The European Commission has started an in-depth probe into Vodafone’s proposed acquisition of a raft of Liberty Global assets in Europe. The commission cited concerns that the deal could reduce competition in Germany and the Czech Republic.
“It’s important that all EU consumers have access to affordable and good quality telephone and TV services,” Commissioner Margrethe Vestager, who is in charge of competition policy, said. “Our in-depth investigation aims to ensure that Vodafone’s acquisition of Liberty Global’s telecommunications businesses in Czechia, Germany, Hungary and Romania will not lead to higher prices, less choice and reduced innovation in telecoms and TV services for consumers.”
In May, Liberty Global and Vodafone finally agreed to a long-expected deal for a range of cable operations in Europe. The agreement would see Vodafone fork out $22.7 billion for Liberty’s cable operations in Germany, Hungary, Romania and the Czech Republic.
The commission outlined specific concerns such as areas where both parties have cable networks or overlapping products and services, the merger of which could squeeze rivals offering TV, telecoms, and broadband services.
In terms of TV, it said the “transaction could substantially increase the bargaining power of the merged entity vis-à-vis TV broadcasters” and this “could negatively impact these broadcasters’ ability to stay competitive and to invest.”
Vodafone and Liberty both said they still hope that the deal will be cleared by mid-2019. That remains possible as the current probe has to be completed within 90 days, meaning a deadline of May, 2019. German competition authorities have also asked the Commission that the German case be referred to them and are waiting to see if that happens.
“This is a pan-European transaction, looking to create a converged national challenger in four European markets,” Vodafone said in a statement. “We are confident that the transaction will be approved, as it will deliver increased consumer choice, more competition and further investment in high speed networks. We continue to expect final approval by mid-2019 in line with our original announcement.”
Mike Fries, Liberty Global’s CEO, also issued a statement in which he said the company would engage with the Commission and is confident of approval for the deal in mid-2019.
“This is welcome and expected news from the European Commission,” Fries said. “We always anticipated a second phase review given the size and scope of the transaction, and it is clear that the EU is retaining regulatory authority over the case. This provides us with the appropriate forum to demonstrate the consumer benefits that will be delivered by the creation of fully converged, fixed-mobile operators in these four markets.”