The EC said it is launching an in-depth probe into the takeover because of fears it may reduce competition in Germany and the Czech market.
Outlining the concerns in Czechia, the Commission said it was concerned that some operators offering solely cable or mobile services could be shut out of the market because the combined company would be able to offer converged deals.
In Germany, Vodafone will take on Unitymedia, which is currently a rival of Vodafone’s German arm in the cable market, offering fixed and retail TV services. The Commission said it has concerns over the reduction in competition that a merger would have on the market.
Rivals including Deutsche Telekom have publicly expressed concerns about the merger, with DT CEO Tim Hoettges welcoming a request from Germany’s cartel office to rule on the deal.
The deal will be Vodafone’s largest acquisition since it first entered the German market with the acquisition of Mannesmann in 2000 – a deal that cost the UK-based operator around £112 billion. If approved, it will see Vodafone have 54 million cable/ fibre homes on-net in Europe and a total of 110 million homes and businesses connected to next generation networks, including wholesale deals.
EC Competition Commissioner Margrethe Vestager said: "It's important that all EU consumers have access to affordable and good quality telephone and TV services. 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.”
The Commission has 90 working days, running up to 2 May 2019, to rule over the deal, it said. Should the deal be approved, it is expected to close in 2019.
Mike Fries, Liberty Global’s CEO, stated, “This is welcome and expected news from the European Commission. 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. We look forward to engaging with the Commission and continue to expect approval mid-2019.”
Vodafone, when announcing the deal, estimated cost and capex synergies of around £535 million per year and revenue synergies exceeding £1.5 billion. The deal will complement Vodafone’s existing mobile operations, it said, in the Czech Republic, Hungary and Romania. In these markets, the combined businesses will reach over 6.4 million homes (39% of total households) and will serve 15.8 million mobile, 1.8 million broadband and 2.1 million TV customers.
A spokesperson for Vodafone said: "This is a pan-European transaction, looking to create a converged national challenger in four European markets. 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.”
