This article is brought to you in collaboration with the European Commission.
The European Commission has opened an in-depth investigation to assess Orange’s proposed acquisition of VOO and Brutélé under the EU Merger Regulation. The Commission is concerned that the proposed transaction could reduce competition in the retail markets for the provision of fixed internet services, audiovisual services and multi-play bundles (including fixed-mobile convergent (“FMC”) services ) in some parts of Belgium.
Executive Vice President Margrethe Vestagerin charge of competition policy, said: “With access to affordable, high-quality Internet and television services comes choice. Orange succeeded in challenging the telecommunications services of Voo/Brutele in certain parts of Belgium. Through our in-depth investigation, we want to make sure that the acquisition of Voo/Brutele by Orange does not lead to higher prices or lower quality for customers in Wallonia and parts of Brussels.
Orange is a provider of retail mobile and fixed telecommunications services in Belgium, based on its own third-party mobile and fixed networks. VOO and Brutele together are leading providers of retail fixed and mobile telecommunications services, based on their own third-party fixed and mobile networks. Orange is the second mobile operator in Belgium, while VOO and Brutélé are together the second provider of fixed telecommunications services in areas covered by their own fixed networks.
The Commission’s preliminary concerns
The Commission’s preliminary investigation shows that the transaction is likely to significantly reduce competition on the markets where Orange, VOO and Brutélé are close competitors, namely on the markets for the retail supply of (i) fixed Internet access, (ii) audiovisual services, (iii) multi-play packages (including FMC services) in areas covered by VOO’s and Brutélé’s own fixed networks.
At this stage, the Commission is concerned that the operation:
- would have reduce the number of operators from three to two in the areas covered by VOO’s and Brutélé’s own fixed networks, thus removing an innovative and significant competitive constraint from the markets concerned;
- can increase the coordination probability on the affected retail markets between the remaining operators in the areas covered by VOO and Brutélé’s own fixed networks;
- may increase the bargaining power of the merged entity in the market for wholesale acquisition of television channels;
- may have an impact on the deployment of third-party mobile networks following the migration of VOO’s mobile customers (currently hosted on third-party mobile networks) to the Orange mobile network.
The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.
The proposed transaction was notified to the Commission on 22 June 2022. The Commission now has 90 working days, until December 6, 2022, to make a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Companies and products
Orange is a French global telecommunications operator, active in Belgium as a provider of retail mobile telecommunications services on the basis of its own network. Orange also provides retail fixed telecommunications services in Belgium on the basis of regulated wholesale access to third-party networks.
VOO is a Belgian cable operator mainly active in the Walloon region of Belgium. VOO mainly provides retail fixed telecommunications services via its own cable network and retail mobile telecommunications services based on access to third-party mobile networks.
Brutele is a Belgian cable operator mainly active in the Brussels-Capital Region and certain municipalities in the Walloon Region of Belgium. Brutélé provides fixed retail telecommunications services via its own cable network, which it markets with VOO under the “VOO” brand.
Merger control and procedure
The Commission is responsible for assessing mergers and acquisitions involving companies whose turnover exceeds certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations which would significantly impede effective competition in the EEA or a substantial part of it.
The vast majority of notified mergers do not pose competition concerns and are cleared after routine review. From the moment an operation is notified, the Commission generally has 25 working days to decide whether to grant its approval (phase I) or to open an in-depth investigation (phase II). In addition to this transaction, three phase II investigations are currently underway: the planned acquisition of OMV Slovenia by MOLthe proposed acquisition of Pfleiderer Polska by Kronospan and the proposed acquisition of GRAIL by Illumina.