By Tom Fairless And Ruth Bender
BRUSSELS--The European Union has halted for a second time its
antitrust probe into Orange SA's EUR3.4 billion ($3.62 billion)
acquisition of Spanish broadband and cellphone operator Jazztel SA,
as regulators seek to establish whether the merger will drive up
consumer prices in Spain.
The move injects fresh uncertainty into a deal that would almost
double Orange's market share in broadband Internet access in Spain,
leapfrogging Vodafone Group PLC to become the country's
second-largest provider in that segment. Both companies trail the
market leader, Telefónica SA.
A spokeswoman for the EU's new antitrust chief, Margrethe
Vestager, said Thursday that "the clock has been stopped" on the
Orange-Jazztel deal since March 4.
"Information is missing from the file that we require before
resuming the investigation," the spokeswoman said. The European
Commission previously suspended the probe for a week in
January.
Orange said it is committed to continuing its discussions with
the commission during the suspension period. "Orange remains
confident that it will secure a positive outcome to this process
but cannot elaborate further at this stage," said a spokesman for
the Paris-based company.
The Spanish merger is being closely watched by investors as a
test case for how Ms. Vestager will approach deals in Europe's
rapidly consolidating telecom sector.
European operators have been lobbying for years to be able to
merge, arguing that such moves would help them boost necessary
investments in their networks. Telecom executives have been
encouraged by the pro-investment stance of the EU's new
Brussels-based executive team. Orange CEO Stephane Richard said
last November that the commission appeared to be more open to
consolidation but that the review of its Jazztel deal would be the
first test case for how the commission approaches such mergers.
For Orange, concluding the deal is crucial for the group's plan
to revive sales. Spain is Orange's second-largest market,
accounting for around 10% of the group's revenue. Competition there
has been stiff as it has been in France, Orange's largest
market.
When the commission opened the probe in December, it expressed
concern that Orange's acquisition of Jazztel would lead to higher
prices for Spanish customers of fixed Internet and fixed-mobile
triple play deals.
Orange submitted fresh remedies aimed at addressing those
concerns on March 6, according to a statement posted online. The
company also presented its arguments at an oral hearing organized
by the commission in Brussels on Monday, two people familiar with
the matter said. Such hearings allow companies to make their case
to a broader audience.
The EU's new executive team, led by former Luxembourg Prime
Minister Jean-Claude Juncker, entered office in November with a
pledge to create a digital single market by breaking down national
silos in telecom regulation and competition law.
In a speech this month, though, Ms. Vestager warned that she
wouldn't allow large mergers to take place at the expense of
consumers. "The argument goes that we need to protect companies, to
help them become bigger companies, otherwise they can't take on
international rivals," she said.
"I'm not convinced about these arguments," she said. "[Mergers]
should not happen at the expense of consumers."
Write to Tom Fairless at tom.fairless@wsj.com and Ruth Bender at
Ruth.Bender@wsj.com
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