The European Commission has announced the launch of an in-depth investigation into the viability of the proposed merger of Wind and 3 Italia, the Italian subsidiaries of VimpelCom and Hutchison Whampoa. "The Commission has concerns that the transaction could lead to higher prices, less choice and reduced innovation for mobile customers in Italy,” said the EC in a statement. First announced in August last year, the 50-50 merger would reduce the number of mobile network operators in Italy from four to three and create the largest player in terms of subscribers, closely followed by TIM (Telecom Italia) and Vodafone.
The announcement of an in-depth investigation follows an initial probe into the Hutchison/VimpelCom deal which served to reveal that the transaction would reduce the number of operators hosting mobile virtual network operators (MVNOs). “This in turn would mean existing and prospective MVNOs would have less choice of host networks and hence a weaker negotiating power to obtain favourable wholesale access terms,” said the EC. In addition, the reduction in the number of competitors following the merger would increase the likelihood that operators would coordinate their competitive behaviour and raise prices on a sustainable basis on the retail and wholesale markets. The Commission now has until August 10 to issue its decision on the proposed merger.
