Telecoms mergers 'do more harm than good' - EU competition commissioner
Margrethe Vestager warns mobile consolidation could mean higher prices and less innovation
European competition commissioner Margrethe Vestager has warned that the current round of consolidation in the EU's telecoms market - which has been encouraged by the EU - could do more harm than good.
At the New Frontiers of Antitrust conference in Paris this week, Vestager said that incumbent operators had argued that if they could not merge with their rivals in the same country, then they would be unable to increase their investments - but she said that she had not seen evidence that this was the case.
"Instead, there is ample evidence that excessive consolidation may lead not only to less competition and more expensive bills for consumers, but that it also reduces the incentives in national markets to innovate," said Verstager.
She added that competition could stimulate infrastructure investment and pointed to the case of Free Mobile, which entered the French telecoms market in 2009 and helped telecoms investment in France to grow. Verstager suggested that investment remains at higher levels than before Free Mobile's launch.
In these markets, she continued, established players have abused their dominant positions to try to stifle competition from alternative operators. "We shouldn't forget that these alternative operators are also behind major network investments in the EU," Verstager said.
Verstager's comments come on the back of some huge deals in the UK and across Europe, which have consolidated the telecoms market. Three UK owner Hutchison Whampoa finalised a deal to buy O2 from Telefonica in a £10.25bn deal.
Meanwhile BT, which shifted out of the mobile market after floating off O2 (formerly BT Cellnet) 14 years ago, is looking to re-enter the market by snapping up EE. It has finalised the deal with EE's joint owners, Germany's Deutsche Telekom and France Telecom-owned Orange. Both deals are still subject to approval from competition watchdogs.
Meanwhile, the UK's other big mobile provider, Vodafone, has been in talks to acquire Virgin Media from Liberty Global.
In Spain, Orange is buying Jazztel, while in Germany, the European Commission allowed Telefonica to buy E-Plus from KPN for €8.6bn. However, this is being challenged by German telecoms firm Airdata, because it felt that the deal would leave little fair competition in the German telecoms market.
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