Brussels, 28 July 2022
The European Commission has opened an in-depth investigation to assess the proposed acquisition of VOO and Brutélé by Orange under the EU Merger Regulation. The Commission is concerned that the proposed transaction may reduce competition in the retail markets for the supply of fixed internet services, audio-visual services, multiple-play bundles (including fixed-mobile convergent (‘FMC’) services) in parts of Belgium.
Executive Vice-President Margrethe Vestager, in charge for competition policy, said:
Access to affordable and high quality Internet and TV services comes with choice. Orange has been a successful challenger to Voo/Brutele’s telecommunication services in parts of Belgium. With our in depth investigation, we want to make sure that the acquisition of Voo/Brutele by Orange does not lead to higher prices or less quality for customers in Wallonia and parts of Brussels.
Orange is a provider of retail mobile and fixed telecommunication services in Belgium, based on its own mobile and third party fixed networks. VOO and Brutélé together are leading providers of retail fixed and mobile telecommunication services, based on their own fixed and third party mobile networks. Orange is the number two mobile provider in Belgium, while VOO and Brutélé together are the number two provider of fixed telecommunication services in the areas covered by their own fixed networks.
The Commission’s preliminary concerns
The Commission’s preliminary investigation shows that the transaction may significantly reduce competition in the markets where Orange, VOO and Brutélé are close competitors, namely in the markets for the retail supply of (i) fixed internet access, (ii) audio-visual services, (iii) multiple-play bundles (including FMC services) in the areas covered by VOO and Brutélé’s own fixed networks.
At this stage, the Commission is concerned that the transaction:
- would reduce the number of operators from three to two in areas covered by VOO and Brutélé’s own fixed networks thereby eliminating an innovative and significant competitive constraint from the relevant markets;
- may increase the likelihood of coordination on the affected retail markets between the remaining operators in areas covered by VOO and Brutélé’s own fixed networks;
- may increase the bargaining power of the merged entity in the market for the wholesale acquisition of TV channels;
- may impact the deployment of third-party mobile networks following the migration of VOO’s mobile customers (currently hosted on third-party mobile networks) to Orange’s mobile network.
The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.
The proposed transaction was notified to the Commission on 22 June 2022. The Commission now has 90 working days, until 6 December 2022, to take a decision. The opening of an in-depth inquiry does not prejudge the outcome of the investigation.
Companies and products
Orange is a French global telecommunications operator, active in Belgium as a provider of retail mobile telecom services on the basis of its own network. Orange also provides retail fixed telecom services in Belgium on the basis of the regulated wholesale access to third-party networks.
VOO is a Belgian cable operator mainly active in the Walloon region of Belgium. VOO primarily provides retail fixed telecom services through its own cable network and retail mobile telecom services based on access to third-party mobile networks.
Brutélé is a Belgian cable operator mainly active in the Brussels-Capital region and certain municipalities in the Walloon region of Belgium. Brutélé provides retail fixed telecom services through its own cable network, which it markets together with VOO under the “VOO” brand.
Merger control and procedure
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). In addition to this transaction, there are currently three on-going Phase II merger investigations: the proposed acquisition of OMV Slovenija by MOL, the proposed acquisition of Pfleiderer Polska by Kronospan and the proposed acquisition of GRAIL by Illumina.