Commission conditionally approves acquisition of Orange Austria by Hutchison 3G

06 February 2013

Victoria Moorcroft

On 12 December 2012, the European Commission approved the acquisition of Orange Austria by H3G, but the approval was subject to a number of conditions intended to preserve competition in the market. The conditions include making available spectrum, and making available wholesale access to the network, including concluding one agreement with a Mobile Virtual Network Operator (“MVNO”) before it can complete the acquisition. 

H3G submitted its merger filing to the Commission in May, which opened a Phase II review and issued a Statement of Objections in September as it was not satisfied with the initial remedies offered by H3G.  The merger reduced the number of Mobile Network Operators (MNOs) in Austria from 4 to 3 and the Commission was concerned that the merged entity would have significant market power. Its economic assessment concluded that the merger would lead to substantial price increases for Austrian consumers. 

The initial remedy package offered by H3G was deemed insufficient by the Commission, reportedly because it did not include any commitment to make available spectrum. The remedies package ultimately accepted by the Commission includes commitments by H3G:

• to make available spectrum;
• to make wholesale access available to up to 16 MVNOs for the next ten years; and
• not to complete the acquisition until H3G enters into a wholesale access agreement with one MVNO approved by the Commission.

The Commission considers that the remedies will open the door for both a new MNO and MVNOs to enter the market.  The third condition was filled before the Commission’s approval was granted, when H3G signed a deal with MVNO, UPC Austria, on 9 October 2012.

On 3 January 2013, Orange announced that H3G’s acquisition of Orange Austria was completed. On the same day, Telekom Austria also confirmed that its purchase of frequencies, base station sites and Yesss!, Orange Austria’s discount brand had completed. That transaction was notified to the Austrian competition authority and formally cleared in December 2012 without conditions. Each of the acquisitions was reported to be conditional upon completion of the other. 

In a statement released on the day the Orange Austria/H3G merger was cleared, the Commission’s Vice-President, Mr Almunia, took the opportunity to comment more generally on the mobile markets. He regretted the continuing national scope of mobile markets and the high market shares of the major MNOs. His stance suggests that the Commission may well look closely at any further consolidation within national markets (as indeed it has done on this Orange Austria/H3G transaction). 

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