been proposing failed deals also in Austria and Ireland), and albeit mobile competing operators such as TIM and Vodafone appear not to be displeased by the deal (Metternich?) certainly all remedy obligations will not pass unscrutinized.

In fact the EU framework for merger control allows the EU Commission to assess the impact of mergers and acquisitions also on innovation and consumer choice and behavior, which has appeared a clear instance of the Commission in validating merger ventures. The EU framework puts the competitive harm caused by reduction of innovation on an equal footing with increased prices and reduced output, and the concern expressed by the Commission on the proposed Wind-3 deal in Italy was that the strong collective position in the retail mobile telephony market could hinder effective potential entrants in the wholesale mobile market.