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EC clears Orange, MásMóvil merger

February 21, 2024

The European Commission has approved, under the EU Merger Regulation, the proposed creation of a joint venture by Orange and MásMóvil. The approval is conditional upon full compliance with a commitments package offered by Orange and MásMóvil.

The decision follows a prolonged investigation of the proposed transaction. The EC explained that “Orange is a full mobile network operator while MásMóvil is a hybrid mobile network operator. MásMóvil relies on its own mobile network, which does not cover the entire Spanish territory, and on a national roaming agreement with Orange to provide retail mobile services. There are two other mobile network operators active in Spain (Telefónica and Vodafone). There are also several mobile virtual network operators (MVNOs) which use the mobile network operators’ infrastructure to offer retail mobile services to consumers. Digi is the largest MVNO in Spain.”

Following its investigation, the Commission had concerns that the transaction, as initially notified, would restrict competition in the retail markets for the supply of mobile and fixed internet services in Spain, whether offered standalone or in bundles.

To address the Commission’s competition concerns, Orange and MásMóvil have committed to:

  1. Divest spectrum held by MásMóvil to Digi across three frequency spectrum bands, two medium frequency bands (1,800 MHz and 2,100 MHz) and one high frequency band (3.5 GHz). The mobile spectrum to be divested will enable Digi to build its own mobile network and to exert a competitive constraint on the joint venture; and
  2. Enter an optional national roaming agreement, which Digi can decide to use or not. The possibility to use the JV’s network will complement Digi’s own network, which Digi will start rolling out with the use of the divested spectrum. This option is critical given that, like MásMóvil’s network today, Digi’s future mobile network would likely not cover the entirety of Spain. As the national roaming agreement is optional, Digi will be free to remain with its current wholesale provider (Telefónica) or choose another mobile network operator in Spain (i.e., the joint venture or Vodafone).

The decision also approves Digi as a remedy taker following a review of Digi’s business plan with the help of an independent adviser. Digi is a suitable purchaser for the divested spectrum as it is currently the largest and fastest-growing MVNO in Spain. Digi also has experience as a mobile network operator in other EU Member States such as Romania. Moreover, Digi has a relatively large, fixed broadband (fibre) network in Spain, which it continues to build. As a result, the commitments do not include any fixed broadband assets.

After collecting the feedback from a variety of market participants during a market test of the proposed commitments, the Commission concluded that they fully address the identified competition concerns and will preserve a competitive telecom market in Spain, both in terms of price and quality, as well as in terms of 5G network deployment, to the benefit of consumers.

The Commission therefore concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.

Margrethe Vestager, EVP in charge of competition policy, commented: “Orange and MásMóvil’s joint venture threatened competition in the retail supply of mobile and fixed internet services in Spain. But the commitments offered by the parties will enable Digi, the largest and fastest-growing mobile virtual network operator in Spain, to replicate the strong competitive pressure exerted by MásMóvil. They will ensure that consumers in Spain continue to benefit from a competitive telecom market, in terms of prices, quality and 5G connectivity.”

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