According to the Commission’s press release its decision to move to Phase II of the European merger process was based on concerns that the transaction may reduce competition in the markets for retail mobile telephony and for wholesale access and call origination in Ireland.
Currently there are 4 mobile network operators in Ireland – Vodafone, O2, Eircom (through its subsidiary Meteor) and Three. The merger will reduce the number of mobile network operators (“MNOs”) in the Irish market from 4 to 3, combining the n. 2 (O2) and n. 4 player (Three).
The Commission has voiced a concern that a reduction in number of players “would remove an important competitive force and change the merged entity’s incentive to exert significant competitive pressure on the remaining competitors”, Vodafone and Eircom. The Commission also expressed a concern that the transaction would reduce the merged entity’s incentive to continue an existing network sharing agreement in place between O2 and Eircom, which the Commission believes could hamper Eircom’s ability to compete effectively post-merger.
The Commission has also expressed a concern about the reduction in mobile networks available and willing to offer wholesale access to third parties and host mobile virtual network operators (MVNOs), and the effect this might have on individual MVNOs’ choice of network and negotiating power to gain access to that network.
The opening of a Phase II investigation automatically extended the Commission’s review period by 90 working days, ie until 21 March 2014. On 11 November the Commission granted a 20 working day extension to the timetable. Absent further extensions, the Commission’s decision is expected on or before 24 April 2014.