EC confirms further investigation into Orange bid for Jazztel

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The European Commission has confirmed that it will open an in-depth investigation into Orange’s proposed €3.4 billion acquisition of Jazztel, the Spanish fixed operator and MVNO.

Orange launched the bid in hopes of filling out its quadplay offering to match rivals Telefonica and Vodafone.

If Orange’s offer is successful, the new venture would create Spain’s second-biggest fixed broadband operator and strengthen the operator’s position in the mobile market, where it is currently in third spot.

“While the merged entity would not be in a dominant position, the Commission has concerns that the proposed transaction may lead to a significant loss of competitive pressure for fixed internet access services and fixed-mobile multiple play offers,” the commission said in a statement.

The number of national fixed operators would fall from four to three, it added.

And the loss of Jazztel as an important competitive force could lead to price increases for these services for customers in Spain, it further explained.

EU antitrust regulators are also concerned that the transaction would change the new entity’s incentive to exert significant competitive pressure on Telefonica and Vodafone.

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According to the Commission, these concerns are reinforced when considering a possible market for fixed-mobile triple-play offers (comprising fixed voice, fixed Internet and mobile telecommunications services) which became the most popular telecommunications product in Spain in 2013 and is expected to continue growing significantly in the future.

The Commission has 90 working days, until 24 April 2015, to make a decision.

Orange, for its part, has said it is confident of a “favourable outcome” and hopes to close the deal in the first half of next year.

It said it believes the investigation will enable it to continue its discussion with the Commission regarding “the overall analysis of the Spanish market: its rapid evolution towards convergence, very high-speed fixed broadband and content distribution.”

“The time limit for this new phase of the proceeding is already included in the schedule for the deal and Orange hopes to close the operation during the first half of 2015”, the company said in a statement.

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