Merging companies complement each other, unlike proposed Sunrise/Orange merger of 2010, Comco declares

The Swiss competition commission on Thursday announced that it has approved the merger between Sunrise and UPC.

The commission said it had analysed the deal and concluded that it would not create a player with dominant position in any area of the market, nor strengthen any existing dominant position.

Further, the body also said it looked in detail at the possibility of joint dominance between the newly merged company and Swisscom, but is satisfied that this would not be the case. Neither is it concerned about the possibility of collusion between the new company and Swisscom as the firms are positioned differently.

"As a result, Comco expects competition to be stimulated by the merger," it said.

Sunrise agreed to pay a hefty 6.3 billion Swiss francs (€5.8 billion) for cable operator UPC in February, a deal that once completed will make it Switzerland’s second-largest telco, offering fixed and mobile services, broadband Internet and digital TV.

"Unlike the Sunrise/Orange merger – which was blocked by Comco in April 2010 – the parties to the merger complement each other in many areas," the commission noted.

Securing competition authority approval is an important step for Sunrise, but the telco still faces considerable opposition from its own shareholders.

When the deal was first announced Sunrise’s major shareholder Freenet said it would not participate in the rights issue the telco plans to conduct to fund the takeover and the pair have since traded barbs about the value, and terms and conditions of the deal.

Freenet holds just under 25% of Sunrise and is therefore unable to block the deal without the support of other shareholders. Recent press reports have suggested that a number of the telco’s other investors are in favour of the transaction, but we won’t know for sure how much support it has until after next month’s shareholder meeting.