The European Commission has cleared the merger of Vodafone Netherlands and Liberty Global's Dutch operation Ziggo, with the condition that Vodafone sells its fixed business. The 50-50 joint venture, first announced in February, sees the country's largest cable operator merged with the number-two mobile operator, to create a full-scale rival to incumbent KPN.
The Commission's main concern about the deal was removing Vodafone from the fixed market, where it has been expanding quickly in the past two years. According to the EC, Vodafone had the potential to become a strong competitor in fixed and fixed-mobile service packages. The divestment offered by Vodafone means another player can take up its role and provide continued competition in the fixed market.
At the end of June, Vodafone had 123,000 fixed broadband customers in the Netherlands. Completion of the joint venture will be conditional on the EC approving the sale of the fixed activities. Vodafone said in a joint statement with Liberty Global that it had already received a "number of expressions of interest" in the fixed business and will proceed with the sale process. The divestment could potentially also include MVNO access, subject to agreement on commercial terms, the company said.
In its decision, the EC said further that it rejected the request from the Dutch competition regulator ACM to investigate the deal, but said it worked closely with the ACM in its own assessment of the merger. The Commission's extensive experience in evaluating the telecoms sector and the need for a consistent approach in applying merger control rules led to the decision to keep the case at EU level, it said.
The ACM said in a statement that the new operator will mean a "big change" in the Dutch market, with two large players going forward. The regulator said it will look at whether the current regulation needs to be "amended or strengthened in order to ensure enough network access options for competitors" and sufficient choice for consumers. It noted that operators with both fixed and mobile networks have an advantage given the growing popularity of subscriptions bundling both fixed and mobile services.
According to research by Telecompaper, there were 775,000 households with quad-play packages in the Netherlands at the end of March, a market which has largely been dominated by KPN to date. Ziggo has its own MVNO over the Vodafone network, but does not offer a single package, only a discount if customers take both fixed and mobile services. Vodafone has been promoting quad-play bundles for the past year. The deal will allow Ziggo and Vodafone to scale up their fixed-mobile offers, reduce costs and better compete against KPN.
