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European Commission expresses concern over impact on competition in Italian mobile market.
The European Commission has opened an in-depth investigation into the proposed merger between Wind and 3 Italia, amidst concerns the tie-up could lead to higher prices for consumers, it announced on Wednesday.
The Commission has 90 working days, until 10 August, to come to a decision in the case.
Hutchison Whampoa and Vimpelcom agreed to merge their Italian telecoms businesses – 3 Italia and Wind respectively – in August in a deal valued at €21.8 billion. They formally notified the European Commission of their plans early last month.
The merger would make little difference to the shape of the Italian fixed-line market, where Wind is the second-largest player behind Telecom Italia. But in the mobile space it would bring together the country’s third and fourth largest network operators, creating a single entity that, based on the most recent figures, would have a larger market share than Telecom Italia and current number two, Vodafone.
Wind and 3 Italia together claimed a market share of 33.7% at the end of last year, according to data from regulator Agcom, while Telecom Italia had 32.4% and Vodafone 26.4%.
"We need to make sure that the proposed transaction will not lead to higher prices or less choice in mobile services for Italian consumers," competition commissioner Margrethe Vestager said, in a statement.
Specifically, the Commission said it is concerned that the merged entity would have limited incentive to exert competitive pressure on its rivals in the retail mobile market, leading to higher prices and reduced investment in mobile networks.
It also highlighted the potential impact on the wholesale market, noting that MVNOs would have less choice of host operator and therefore weaker negotiating power.
And the Commission warned that post-merger the network operators would be more likely to "coordinate their competitive behaviour," leading to sustained price rises across the retail and wholesale markets.
"The Commission will now investigate in-depth the transaction to determine whether its competition concerns are confirmed," the Commission said.
"The Commission will in particular examine the extent to which the parties are close competitors, the market incentives that would be faced by the joint venture and the potential response of its competitors," it added.
