The European Commission has approved, under the EU Merger Regulation, the proposed creation of a joint venture by Orange and MásMóvil.
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The approval is conditional upon full compliance with a commitments package offered by Orange and MásMóvil.
The decision follows an in-depth investigation of the proposed transaction.
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 committed to:
• 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 strong competitive constraint on the joint venture; and
• 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 careful review of Digi's business plan with the help of an independent adviser.
The Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. ■