NEW YORK- ( The Deal) -- Continuing its hard line against telecoms mergers, the European Commission on Tuesday, May 14, said it would allow France's Orange SA ( ORAN) to proceed with its €3.4 billion (OR $3.78 billion) purchase of Jazztel SA ( JAZTF) after the companies signed up to several commitments to ensure fair competition in Spain.
The decision comes seven months after the companies issued notification of the deal in Brussels and five months after the opening of an in-depth probe.
In the Orange-Jazztel review, regulators stopped the clock several times, once to study a referral request from Spain, which the EC turned down, and at least twice to examine concessions offered by the companies to allay competition worries.
Regulators had been concerned that the deal, as initially notified, could have led to higher prices of fixed Internet access service for Spanish consumers, by combining the country's third- and fourth-largest providers of fixed telecommunications services. They also noted that Orange and Jazztel have attracted a higher share of new customers than reflected in their market shares, which have significantly risen in recent years.
The final remedies package approved by regulators includes Orange's promise to divest a so-called fiber-to-the-home network covering 700,000 to 800,000 buildings in 13 urban areas, similar in size to Orange's current network in Spain.
Orange has also promised to grant whoever purchases the network wholesale access to Jazztel's national asymmetric digital subscriber line, or ADSL, network for as much as five years. This commitment, for an unlimited number of subscribers, will allow the buyer to compete immediately on nearly 80% of the Spanish market, according to the commission.
"A very important thing before agreeing to Orange's takeover of Jazztel was to make sure that consumers in Spain would not suffer from higher prices for fixed internet access services," Vestager said in a statement after the EC's meeting in Strasbourg, France. "With the remedies in this merger, a new player may enter the market and compete as strongly as Orange and Jazztel do today."
Last month the EC opened an in-depth probe into a Danish merger in Vestager's home country involving Sweden's TeliaSonera AB and Norway's Telenor ASA (TELNY). The review is due to be wrapped up by September.