EU Raises Concerns over Orange-MasMovil Tie-Up

The European Commission has issued a Statement of Objections to Orange and MasMovil, expressing preliminary concerns about their proposed joint venture in Spain.

The Commission believes that the merger may lead to a reduction in competition in the retail supply of mobile and fixed internet services, as well as multiple-play bundles. Orange and MasMovil are the second and fourth largest providers of retail telecommunications services in Spain, respectively. 

The Statement of Objections

On April 3, 2023, the European Commission initiated an in-depth investigation to assess the impact of the proposed joint venture on the Spanish market for mobile telecommunications services, fixed internet access services, and multiple-play bundles. After conducting a comprehensive analysis, which included examining internal documents and gathering input from competitors, suppliers, and customers, the Commission expressed concerns that the merger could reduce the number of network operators in Spain. This reduction would eliminate a significant competitive constraint and an innovative rival in the Spanish retail telecommunications market. The Commission is particularly worried about the potential for significant price increases for consumers across the Spanish market.

Companies and Products

 Orange, headquartered in France, is a global telecommunications operator with a subsidiary, OSP, operating in the Spanish telecommunications market. OSP provides mobile and fixed telecommunication services under the brands Orange, Jazztel, and Simyo. On the other hand, MasMovil, controlled by Lorca, a UK holding company, offers fixed and mobile telecommunications services in Spain under various brands such as Yoigo, MásMóvil, Virgin, and Pepephone, among others.

Background and Implications

The European Commission’s issuance of a Statement of Objections marks a formal step in the investigation process. The objections outlined in the statement do not determine the final decision. Orange and MasMovil now have the opportunity to respond to the objections, examine the Commission’s case file, and request an oral hearing. The Commission has until September 4, 2023, to make a final decision on the merger.

The Commission’s concerns regarding a potential reduction in the number of network operators align with its previous stance favoring four-player markets across Europe. While the Commission has shown support for cross-border consolidation, it has been cautious about in-market mergers and acquisitions. The outcome of the Orange and MasMovil merger will likely influence future competition policy decisions in the telecom industry.

To address the Commission’s concerns and potentially secure approval, Orange and MasMovil may propose remedies such as providing wholesale access to virtual players or divesting assets to create a new fourth operator. The latter option has been previously employed in Italy to safeguard competition and encourage market rivalry.