The European Commission has approved under the EU merger regulation the proposed acquisition of Orange Austria by Hutchison 3G (3 Austria). The approval is conditional upon the implementation of a commitments package that will facilitate the entry of new players into the Austrian mobile telecommunications market. The EC had concerns that the elimination of one out of only four mobile network operators in Austria could have led to less competition and higher prices, to the detriment of end consumers. To address these concerns, 3 Austria submitted remedies offering in particular to divest radio spectrum and additional rights to an interested new entrant in the Austrian mobile market. Such newcomer will also have the right to acquire additional spectrum at an auction planned in 2013 by the Austrian telecom regulator. The latter will reserve spectrum for a new entrant, in order to enable such an operator to build up a physical network for mobile telecommunication services in Austria. The new entrant will also benefit from privileged conditions for the purchase of sites for building up its own network in Austria.
3 Austria also commits to provide, on agreed terms, wholesale access to its network for up to 30 percent of its capacity to up to 16 mobile virtual network operators (MVNOs) in the coming 10 years. This will enable MVNOs to offer mobile telecommunications services to end customers in Austria at competitive terms and conditions. MVNOs generally need to enter into a business agreement with a mobile network operator in order to provide mobile telephony services to their customers. An up-front commitment ensures that H3G will not complete the acquisition of Orange before it has entered into such a wholesale access agreement with one MVNO. This condition is already fulfilled with UPC Austria signing a MVNO deal with 3 Austria on 9 October of this year.
In light of these commitments, the Commission concluded that the transaction would no longer raise competition concerns. This decision is conditional upon full compliance with the commitments.
3 Austria announced the agreement to acquire Orange Austria in February 2012 from France Telecom and Mid Europa Partner, valuing Orange at EUR 1.3 billion. At the same time, 3 signed an agreement with A1 (Telekom Austria) to sell frequencies, base station sites, Orange's mobile discount brand Yesss! and certain intellectual property rights for EUR 390 million. This sub-agreement was approved by the Austria cartel court on 27 November of this year. The decision faces an appeal of the Austria cartel office BWB.
In a first reaction, 3 Austria CEO Jan Trionow said that the conditions proposed to and approved by the European Commission will see a continuation of a competitive mobile market with lower thresholds for new entrants. He also said that the merger gives 3 Austria enough body to roll-out a country covering LTE network a s fast as possible. The Austria consumer organisation AK warns that the merger will lead to higher mobile prices as the competition will become less.
