Background
Proposed acquisition by the Swedish and Norwegian government of joint control of a newly created company, Newco, set up to hold the shares of Telia and Telenor. (Since this decision, the deal has fallen through).
Telia is the largest telecommunications operator in Sweden and is solely owned by the Swedish State. It is also the parent undertaking of the Telia Group. Telenor is the largest telecommunications operator in Norway and is wholly owned by the Norwegian State. Both companies provide within their respective countries the full range of telecommunications services as well as television services and also provide such services elsewhere in the Nordic area and internationally.
Assessment
Following a second stage investigation, the Commission concluded that the concentration, as originally notified, would have caused serious competition concerns by strengthening dominant positions in the following market : (i) the Swedish and Norwegian market for fixed switch telephony services, mobile telephony, business data communications, Internet access, BABX distribution and local telephone directories; (ii) the Irish mobile telephony market where they merged and this would have control over both of the only two operators active on the market; and (iii) a number of Scandinavian/Nordic television services markets. In the latter market, the Commission’s concerns arose from the vertical integration and households connected to the distribution systems of the merged entity. To address these competition concerns, the parties have committed to the divestment of all existing overlaps in the field of telecom services, i.e. the sale of Swedish businesses owned by Telenor and Norwegian owned by Telia. Also, either Telia or Telenor will sell the stake it holds in one of the two existing Irish mobile telephony operators, respectively. Thirdly, the parties undertook to divest their respective interest in cable TV networks in Sweden and Norway, so that the merged entity will not have a more extensive customer-base than Telenor had alone prior to the concentration. Finally, the parties are to implement a set of measures to introduce local loop unbundling (LLU) in both countries. This will open up access to final users of telecommunications services. The Swedish and Norwegian governments have provided support for the undertakings.
This decision is relevant in that it helps in clarifying the Commission approach to operation between incumbent operators in the EU. It is clear that the Commission wants to closely look at access to local telecommunications and cable TV network when assessing mergers or joint ventures between incumbent operators. It may be the case that the combination will also in future require cable TV network divestment and/or local loop unbundling in order to resolve competition concerns. This approach is in line with the Cable Review of 1998, which required legal separation between cable TV networks and telecommunication networks owned by the same incumbent operators.
The Commission has accepted that the notifying companies faced exceptional constraints in submitting the proposed commitments, also because their original operation had been approved by the Swedish and Norwegian Parliaments. Therefore, the Commission has agreed to take the commitment into account even though they were submitted one week after the legal deadline. In this regard, the Commission considered that the request for prolongation stated the additional commitment to be given and was submitted within the legal deadline. Also, it took account of the clear-cut character of the proposed undertakings. (Case n° COMP/M.1439, Decision of 13 October 1999).
