2nd UPDATE: EU Opens Probe Into Mobile-Payments Joint Venture
April 13 2012 - 02:13PM
Dow Jones News
The European Commission Friday opened an in-depth investigation
into the proposed creation of a joint venture in the U.K. between
Vodafone Group PLC (VOD.LN, VOD, VODPF), Telefonica SA (TEF,
TEF.MC) and Everything Everywhere in the field of mobile
commerce.
The commission's preliminary investigation indicated potential
competition concerns in the nascent markets of mobile-payment
applications supply [so-called "mobile wallets"], mobile
advertising and related data analytics services, where the joint
venture may have very high market shares.
The opening of an in-depth inquiry doesn't prejudge the final
result of the investigation. The Commission now has 90 working
days, until 27 August 2012, to take a final decision on whether the
proposed transaction would affect competition in the European
Union.
Everything Everywhere is a joint venture between France Telecom
(FTE.FR, FTE) and Deutsche Telekom AG (DTE.XE, DTEGY).
"The Commission is in favor of any initiative that will develop
the promising mobile commerce sector in Europe and bring new and
innovative payment and interactive advertising experience to
consumers," said Joaquin Almunia, the EU's competition
commissioner, in a statement.
"At the same time, we need to make sure that competing services
can keep emerging on this market, so that incentives to innovate
remain and customers get the best mobile commerce services at the
best cost," said Almunia.
The commission said it wanted to fully investigate initial
concerns over the ability of the three operators to block future
competitors from offering their own mobile-wallet services to
customers in the U.K., or to degrade the quality of these competing
mobile wallets so that they become less attractive.
The three mobile operators announced in June last year they
would join forces to find ways to popularize ways of making
payments using mobile phones.
The companies said that discussions with the Commission so far
have been "constructive" and they are confident the joint venture
will be approved.
"During the course of discussions with the Commission it has
become apparent that the embryonic nature of the mobile payments
market in particular means that more time is needed to fully
consider the proposed joint venture's plans for a mobile wallet and
engage with the views of other interested parties," Everything
Everywhere, Telefonica and Vodafone UK said in a statement. "We
remain confident that an extended review will conclude that the
proposed joint venture is pro-competitive."
The project had been due to launch by the end of last year, but
is taking longer than expected to gain antitrust approval. The U.K.
and U.S. lag behind countries such as Japan in implementing this
technology, and mobile operators risk being squeezed out of the
nascent mobile marketing business by online incumbents like Google
Inc. (GOOG) and Apple Inc. (AAPL).
The newly created joint venture would provide various mobile
commerce services to businesses, including mobile payment
transaction services, mobile marketing services, and associated
data analytics services.
Rival U.K. mobile company Three--owned by Hutchison Whampoa Ltd.
(HUWHY, 0013.HK)--which is not part of the joint venture, welcomed
the decision, saying the joint venture could block future
initiatives in the area of mobile-commerce services.
"The proposed joint venture raises serious competition
concerns," a Three spokesperson said in a statement. "We are
pleased that [the Commission] has moved to launch an in-depth
investigation into the scope, activities and impact on consumers of
this venture as well as the future development of the market for
these services."
-By Frances Robinson and Vanessa Mock, Dow Jones Newswires; +32
2 741 1486; frances.robinson@dowjones.com
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