The European Commission on Wednesday opened an in-depth investigation into the planned merger between Telenor and TeliaSonera in Denmark, expressing concerns that the deal could have a negative impact on competition.
TeliaSonera and Telenor agreed to merge their Danish operations late last year, a move that would leave three mobile network operators in the market. The merged entity would have a market share of around 40%.
The two remaining players – incumbent TDC and the market’s smallest player 3 – might struggle to compete effectively with the merged outfit, the Commission said.
"This could lead to higher prices and less innovation," it warned.
The Commission also pointed out that both Telenor and TeliaSonera offer fixed broadband and TV services, as well as having mobile offers under multiple brands. On the mobile side, the telcos already have a wide-ranging network-sharing deal in place.
"My aim is to make sure that the proposed transaction will not lead to higher prices to Danish consumers and businesses," said European competition commissioner Margrethe Vestager.
The Commission has 90 days to carry out the probe. It is due to make a decision by 19 August.
If other similar cases are anything to go by, the Commission will likely approve the merger provided the telcos agree to certain remedies designed to safeguard competition, such as the divestment of spectrum – Berenberg analysts suggest 3 could be the main beneficiary from such a requirement – or the establishment of favourable conditions to enable newcomers into the market.
Indeed, the Commission noted that the consolidation of network operators also reduces the choice of host network for wholesale customers.
"Finally, the merger would result in a highly concentrated market structure with two large and symmetric operators at the retail and wholesale level," it said. "The Commission has concerns that this could lead to coordination between the remaining operators."
