The European Commission Approves a Telecoms Merger With Commitments to Address Unilateral Horizontal Effects Without Dominance (So-Called ‘Gap’ Case) (Vodafone/Liberty Global)
Concurrences Competition Law Review, Nr. 1-2020 (February 2020).
5 Pages Posted: 27 Jul 2020
Date Written: January 1, 2020
This case note analyses and comments on the European Commission’s decision to approve Vodafone’s acquisition of Liberty Global’s operations in Germany, Hungary, the Czech Republic and Romania, subject to remedies.
The acquisition, cleared in July 2019, was the largest telecoms deal in Europe in more than a decade. It allowed Vodafone to acquire Liberty Global’s cable networks in several countries, enhancing Vodafone's ability to offer bundles of fixed and mobile services, a trend known in the telecoms industry as “fixed-mobile convergence”.
The Commission found that the acquisition would harm competition in Germany on the basis of two theories of harm. The first theory was based on horizontal non-coordinated effects in the German internet broadband market. As the acquisition did not lead to a dominant position, the case was an example of a so-called "gap case", a term used for mergers in oligopolistic markets where the anti-competitive effects stem neither from the fact that the merged entity has a dominant position, nor from coordinated effects.
The second theory was based on the fact that Vodafone would have greater buyer power vis-à-vis German TV broadcasters. Concerns in merger review on the basis of increased buyer power are relatively rare, as it is often difficult to show how increased buyer power will harm competition and consumers. However, in this case, the Commission identified two ways in which the acquisition would harm TV broadcaster and, ultimately, TV viewers.
The Commission also investigated conglomerate effects based on bundling of fixed and mobile products, but ultimately dismissed those concerns. The decision therefore also corroborates the orthodox wisdom that conglomerate effects are less likely to lead to intervention than horizontal effects.
Several companies have appealed the Commission's decision before the EU's General Court.
Keywords: competition law, antitrust law, merger control, horizontal effects, buyer power
JEL Classification: K21
Suggested Citation: Suggested Citation