Competition Commission prohibits merger of Orange and Sunrise
The Competition Commission has blocked the merger of the telecommunications companies France Télécom (Orange) and Sunrise Communications. Together with Swisscom, the merged company would have established a collective dominant position in the mobile communications market. In addition, the most active network operator in the market would have been forced out of the market.
As part of the proposed merger, Sunrise was to be integrated into France Télécom (Orange). The in-depth examination of the mobile telephony markets revealed that the merger would leave only two mobile telephony companies with their own network in Switzerland, writes the Competition Commission in a press release issued on Thursday. "This would give them a collective dominant position that could eliminate effective competition and would not be disciplined by any market entries," it said. As a result, the merged company and Swisscom would no longer compete effectively: it would be more advantageous for both companies to maintain a relatively high price level than to attack the competitor's position in order to gain market share.
The synergies that should benefit the end customer are also not significant enough to outweigh the expected competitive disadvantages. The investigation had not revealed any synergies that would promote competition and from which consumers would benefit. In addition, it was not possible to identify any targeted conditions that could have dispelled the Competition Commission's competition law concerns.
"Although the merger would create a larger company than Swisscom, it would also create a situation in which neither company would have sufficient incentives to compete." Furthermore, as the ComCo considers it very unlikely that another mobile telephony company with its own network would enter the market after the merger, there would only be two nationwide network operators in Switzerland. With three providers, however, there is still a certain competitive dynamic in the Swiss mobile telephony market and it remains open to innovation.
For these reasons, the Competition Commission has prohibited the proposed merger. France Telecom and TDC will now examine the various options for the next steps, the companies announced in a press release.
The synergies that should benefit the end customer are also not significant enough to outweigh the expected competitive disadvantages. The investigation had not revealed any synergies that would promote competition and from which consumers would benefit. In addition, it was not possible to identify any targeted conditions that could have dispelled the Competition Commission's competition law concerns.
"Although the merger would create a larger company than Swisscom, it would also create a situation in which neither company would have sufficient incentives to compete." Furthermore, as the ComCo considers it very unlikely that another mobile telephony company with its own network would enter the market after the merger, there would only be two nationwide network operators in Switzerland. With three providers, however, there is still a certain competitive dynamic in the Swiss mobile telephony market and it remains open to innovation.
For these reasons, the Competition Commission has prohibited the proposed merger. France Telecom and TDC will now examine the various options for the next steps, the companies announced in a press release.
