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The European Commissioner said that merger rules would not change, but nonetheless emphasised the need for a less fragmented European market
This week, European Commissioner Margrethe Vestager has moved to dispel rumours that the European Union will ease merger rules for the telecoms sector, saying that she has not heard of any such proposals.
Her comments come after a report published last week by Reuters, based on Commission documents, said that antitrust regulators were preparing to make it easier for telcos to combine their operations.
Over the past decade, the European Commission has been wary of allowing major telecoms mergers, particularly in cases where this would reduce the number of players in the market from four to three. The Commission argues that these deals typically result in reduced competition and drive-up prices for consumers.
In the rare circumstances when such deals have been approved, the Commission has typically applied stringent conditions, often involving price fixes for customers and divestment of overlapping assets.
In recent years, however, facing expensive rollouts of fibre and 5G, network operators are crying out for change. Intense competition and the troubling macroeconomic environment have shrunk margins considerably, driving the operators into merger discussions as they seek cost-saving synergies and a path to scalable growth.
To make matters worse, the operators have suggested that the congested nature of the European telecoms market is seeing it fall behind rivals like the US and China, which are both dominated by just three nationwide mobile players and therefore can invest at scale far more easily.
Numerous major tie-ups are already being attempted in Europe, most notably Orange and MasMovil in Spain and Three and Vodafone in the UK (though the latter is no longer regulated by the European Commission post-Brexit implementation).
But while some view these deals as representative of a softening sentiment from the EU Commission, Vestager now suggests that merger regulations are unlikely to change. Instead, she argues that facilitating a less fragmented European market will focus on other policy hurdles, such as spectrum coordination.
“One of my hobby horses is indeed to push for taking away the barriers that disable us from having a real European single market for telcos,” Vestager told journalists earlier this week. “If you have a more centralised spectrum management, you can actually harvest efficiencies that are not possible today.”
Currently, each country in the EU has its own independent spectrum policy, making cross-border partnerships problematic.
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