EU: Orange and MasMovil’s merger poses competition threat in Spain

The proposed merger between Orange and MasMovil’s Spanish operations has raised significant concerns for the European Commission, as it warns about potential negative consequences such as reduced competition and increased prices.

To address these concerns, the EU Commission has taken action by sending a statement of objections to Orange and MasMovil regarding their planned merger. One of the primary concerns expressed by the European Commission is the potential decrease in the number of network operators in Spain due to the consolidation. This reduction would eliminate a notable and innovative competitor, which could lead to higher prices and a decline in the quality of telecom services for customers. Additionally, the merger would provide Orange and MasMovil with the power and incentive to restrict the access of virtual operators to wholesale mobile networks and fixed network access services. Such restrictions would further harm competition within the market.

Statement of objections sends a clear signal that telecom companies may need to propose substantial remedies to obtain approval for the deal. The EU has not specified what remedies the companies could offer to address its concerns. However, potential remedies could include divestiture of certain assets, sharing network infrastructure, offering wholesale access to competitors, committing to price caps, or other measures that would address the EU’s concerns about reduced competition and increased customer prices.

The merger was initially notified to the Commission on 13 February 2023. The companies involved have the opportunity to request a closed hearing, where they can present their arguments and evidence before the Commission reaches a final decision. The deadline for the final decision is set for 4 September.

• Under the EU Merger Regulation, the European Commission is responsible for evaluating mergers and acquisitions involving companies surpassing certain turnover thresholds and preventing concentrations that could significantly hinder effective competition in the European Economic Area.
• The Commission’s Statement of Objections represents a formal step in the investigation process, allowing the companies to respond to the objections raised, access the Commission’s case file, and request an oral hearing.
• The EC’s statement of objections does not necessarily mean that it will move to block the merger, but it casts doubt over the likelihood of it approving the merger.