Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP  MERGER REGISTRY, 1049 Brussel,   BELGIË  
 
Tel: +32 229 -91111. Fax: +32 229 -64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu .   EUROPEAN COMMISSION  
Brussels, 19.2.2020  
C(2020 ) 1087 final  
PUBLIC VERSION  
 
To the notifying parties  
Subject : Case M.9559 – Telefónica/Prosegur/Prosegur Alarmas España  
Commission decision pursuant to Article 6(1)(b) of Counc il Regulation 
No 139/20041 and Article 57 of the Agreement on the European Economic 
Area2 
Dear Sir or Madam,  
(1) On 15 January 2020 , the European Commission received notification of a proposed 
concentration pursuant to Article 4 of the Merger Regulation by which Telefónica 
EF S.A. ("TEF", Spain) and Prosegur Compañía de Seguridad, S.A. ("PCS", Spain) 
(together the “Notifying Parties”) will acquire within the meaning of Article 3(1)(b) 
and 3(4) of the Merger Regulation joint control over Prosegur Alarmas España, 
S.L.U. ("Prosegur Alarmas" or the "JV", Spain) (together with TEF and PCS, the 
“Parties”). Prosegur Alarmas currently belongs t o the group of PCS .3 
(2) The concentration had already been notified to the Commission on 27 November 
2019, but was subsequently withdrawn on 20 December 2019.  
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation ”). With effect from 1 December 2009,  the Treaty on the 
Functioning of the European Union ( “TFEU ”) has introduced certain changes, such as the replacement of  
“Community ” by “Union ” and “common market ” by “internal market ”. The terminology of the TFEU will 
be used throughout this decision.  
2  OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).  
3  Publication in the Official Journal of the European Union No C 23, 23.01.2020 , p. 14. 
In the published version of this decision, 
some information has been omitted 
pursuant to Article 17(2) of Council 
Regulation (EC) No 139/2004 concerning 
non-disclosure of business secrets and other  
confidential information. The omissions are 
shown thus […] . Where possible the 
information omitted has been replaced by 
ranges of figures or a general description.  
 
 
2 1. THE PARTIES  
(3) TEF is a global telecommunications operator and mobile network provider, 
operating under  a number of brands, including Movistar, O2 and Vivo. TEF is a 
100% publicly owned company listed on the Madrid, New York, Lima and Buenos 
Aires Stock Exchanges. In Spain, TEF mainly provides fixed and mobile 
telecommunication services, including machine -to-machine (“M2M”) SIM cards. It 
is also marginally active in the provision of security systems. Through its subsidiary 
Telefónica Ingeniería de Seguridad S.A.U. (“TIS”), TEF sells “Vivo Smart 
Security”, which is an alarm service mainly for small and medium -sized enterprises 
(“SMEs”).  
(4) PCS is a provider of security systems to business customers, whose operations are 
divided in three business lines, namely alarms, security, and cash. The alarms 
business line offers (i) the installation and maintenance services  to residential and 
SME customers; (ii) alarm monitoring by alarm reception centres services; and, (iii) 
alarm response services through immediate intervention and key holding services. 
The security business line provides comprehensive security systems, ba sed on a 
combination of manned guarding and technological and analytical capabilities. The 
cash business line provides a range of services from basic valuables logistics and 
cash management to added -value outsourced services from financial institutions, 
retail establishments, government agencies, central banks, mints, jewellers and 
others.  
(5) Prosegur Alarmas  is a provider of alarm installation services and connection to alarm 
reception centres for both residential and SME customers in Spain.  
2. THE CONCENTRATIO N 
(6) Pursuant to a Stock Purchase Agreement signed on 17 September 2019, TEF and 
PCS will each own 50% of the stock in Prosegur Alarmas.  
(7) After the concentration, under the Shareholders Agreement signed on 17 September 
2019, […]. The board will be responsible for the operational and financial strategy of 
the JV. A board meeting will only be validly constituted […]. Furthermore, key 
decisions of the board, including the approval of the annual budget and of the 
business plan, will require the vote of at least one  board member appointed by TEF 
and one board member appointed by PCS. As a result, both TEF and PCS will 
effectively have a veto right over such key decisions. Prosegur Alarmas will 
therefore be jointly controlled by TEF and PCS within the meaning of Artic le 
3(1)(b) of the Merger Regulation.4 
(8) The JV has sufficient own staff, financial resources and dedicated management for 
its operation and for the management of its portfolio and business interests. 
Furthermore, the JV will continue to have a market presenc e, does not have 
significant sale or purchase relationships with its parents and is intended to operate 
on a lasting basis. Therefore, the JV is full functional.  
                                                 
4  Form CO, paragraph 53.  
 
 
3 (9) Therefore, the Transaction consists of the acquisition of joint control by TEF and 
PCS over Pr osegur Alarmas within the meaning of Article 3(1)(b) and 3(4) of the 
Merger Regulation.  
3. UNION DIMENSION  
(10) The undertakings concerned have a combined aggregate worldwide turnover of more 
than EUR 5 000 million (TEF: EUR 48 693 million, PCS: 3 939.2 million).5 Each of 
them has an EU -wide turnover in excess of EUR 250 million (TEF: EUR 26 816 
million, PCS: 1 739.9 million), but they do not achieve more than two -thirds of their 
aggregate EU -wide turnover within one and the same Member State.  
(11) The Transaction ther efore has an Union dimension pursuant to Article 1(2) of the 
Merger Regulation.  
4. RELEVANT MARKETS  
4.1. Introduction  
(12) The Parties are both active in the market for security systems in Spain. PCS supplies 
the full spectrum of security systems to business customers.  Prosegur Alarmas is 
active in the alarm installation and maintenance market as well as in the alarm 
monitoring and response market for both residential and SME customers whereas 
TEF, which is active through its subsidiary TIS, mainly supplies such service s to 
SME customers.  
(13) TEF’s main business focus is the retail supply of several telecommunications and 
TV services in Spain.  
4.2. Market for security systems  
4.2.1.  Product market definition  
4.2.1.1.  Commission precedents  
(14) In prior decisions, the Commission made a distinction, w ithin the market for security 
systems, between (i) manned guarding services; (ii) alarm installation and 
maintenance (i.e. electronic guarding equipment); and (iii) alarm monitoring and 
response.6 Hereafter, segments (ii) and (iii) will be referred to as “ alarm services”.  
(15) Prosegur Alarmas and TEF, via its subsidiary TIS, are active in the supply of alarm 
services7, while they do not offer manned guarding services as PCS does. While 
Prosegur Alarms mainly supplies alarm services to residential and SME customers, 
TEF mainly supplies SME customers. Accordingly, the Transaction only concerns 
the markets for alarms services and not the wider market for security systems.  
                                                 
5  Turnover calculated in accordance with Article 5 of the Merger Regulation . 
6  Commission decision of 2 August 2011 in case M.6292 – Securitas/Niscayah Group , paragraph 8. 
7  TIS directly provides alarm installation and maintenance and provides its alarm monitoring and response 
through Ralset’s alarm receiving centre . 
 
 
4 (16) Alarm installation and maintenance services consist in the installation and 
maintenance of alarm systems such as management of access control, fire, gas and/or 
flood alarm systems or systems based on video surveillance and telecare services.8  
(17) Alarm monitoring and response services consist in receiving electronic data in an 
alarm receiving ce ntre (“ ARC ”) connected to a site of a customers, and reacting to 
abnormal events detected by the alarm system of the site. The action to be taken by 
the provider of alarm monitoring services when an abnormal event is detected can 
either be (i) a phone call  to the customer, to the police or another security company; 
or, (ii) an “outside response”, which involves sending staff on -site.9 In previous 
decisions, the Commission considered whether alarm monitoring and alarm response 
could belong to distinct market , but left the exact product market definition open.10 
(18) The Commission has previously considered that alarm installation and maintenance 
and alarm monitoring and response could each be further divided into two sub -
segments depending on the type of customers,  i.e. residential and business 
customers, although it ultimately left the market definition open.11 
4.2.1.2.  The Notifying Parties’ view  
(19) The Notifying Parties submit that there is a single overall market including all 
security systems or, at least, including all ala rms services, but that the relevant 
product market can be left open.12 The Notifying Parties’ view is based on a 
precedent from the Spanish National Competition Authority (“CNMC”) where the 
CNMC retained a broader market definition covering all alarm servic es.13 
(20) The Notifying Parties submit that so -called “Peace of Mind” solutions, which 
include electronic device -based security systems without connection to an ARC, 
should also be included into an overall market for security systems.14 Notably, the 
Notifying Pa rties identify a high degree of demand -side and supply -side 
substitutability. As regards the demand side, the Notifying Parties consider that 
Peace of Mind solutions cover the same need, i.e., detecting any abnormal event on 
the customer’s premise. The mai n difference is that Peace of Mind services are 
cheaper as customers “self -install” and “self -monitor” the solution with no technical 
support from professionals and as they have no connection to an ARC. However, 
they could always be upgraded to a professio nal alarm monitoring system at a later 
stage. As regards the supply side, the Notifying Parties submit that the underlying 
hardware and software for the supply of Peace of Mind solutions are very similar to 
                                                 
8  Commission decision of 2 August 2011 in case M.6292 – Securitas/Niscayah Group , paragraph 13.  
9  Commission decision of 2 August 2011 in case M.6292 – Securitas/Niscayah Group , paragraph 9.  
10  Commission decisions of 2 August 2011 in case M.6292 – Secur itas/Niscayah Group , paragraph 10; of 9 
November 2010 in case M.5993 – Securitas/Reliance Security Services/Reliance Security Services 
Scotland , paragraphs 15 -17. 
11  Commission decisions of 2 August 2011 in case  M.6292 – Securitas/Niscayah Group , paragraph  15; of 31 
January 2008 in case M.4986 – EQT V/Securitas Direct , paragraphs 12 -14. 
12  Form CO, paragraph 142.  
13  CNMC decision of 15 October 2015 in case  C/0697/15 – Securitas Direct/Segur Control , paragraphs 27 -
30 and 33.  
14  Notifying Parties’ reply to RFI 10 of 5 February 2020, question 12.  
 
 
5 those necessary for professional monitoring, albe it rendering a certification of the 
installation impossible as the alarm system would not be connected to an ARC.15 
4.2.1.3.  The Commission’s assessment  
(21) The results of the market investigation conducted in the present case generally 
confirmed the market definition derived from the Commission’s past decisional 
practice. A majority of respondents agree that the market for security systems can be 
segmented between (i) manned guarding services; (ii) alarm installation and 
maintenance (i.e. electronic guarding equipment); and (iii) alarm monitoring and 
response services.16 
(22) However, the Commission also takes note of the evidence from the CNMC’s 
precedent  which fol lowed the argument of the parties to that case  that alarm 
installation and maintenance services are usually sold in conjunction with alarm 
monitoring and response services in Spain.17 Moreover, a ccording to the Notifying 
Parties, a ll the main players in the  alarm systems market in Spain offer installation 
and maintenance services together with alarm monitoring and response services and 
it is difficult from a customer perspective to identify in those offers the possibility of 
acquiring one service separate fr om the other.18 
(23) A majority of respondents to the market investigation further confirmed that the 
market for alarm services could be segmented by type of customers, i.e. 
distinguishing between residential and business customers.19 
(24) Peace of Mind solutions have  different product characteristics and functionalities 
compared to traditional alarm services. In particular, they require self -installation 
and self -monitoring by the customer with no technical support from professionals. 
One respondent to the market inve stigation stressed that they exert competitive 
pressure on alarm services, without reaching a conclusion as to whether these 
services constitute a separate product market distinct from the market for alarm 
services.20 The Commission concludes that, for the purpose of this decision, Peace of 
Mind solutions do not form part of the market for security systems, even though they 
exert some competitive constraint on alarm services.  
(25) With regard to the other above -mentioned segmentations, namely between (i) 
manned g uarding services; (ii) alarm installation and maintenance (i.e. electronic 
guarding equipment); and (iii) alarm monitoring and response services and, for (ii) 
and (iii), a further potential sub -segmentation between residential and business 
customers , the C ommission considers that, in any event, for the purposes of this 
decision, the exact product market definition with regard to the market for security 
                                                 
15  The provision of professional alarm services is subject to country specific regulations and to an 
administrative authorization in Spain (Form CO, paragraphs 80 -84).  
16  Replies to questionnaire Q2 to alarm service s providers, questions 4 and 4.1; Replies to  questionnaire Q1 
to telecommunications operators, questions 4 and 4.1.  
17  CNMC decision of 15 October 2015 in case C/0697/15 – Securitas Direct/Segur Control , paragraphs 29 
and 33 . 
18  Notifying Parties’ reply t o RFI 10 of 5 February 2020, question 12. 
19  Replies to questionnaire Q2 to alarm services providers, questions 5 and 5.1; Replies to questionnaire Q1 
to telecommunications operators, questions 5 and 5.1.  
20  Replies to questionnaire Q1 to telecommunication s operators, questions 2.1, 4.1 and 23.1.  
 
 
6 systems can be left open, as the Transaction does not raise serious doubts as to its 
compatibility with th e internal market or the functioning of the EEA Agreement  
under any plausible product market definition.  
4.2.2.  Geographic market definition  
4.2.2.1.  Commission precedents  
(26) In its previous decisions, the Commission concluded that the market for  security 
systems, under any plausible segmentation, is  national in scope due to the existence 
of specific national regulations and standards, language differences and national 
preferences derived from the reputation of each of the players at the national level.21 
4.2.2.2.  The Notifying Parties ’ view  
(27) The Notifying Parties submit that, in accordance with the Commission’s practice, the 
geographic market is national in scope.22 
4.2.2.3.  The Commission’s assessment  
(28) All respondents to the market investigation conducted in the present case supported 
the market definition derived from the Commission’s past decisional practice.23 
(29) For the purpose of this decision, the Commission concludes that the market for 
security systems, including any plausible segmentation thereof, is national in scope.  
4.3. Telecommunication mark ets 
4.3.1.  Retail supply of mobile telecommunication services  
(30) Mobile telecommunication services to end customers include services for national 
and international voice calls, SMS (including MMS and other messages), mobile 
internet with data services, and retail in ternational roaming services.24  
(31) A segment of the market for retail mobile telecommunications services includes 
machine -to-machine (“M2M”) subscriptions. These allow machines, devices, 
appliances, etc., to connect wirelessly to the internet via mobile netwo rks, or other 
technologies, permitting the transmission and receipt of data to a central server.25 
M2M services are received through specific data -only M2M (SIM) cards, used for 
communication between machines (for instance, between different devices of an 
alarm system) and are mainly supplied to business customers.  
                                                 
21  Commission decision s of 2 August 2011 in case  M.6292 – Securitas/Niscayah Group , paragraphs 16 -18; 
of 9 November 2010 in case M.5993 – Securitas/Relience Security Services /Reliance Security Services 
Scotland , paragraph 24; of 31 January 2008 in case M.4986 – EQT V/Securitas Direct , paragraphs 16 -18. 
22  Form CO, paragraphs 161 -162. 
23  Replies to questionnaire Q2 to alarm services providers, questions 9 and 9.1.  
24  Commission decision s of of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 38; of 30 May 2018 
in case M.7000 – Liberty Global/Ziggo , paragraph 199 . 
25  Commission decision of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 38 . 
 
 
7 (32) TEF is active as mobile network operator (“MNO”) in the supply of mobile 
telecommunication (and M2M services) in Spain whereas Prosegur Alarmas is not 
active in this market.  
4.3.1.1.  Product market definition  
(A) Commission precedents  
(33) The Commission has previously considered that there is an overall retail market for 
mobile telecommunication services constituting a separate market from retail fixed 
telecommunication services. In previous decisions, the C ommission did not further 
segment the overall retail mobile market based on the type of service (e.g. voice 
calls, SMS, data services), or the type of network technology (e.g. 2G, 3G, 4G). The 
Commission considered possible segments of the overall retail m arket for mobile 
telecommunication services between pre -paid or post -paid services and private 
customers or business customers, concluding that these did not constitute separate 
product markets but rather represent market segments within an overall retail 
market.26 
(34) In previous decisions, the Commission concluded that there is a separate market for 
M2M services.27 
(B) The Notifying Parties’ view  
(35) The Notifying Parties submit that there is a single overall market for the provision of 
retail mobile telecommunication services, including M2M services.28 
(C)  The Commission’s assessment  
(36) The results of the market investigation conducted in the present case generally 
supported the market definition derived from the Commission’s past decisional 
practice.29 Notably, the respondent s highlighted several demand -side and supply -side 
substitutability issues. In particular, one respondent stressed that not all retail 
telecommunication service s providers offer M2M services, the reverse being also 
true. Furthermore, remote monitoring and c ontrol as well as predictive maintenance 
are key features for M2M services that are not necessary for traditional 
telecommunication services.30 
                                                 
26  Commission decision s of 18 July 2019 in c ase M.8864 – Vodafone/Certain Liberty Global Assets , recital 
67; of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraphs 201 and 207 ; of 1 September 
2016 in case M.7758 – Hutchison 3G Italy/Wind/JV , recital 162; of 3 August 2016 in case M.7978 – 
Vodafone/Liberty Global/Dutch JV , paragraph 74; of 11 May 2016 in case M.7612 – Hutchison 3G 
UK/Telefónica UK , recitals 255, 261, 270, 279, 287; of 2 July 2014 in case M.7018 – Telefónica 
Deutschland/E -Plus, recitals 31 to 55; of 28 May 2014 in case M.6992 – Hutchison 3G UK/Telefónica 
Ireland , recital 141; of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria , recital 
58. 
27  Commission decisions of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 40-42; of 27 November 
2018 in case M.87 92 – T-Mobile NL/Tele2 NL , recital 224.  
28  Form CO, paragraph 147.  
29  Replies to questionnaire Q1 to telecommunications operators, questions 6 and 6.1; Replies to 
questionnaire Q3 to international telecommunications operators, questions 4 and 4.1.  
30  Replies to questionnaire Q1 to telecommunications operators, questions 6 and 6.1.  
 
 
8 (37) The Commission therefore concludes, for the purpose of this decision, that M2M 
services constitute a separate market. As for the remaining part of the market for the 
provision of retail mobile telecommunications services, the exact product market 
definition can be left open as the Transaction does not raise serious doubts as to its 
compatibility with the internal market or the functioning of the EEA Agreement 
under any possible market definition.  
4.3.1.2.  Geographic market definition  
(A) Commission precedents  
(38) The Commission has found that the overall market for retail mobile 
telecommunication services (except M2M services) is n ational in scope.31 
(39) As for M2M services, the Commission assessed whether the geographic market was 
national or regional (e.g. including the Nordic countries in a specific case), but 
ultimately left the geographic market definition open.32 
(B) The Notifying Parti es’ view  
(40) The Notifying Parties submit that the segment for M2M services is at least EEA -
wide or global in scope as global M2M services are provided by all 
telecom munication  companies, including international operators.33 
(C) The Commission’s assessment  
(41) With reg ard to the overall market for retail mobile telecommunication services 
(excluding M2M services), the market investigation in this case did not provide any 
new elements justifying a departure from Commission’s previous decisions.34 
(42) As for the geographic scop e of M2M services, the market investigation has yielded 
mixed results depending on the area of activity of the responding operator. The 
majority of operators active in Spain consider that a potential market for M2M 
services is national in scope35, whereas s uppliers of M2M services mainly active 
outside of Spain have considered the geographic market to be wider in scope.36 
However, the respondents that argued for a wider geographic scope referred to 
devices which cross borders (e.g., connected cars), for which  a multi -national SIM 
card from a single connectivity provider would be required.37 This is not the case for 
alarm devices, which are installed at a fixed location.  
                                                 
31  Commission decisions of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
70; of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 46; of 27  November 2018 – T-Mobile 
NL/Tele2 NL , paragraph 234 , recital  234. 
32  Commission decision of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 46. 
33  Form CO, paragraph 169.  
34  Replies to questionnaire Q1 to telecommunications operators, questions 6 and  6.1; Replies to 
questionnaire Q3 to international telecommunications operators, questions 5 and 5.1.  
35  Replies to questionnaire Q1 to telecommunications operators, questions 12 and 12.1.  
36  Replies to questionnaire Q3 to international telecommunications operators, questions 5 and 5.1.  
37  Replies to questionnaire Q1 to telecommunications operators, questions 6 and 6.1; Replies to 
questionnaire Q2 to international telecommunications operators, questions 5 and 5.1.  
 
 
9 (43) For the purpose of this decision, the Commission concludes that the market for retail 
mobile  telecommunication services (excluding M2M services) is national in scope. 
As for the market for M2M services, the Commission considers that, for the 
purposes of this decision, the exact geographic market definition can be left open, as 
the Transaction doe s not raise serious doubts as to its compatibility with the internal 
market or the functioning of the EEA Agreement  under any plausible geographic 
market definition.  
4.3.2.  Retail supply of fixed telephony services  
(44) Fixed telephony services to end customers compri se the provision of subscriptions 
enabling access to public telephone networks at a fixed location for the purpose of 
making and/or receiving calls and related services.38  
(45) TEF is the incumbent provider of fixed telephony services in Spain whereas 
Prosegur Alarmas is not active in this market.  
4.3.2.1.  Product market definition  
(46) In previous decisions, the Commission considered whether a distinction between 
local/national and international calls as well as between residential and non -
residential customers should be drawn, based on the distinctions in the Commission 
Recommendation 2003/311/EC,39 but ultimately left the exact product market 
definition open.40 
(47) More recently, the Commission also considered that managed Voice over Internet 
Protocol (“VoIP”) services41 and tr aditional telephony are interchangeable and 
therefore belong to the same market. In recent decisions, the Commission considered 
that an overall retail market for fixed telephony services exists, which includes VoIP 
services.42 
                                                 
38  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
33; of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 47; of 3 August 2016 in case M.7978 – 
Vodafone/Liberty Global/Dutch JV , paragraph 21; of 4 February 2016 in case M.7637 – Liberty 
Global/BASE Belgium , recital 69; of 20 September 2013 in case M.6990 – Vodafone/Kabel Deutschland , 
paragraph 131.  
39  Commission Recommendation of 11 February 2003 on relevant product and service markets within the 
electronic communications sector susceptib le to ex ante regulation in accordance with Directive 
2002/21/EC of the European Parliament and of the Council on a common regulatory framework for 
electronic communication networks and services (Text with EEA relevance) (notified under document 
number C(2 003) 497), OJ L 114, 8.5.2003, p. 45 –49. 
40  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
40; of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 52; of 29 January 2010 in case M.5730 – 
Telefónica /Hansenet Telekommunikation , paragraph s 16-17; of 29 June 2009 in case M.5532 – Carphone 
Warehouse/Tiscali UK , paragraph s 35 and 39; of 7 September 2005 in case M.3914 – Tele2/Versatel , 
paragraph 10. 
41  VoIP is a technology that allows users to make voice calls using a broadband internet connection instead 
of a regular (or analogue) phone line . 
42  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
40; of 3 August 2016 in case M.7978 – Vodafone/Liberty Globa l/Dutch JV , paragraph 26; of 4 February 
2016 in case M.7637 – Liberty Global/BASE Belgium , recital 69; of 20 September 2013 in case M.6990 – 
Vodafone/Kabel Deutschland , paragraph 131.  
 
 
10 (48) The Notifying Parties agree  with the Commission’s past decisional practice in 
relation to the market for the retail supply of fixed telephony services.43 
(49) The Commission considers that, for the purposes of this decision, the exact product 
market definition with regard to the market for t he retail supply of fixed telephony 
services can be left open, as the Transaction does not raise serious doubts as to its 
compatibility with the internal market or the functioning of the EEA Agreement  
under any plausible product market definition.  
4.3.2.2.  Geograph ic market definition  
(50) In previous decisions, the Commission concluded that the retail market for the 
provision of fixed telephony services was national in scope.44 This is due to the 
continuing importance of national regulation in the telecommunications sect or, the 
supply of upstream wholesale services that work on a national basis, and the fact that 
the pricing policies of telecommunications providers are predominantly national.45 In 
Liberty Global/BASE Belgium and MEIF 6 Fiber/KCOM Group , the Commission 
assessed the possibility for the scope of the market for the retail provision of fixed 
telephony services to be narrower than national.46 More recently in 
Vodafone/Certain Liberty Global Assets , the Commission considered that the scope 
of the market for the ret ail provision of fixed telephony services was national.47 
(51) The Notifying Parties agree  with the Commission’s past decisional practice in 
relation to the market for the retail supply of fixed telephony services.48 
(52) The Commission considers that, for the purpose s of this decision, the exact 
geographic market definition with regard to the market for the retail supply of fixed 
telephony services can be left open, as the Transaction does not raise serious doubts 
as to its compatibility with the internal market or th e functioning of the EEA 
Agreement  under any plausible geographic market definition.  
4.3.3.  Retail supply of fixed internet access services  
(53) Fixed internet access services at the retail level consist of the provision of a fixed 
telecommunications link enabling cus tomers to access the internet through a fixed 
telecommunications connection.  
                                                 
43  Notifying Parties’ reply to RFI 11 of 13 February 2020, question 9.  
44  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
46; of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 56; of 30 May 2018 in case M.7000 – 
Liberty Global/Ziggo , paragraph 150; of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/ Dutch 
JV, paragraph 29 ; of 19 May 2015 in case M.7421 – Orange/Jazztel , recital 37 . 
45  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recitals 
44-45; of 29 June 2009 in case M.5532 – Carphone Warehouse/Tiscali UK , paragraph 47 ; of 7 December 
2006 in case M.4442 – Carphone Warehouse Group plc/AOL UK , paragraph 19 ; of 7 September 2005 in 
case M.3914 – Tele2/Versatel , paragraph 18.  
46  Comm ission decision s of 18 October 2019 in case M.9433 – MEIF 6 Fiber/KCOM Group , paragraphs 24 -
25; of 4 February 2016 in case M.7637 – Liberty Global/BASE Belgium , recital 73; . 
47  Commission decisions of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty  Global Assets , recital 
46. 
48  Notifying Parties’ reply to RFI 11 of 13 February 2020, question 9.  
 
 
11 (54) TEF is the incumbent provider of fixed internet access services in Spain whereas 
Prosegur Alarmas is not active in this market.  
4.3.3.1.  Product market definition  
(55) In previous cases, the Co mmission considered, but ultimately left open, possible 
segmentations within the supply of retail fixed internet access services according to 
(i) product type, distinguishing between narrowband, broadband and dedicated 
access; (ii) distribution mode, disti nguishing between xDSL, fibre, cable (fixed -only) 
and internet provided through the mobile network infrastructure (fixed -wireless); and 
(iii) customer type, distinguishing between residential and small business customers 
on the one hand, and larger busines s customers and public authorities on the other.49 
At the same time, the Commission noted that the retail market for fixed internet 
access services should not be segmented according to download speed.50  
(56) More recently, in Vodafone/Certain Liberty Global Assets , the Commission 
considered that the relevant product for the retail supply of fixed internet access 
services is the overall retail market for the provision of fixed internet access services, 
including all product types, distribution modes and speeds /bandwidths, to residential 
and small business customers, excluding the supply of fixed internet services 
provided through mobile network infrastructure.51 
(57) The Notifying Parties submit that there is a single overall market for the retail 
provision of fixed internet access services, without further segmentations.52 
(58) The Commission considers that, in any event, for the purposes of this decision, the 
exact product market definition with regard to the market for the retail supply of 
fixed internet access services  can be left open, as the Transaction does not raise 
serious doubts as to its compatibility with the internal market or the functioning of 
the EEA Agreement  under any plausible product market definition.  
4.3.3.2.  Geographic market definition  
(59) In previous decisions, t he Commission concluded that the retail market for the 
provision of fixed internet services was national in scope.53 In Liberty Global/BASE 
Belgium  and MEIF 6 Fiber/KCOM Group , the Commission considered whether the 
                                                 
49  Commission decision s of 18 October 2019 in case M.9433 – MEIF 6 Fiber/KCOM Group , paragraph 37; 
of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV , paragraph 38 ; of 20 September 
2013 in case M.6990 – Vodafone/Kabel Deutschland , paragraphs 192 -194; of 29 June 2010 in case 
M.5532 – Carphone Warehouse/Tiscali UK , paragraphs 721 . 
50  Commission decision s of 18 October 2019 in case M.9433 – MEIF 6 Fiber/KCOM Group , paragraph 37; 
of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV , paragraph 38 ; of 20 September 
2013 in case M.6990 – Vodafone/Kabel Deutschland , paragraphs 192 -194; of 29 June 2010 in case 
M.5532 – Carphone Wareho use/Tiscali UK , paragraphs 721 . 
51  Commission decision of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
56. 
52  Form CO, paragraph 153 . 
53  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
61; of 30 May 2018 in case M.7000 – Liberty Global/Ziggo, paragraph  169; of 3 August 2016 in case 
M.7978 – Vodafone/Liberty Global/Dutch JV , paragraph 40 ; of 20 September 2013 in case M.6990 – 
Vodafone/Kabel Deutschland , paragraph 197; of 2 9 June 2010 in case M.5532 – Carphone 
Warehouse/Tiscali UK , paragraph 47; of 29 January 2010 in case M.5730 – Telefónica/Hansenet 
Telekommunikation , paragraph 28 . 
 
 
12 geographic scope of the market should be d efined on a national, regional basis or by 
reference to the footprint of the operators’ networks, but ultimately left the question 
open.54 More recently, in Vodafone/Certain Liberty Global Assets , the Commission 
considered the geographic scope of the retail  market for the provision of fixed 
internet services was national in scope.55 
(60) The Notifying Parties agree with the Commission’s assessment and submit that the 
relevant market for the retail provision of fixed internet services is national in 
scope.56 
(61) The Com mission considers that, in any event, for the purposes of this decision, the 
exact geographic market definition with regard to the market for the retail supply of 
fixed internet access services  can be left open, as the Transaction does not raise 
serious do ubts as to its compatibility with the internal market or the functioning of 
the EEA Agreement  under any plausible geographic market definition.  
4.3.4.  Retail supply of TV services  
(62) TV distributors either limit themselves to carrying TV channels and making them 
available to end users, or also act as channel aggregators, which “package” TV 
channels into “bouquet” retail offers. The TV services supplied by TV distributors to 
end users consist of: (i) packages of linear TV channels (which they have either 
acquired or produced themselves); and (ii) content aggregated in non -linear services, 
such as video on demand (“VOD”), Subscription VOD (“SVOD”), Transactional 
VOD (“TVOD”) and Pay -Per-View (“PPV”). TV content can be delivered to end 
users through a number of technica l platforms including terrestrial (“DTT”), cable, 
satellite and IPTV.57 Over -The-Top (“OTT”) players deliver channels and content in 
both a linear and non -linear fashion through the use of the internet.  
(63) TEF is active in the retail supply of TV services in S pain whereas Prosegur Alarmas 
is not active in this market.  
4.3.4.1.  Product market definition  
(64) In previous cases, the Commission distinguished two separate markets for the retail 
supply of television services: (i) Free -to-Air (“FTA”) TV and (ii) pay -TV.58 The 
                                                 
54  Commission decision s of 4 February 2016 in case M.7637 – Liberty Global/BASE Belgium , recitals 62 -
64; of 18 October 2019 in case M.9433 – MEIF 6 Fiber/KCOM Group , paragraph 43 . 
55  Commission decision of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
61. 
56  Form CO, paragraph 171.  
57  IPTV is the abbreviation fo r Internet Protocol TV; it is a system through which television services are 
delivered using the internet protocol over a packet -switched network such as the internet, instead of being 
delivered through traditional terrestrial, satellite signal and cable t elevision formats . 
58  Commission decisions of 18 July 2007 in case M.4504 – SFR/Télé 2 France , recital 40, and of 25 June 
2008 in case M.5121 – News Corp /Premiere , paragraph 20. In other cases this question has been left open 
(see for instance the Commission decisions of 5 September 2019 in case M.9416 – Bolloré Group/M7 
Group , paragraph 51; of 15 July 2019 in case M.9370 – Telenor/DNA , paragraph 22; of 18 October 2019 
in case M.9433 – MEIF 6 Fiber/KCOM Group , paragraph 53; of 30 May 2018 in case M.7000 – Liberty 
Global/Ziggo , paragraph 135 ; of 24 February 2015 in case M.7194 – Liberty Global/Corelio/W&W/De 
Vijver Media , recital s 119-120; of 25 June 2008 in case M.5 121 – News Corp/Premiere , paragraphs 15 
and 21) . 
 
 
13 Commis sion also considered whether pay -TV can be segmented further according 
to: (i) linear vs non -linear pay -TV services;59 (ii) distribution technologies (e.g. 
cable, satellite, or terrestrial);60 (ii) distribution technologies (e.g. cable, satellite, or 
terrest rial);61 and (iii) premium vs basic pay -TV services.62 In certain countries, due 
to the large penetration of pay -TV services and the fact that such services also carry 
the main FTA channels, the Commission has identified two separate product markets 
for: (i)  basic pay -TV services (including FTA services) and (ii) premium pay -TV 
services. In previous cases, the Commission has left open the market definition with 
regard to each of these potential sub -segments.63 
(65) The Notifying Parties submit that there is a singl e overall market for the retail 
provision of TV services.64  
(66) The Commission considers that, in any event, for the purposes of this decision, the 
exact product market definition with regard to the market for the retail supply of TV 
services  can be left open, as the Transaction does not raise serious doubts as to its 
compatibility with the internal market or the functioning of the EEA Agreement  
under any plausible product market definition.  
4.3.4.2.  Geographic market definition  
(67) The Commission has pre viously considered that the market for the retail provision of 
TV services is either national, or limited to the geographic coverage of a supplier’s 
cable network.65 
                                                 
59  Commission decision s of 5 September 2019 in case M.9416 – Bolloré Group/M7 Group , paragraph 51; of 
15 July 2019 in case M.9370 – Telenor/DNA , paragraph 22; of 18 October 2019 in case M.9433 – MEIF 6 
Fiber /KCOM Group , paragraph 53; of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraph 
135; of 24 February 2015 in case M.7194 – Liberty Global/Corelio/W&W/De Vijver Media , recital 124; of 
25 June 2008 in case M.5121 – News Corp/Premiere , paragraph 21 . 
60  Commission decision s of 5 September 2019 in case M.9416 – Bolloré Group/M7 Group , paragraph 51; of 
15 July 2019 in case M.9370 – Telenor/DNA , paragraph 22; of 18 October 2019 in case M.9433 – MEIF 6 
Fiber/KCOM Group , paragraph 53; of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraph 
136; of 24 February 2015 in case M.7194 – Liberty Global/Corelio/W&W/De Vijver Media , recital  127; of 
21 December 2010 in case M.5932 – News Corp/BskyB , paragraph 105; of 25 June 2008 in case M.5121 – 
News Corp/Premiere , paragraph 22 . 
61  Commission decision s of 5 September 2019 in case M.9416 – Bolloré Group/M7 Group , paragraph 51; of 
15 July 2019 in case M.9370 – Telenor/DNA , paragraph 22; of 18 October 2019 in case M.9433 – MEIF 6 
Fiber/KCOM Group , paragraph 53; of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraph 
136; of 24 February 2015 in case M.7194 – Liberty Global/Corelio/W&W/De Vijver Media , recital  127; of 
21 December 2010 in case M.5932 – News Corp/BskyB , paragraph 105; of 25 June 2008 in case M.5121 – 
News Corp/Premiere , paragraph 22 . 
62  Commission decision s of 5 September 2019 in case M.9416 – Bolloré Group/M7 Group , paragraph 51; of 
15 July 2019 in case M.9370 – Telenor/DNA , paragraph 22; of 18 October 2019 in case M.9433  – MEIF 6 
Fiber/KCOM Group , paragraph 53; of 24 February 2015 in case M.7194 – Liberty 
Global/Corelio/W&W/De Vijver Media , recital 119 . 
63  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
83; of 5 Septem ber 2019 in case M.9416 – Bolloré Group/M7 Group, paragraph 51; of 15 July 2019 in 
case M.9370 – Telenor/DNA , paragraph 22; of 15 June 2018 in case M.8861 – Comcast/Sky , paragraphs 
57-59; of 7 April 2017 in case M.8354 – Fox/Sky , paragraph 101 . 
64  Notifying Parties’ reply to RFI 11  of 13 February 2020 , question 10 . 
65  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
88; of 5 September 2019 in case M.9416 – Bolloré Group/M7 Group , paragraph 55; of 24 February 2015 
in case M.7194 – Liberty Global/Corelio/W&W/De Vijver Media . 
 
 
14 (68) The Notifying Parties have not objected to the Commission’s past decisional practice 
in rel ation to the market for the retail supply of TV services.66 
(69) The Commission considers that, in any event, for the purposes of this decision, the 
exact geographic market definition with regard to the market for the retail supply of 
TV services  can be left ope n, as the Transaction does not raise serious doubts as to 
its compatibility with the internal market or the functioning of the EEA Agreement  
under any plausible geographic market definition.  
4.3.5.  Retail supply of multiple play services  
(70) The term “multiple play” relates to offers comprising two or more of the following 
services provided to retail consumers: fixed telephony, fixed internet access, TV and 
mobile telecommunications services. Multiple play comprising two, three or four of 
these services is referred to  as dual play (“2P”), triple play (“3P”) and quadruple play 
(“4P”) respectively.  
(71) TEF is a supplier of multiple play services in Spain whereas Prosegur Alarmas is not 
active in this market.  
4.3.5.1.  Product market definition  
(A) Commission precedents  
(72) In previous decisio ns, the Commission considered, but ultimately left open, the 
existence of distinct markets for the supply of multiple play offerings that comprise a 
bundle of two or more telecommunication (fixed internet access, fixed telephony, 
mobile) and TV services.67 In its previous analysis of this market,68 the Commission 
examined the factors associated with the rise in popularity of multiple play offers. In 
particular, customers choose multiple play bundles mainly because of the lower 
price, additional benefits and convenience of having one supplier/point of contact. 
From the supply -side, operators offer bundled serv ices as a tool to increase customer 
loyalty and reduce customer churn.  
(B) The Notifying Parties’ view  
(73) The Notifying Parties consider that it is unlikely that there is a separate retail market 
for the provision of multiple play services due to potential demand -side 
                                                 
66  Notifying Parties’ reply to RFI 11 of 13 February 2020, question 10.  
67  Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 
161; of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraph 230 ; of 4 February 2016 in case 
M.7637 – Liberty Global/BASE Belgium , recital 96; of 19 May 2015 in case M.7421 Orange/Jazztel , 
recitals 86 and 91; of 20 September 2013 in case M.6990 – Vodafone/Kabel Deutschland , paragraph 261; 
of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless , paragraphs 102 -104; of 16 June 2011 in 
case M.5900 – LGI/KBW , paragraphs 183 -186; of 25 January 2010 in case M.5734 – Liberty Global 
Europe/Unitymedia , para graphs 43 -48. 
68  See, for example, Commission decision s of 18 July 2019 in case M.8864 – Vodafone/Certain Liberty 
Global Assets , recital 153; of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV , 
paragraph 93.  
 
 
15 substitutability between multi -play offerings and their separate component 
services.69 
(C) The Commission’s assessment  
(74) The results of the market investigation conducted in the present case generally 
supported the possibility of a potential separate market  for the retail supply of 
multiple play services. In particular, most respondents considered that quadruple 
play (“4P”) offerings that comprise fixed internet access, fixed telephony, mobile 
and TV services have a high penetration in the Spanish residentia l market.70 
(75) The Commission considers that, in any event, for the purposes of this decision, the 
exact product market definition with regard to the market for the retail supply of 
multiple play services  can be left open, as the Transaction does not raise ser ious 
doubts as to its compatibility with the internal market or the functioning of the EEA 
Agreement  under any plausible product market definition.  
4.3.5.2.  Geographic market definition  
(A) Commission precedents  
(76) In previous decisions, the Commission considered that the  geographic scope of any 
possible retail market for multiple play services would be national since the 
components of the multiple play offers are offered individually at national level and 
the bundling of the services would not change the geographic scope of the 
components. It nevertheless left the exact geographic delineation of the possible 
multiple play market open.71 However, in recent decisions, the Commission noted 
that bundles display their competitive effects on a national basis.72 
(B) The Notifying Parti es’ view  
(77) The Notifying Parties agree that a possible market for the retail provision of multiple 
play services is national in scope.73 
(C) The Commission’s assessment  
(78) The market investigation in this case did not provide any new elements justifying a 
departure from the Commission's previous decisions.74 
(79) The Commission considers that, for the purposes of this decision, the exact 
geographic market definition with regard to the market for the retail supply of 
multiple play services  can be left open, as the Transacti on does not raise serious 
                                                 
69  Form CO, paragraph 160.  
70  Replies to questionnaire Q1 to telecommunications operators, questions 7 and 7.1.  
71  Commission decision s of 18 October 2019 in case M.9433 – MEIF 6 Fiber/KCOM Group , paragraph 70; 
of 19 May 2015 in case M.7421 – Orange/Jazztel , recitals 89 -90; of 20 September 2013 in case M.6990 – 
Vodafone/Kabel Deutschland , paragraphs 263 -265; of 16 June 2011 in case M.5900 – LGI/KBW , 
paragraphs 183 -186. 
72  Commission decision s of 30 May 2018 in case M.7000 – Liberty Global/Ziggo , paragraph 232 of 18 July 
2019 in case M.8864 – Vodafone/Certain Liberty Global Assets , recital 165.  
73  Form CO, paragraph 173.  
74  Replies to questionnaire Q1 to telecommunications operators, questions 7 and 7.1.  
 
 
16 doubts as to its compatibility with the internal market or the functioning of the EEA 
Agreement  under any plausible geographic market definition.  
5. COMPETITIVE ASSESSMEN T 
5.1. Analytical framework  
(80) Under Article 2(2) and Article 2 (3) of the Merger Regulation, the Commission must 
assess whether a proposed concentration would significantly impede effective 
competition in the internal market or in a substantial part of it, in particular through 
the creation or strengthening of a dominant pos ition.  
(81) In this respect, a merger may entail horizontal and/or non -horizontal effects. 
Horizontal effects are those deriving from a concentration where the undertakings 
concerned are actual or potential competitors of each other in one or more of the 
releva nt markets concerned. Non -horizontal effects are those deriving from a 
concentration where the undertakings concerned are active in different relevant 
markets.  
(82) As regards non -horizontal mergers, two broad types of such mergers can be 
distinguished: vertic al mergers and conglomerate mergers.75 Vertical mergers 
involve companies operating at different levels of the supply chain.76 Conglomerate 
mergers are mergers between firms that are in a relationship which is neither 
horizontal (as competitors in the same r elevant market) nor vertical (as suppliers or 
customers).77 
(83) The Commission appraises horizontal effects in accordance with the guidance set out 
in the relevant notice, that is to say th e Horizontal Merger Guidelines.78 
Additionally, the Commission appraises non-horizontal effects in accordance with 
the guidance set out in the relevant notice, that is to say the Non -Horizontal Merger 
Guidelines.  
5.2. Affected markets  
(84) The Transaction results in a limited horizontal overlap between the Parties’ activities 
in the prov ision of security systems, more precisely in the provision of (i) alarm 
installation and maintenance services and (ii) alarm monitoring and response 
services to all, residential and business , customers in Spain. However, a horizontally 
affected market coul d only arise in the potential segment for alarm services for 
business customers. In this segment, the Parties had a combined market share of [20-
30]% by value in Spain in 2018 ( PCS [10-20]%, Prosegur Alarmas [5-10]% and TEF 
[0-5]%79). However, in light of T EF’s de minimis  presence in this segment, the 
                                                 
75  Guidelines on the assessment of non -horizontal merger s under the Council Regulation on the control of 
concentrations between undertakings ("Non -Horizontal Merger Guidelines"), OJ C 265, 18.10.2008, 
paragraph 3.  
76  Non-Horizontal Merger Guidelines, paragraph 4.  
77  Non-Horizontal Merger Guidelines, paragraph 5 . 
78  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of 
concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C 31, 05.02.2004.  
79  TEF’s exact market share is [0-5]%. 
 
 
17 increment of the Herfindahl -Hirschman Index (“HHI”) of below 150 ( i.e., 0.1) and 
the fact that sufficient credible competitors would remain (in particular Securitas 
Direct and Tyco with market shares of 34.9% and 23.1%, respectively ), the 
Commission considers that the concentration does not raise serious doubts as to its 
compatibility with the common market in the potential segment for alarm services 
for business customers. As for the market for alarm services and the plausible 
segmentation for residential customers, in light of TEF’s de minimis  presence in the 
supply of alarm services, amounting to a market share of [0-5]%, and the Parties’ 
combined market share of below 20% , there is no horizontally affected m arket. 
Therefore, the horizontal overlaps between the Parties will not be considered further.   
(85) Moreover, TEF supplies M2M services, which are used as input for the provision of 
alarm services. Therefore, the Transaction gives rise to vertically affected ma rkets in 
relation to TEF’s activities in the upstream market for the supply of M2M services 
and Prosegur Alarmas’ activities in the downstream market for the supply of alarm 
services (i.e., (i) alarm installation and maintenance services and (ii) alarm 
monitoring and response services to all, residential and business customers) in 
Spain.80  
(86) The Transaction further results in a potential conglomerate relationship in relation to 
the potential bundling of TEF’s and Prosegur Alarmas’ services in the markets for 
telecommunication and TV services (i.e., (i) mobile telecommunication services, (ii) 
fixed telephony services, (iii) fixed internet access services, (iv)  TV services and (v) 
multiple play services) and alarm services (i.e., (i) alarm installation and 
main tenance services and (ii) alarm monitoring and response services), which can be 
considered to be closely related markets for residential and SME customers81, in 
Spain.  
5.3. Market shares  
(87) According to the Non -Horizontal Merger Guidelines, market shares provide u seful 
first indications of the market structure and of the competitive importance of both the 
merging parties and their competitors.82,83 
                                                 
80  Alarm services provide rs also purchase other telecommunication services, such as fixed  telephony,  mobile 
telecommunication and business connectivity. However, these do not give rise to meaningful vertical 
relationships. First, these concern standard telecommunication ser vices, similar to those purchased by  any 
other business  customer . Second, among telecommunication services, M2M services are by far the most 
relevant cost category (Form CO, Annex 1.1, section 2.2., page 8). Third, alarm services providers 
responding to th e market investigation have not identified any telecommunication services, other than 
M2M services, as important input to the provision of alarm services ( Replies to questionnaire Q2 to alarm 
services providers, questions 3.1 and 13.3).  
81  The potential bu ndling of telecommunication and alarm services for larger business customers was not 
identified as plausible scenario based on the market investigation and available evidence on industry 
trends. Moreover, Prosegur Alarmas and TEF are not active in the supp ly of alarm services to business 
customers and hence, in any case, there would be no Transaction -specific change in relation to business 
customers.  
82  Non-Horizontal Merger Guidelines, paragraph 24.  
83  The presented market shares for all markets cover the  last three business years, i.e., 2016, 2017 and 2018, 
for which complete market share information is available. Market share information for the full year 2019 
is not yet available.  








 
 
26 foreclosure occurs wh ere the merger is likely to foreclose upstream competitors by 
restricting their access to a sufficient customer base.  
(123)  In assessing the likelihood of an anticompetitive foreclosure scenario, the 
Commission examines, first, whether the merged entity would ha ve, post -merger, the 
ability to substantially foreclose access to inputs or customers, second, whether it 
would have the incentive to do so, and third, whether a foreclosure strategy would 
have a significant detrimental effect on competition.97 
(124)  As regards a bility to foreclose, under the Non -Horizontal Merger Guidelines, input 
foreclosure may lead to competition problems if the upstream input is important for 
the downstream product.98 For input foreclosure to be a concern, a vertically 
integrated merged entity  must have a significant degree of market power in the 
upstream market. It is only in those circumstances that the merged entity can be 
expected to have significant influence on the conditions of competition in the 
upstream market and thus, possibly, on pr ices and supply conditions in the 
downstream market.99  
(125)  With respect to incentives to foreclose, paragraph 40 of the Non -Horizontal Merger 
Guidelines states that the incentive of the merged entity to foreclose depends on the 
degree to which foreclosure woul d be profitable. The vertically integrated firm will 
take into account how its suppl y of inputs to competitors downstream will affect not 
only the profits of its upstream division, but also of its downstream division. 
Essentially, the merged entity faces a  trade -off between the profit lost in the 
upstream market due to a reduction of input sales to (actual or potential) rivals and 
the profit gain, in the short or longer term, from expanding sales downstream or, as 
the case may be, being able to raise prices  for consumers.100 Additionally, paragraph 
42 of the Non -Horizontal Merger Guidelines indicates that “[t]he incentive for the 
integrated firm to raise rivals' costs further depends on the extent to which 
downstream demand is likely to be diverted away from f oreclosed rivals and the 
share of that diverted demand that the downstream division of the integrated firm can 
capture”.  
(126)  As regards the effects of input foreclosure, the Non -Horizontal Merger Guidelines 
explain that such conduct raises competition concerns  when it leads to increased 
prices on the downstream market. First, anticompetitive foreclosure may occur when 
a vertical merger allows the merging parties to increase the costs of downstream 
rivals in the market thereby leading to upward pressure on their  sales prices. Second, 
effective competition may be significantly impeded by raising barriers to entry to 
potential competitors.101 The Non -Horizontal Merger Guidelines further state that if 
there remain sufficient credible downstream competitors whose costs  are not likely 
to be raised, for example because they are themselves vertically integrated or they 
are capable of switching to adequate alternative inputs, competition from those firms 
                                                 
97  Non-Horizontal Merger Guidelines, paragraph 32.  
98  Non-Horizontal Merger Guidelines, paragraph 34.  
99  Non-Horizontal Merger Guidelines, paragraph 35.  
100  Non-Horizontal Merger Guidelines, paragraph 40.  
101  Non-Horizontal Merger Guidelines, paragraphs 47 -49. 
 
 
27 may constitute a sufficient constraint on the merged entity and theref ore prevent 
output prices from rising above pre -merger levels.102  
(127)  For customer foreclosure to be a concern, a vertical merger must involve a company 
which is an important customer with a significant degree of market power in the 
downstream market. If, on th e contrary, there is a sufficiently large customer base, at 
present or in the future, that is likely to turn to independent suppliers, the 
Commission is unlikely to raise competition concerns on that ground.103 
5.4.2.  Assessment of potential input foreclosure  
(128)  This section assesses the risk of input foreclosure with regard to M2M services as 
M2M services are used as input in the provision of alarm services, i.e., concerning 
the possible markets for (i) alarm installation and maintenance and (ii) alarm 
monitoring and response services for all, residential and business customers in 
Spain.104 The possible segmentation s by type of  alarm service and type of customer 
do not have any impact on the competitive assessment and therefore the assessment 
focusses on the downstream m arket for the provision of alarm services to all 
customers.  
5.4.2.1.  The Notifying Parties’ views  
(129)  The Notifying Parties submit that TEF will not have the ability or the incentive to 
restrict access to M2M services or to raise prices to downstream competitors of 
Prosegur Alarmas post -Transaction.105 
As regards ability  
(130)  First, the Notifying Parties submit that M2M services do not constitute an important 
input for the provision of alarm services. They note that M2M services are a pure 
commodity in the context of the provision of alarm services. Accordingly, there is no 
specific technology or differentiation among different telecommunication providers. 
M2M services would only represent about [0-5]% of the total cost of Prosegur 
Alarmas’ products and services. Moreover, the Notifying Parties argue that M2M 
services are mainly  used as backup line, while the end customer’s fixed internet 
access connection would usually be used as primary source of connectivity. 
Nevertheless, the Notifying Parties acknowledge that it is advisable for alarm 
services providers to have more than one  M2M services provider in order to ensure 
universal geographic coverage.106 
                                                 
102  Non-Horizontal Merger Guidelines, paragraph 50.  
103  Non-Horizontal Merger Guidelines, paragraph 61.  
104  The assessme nt focusses on input foreclosure. Customer foreclosure can be excluded, considering that the 
telecommunication services acquired by Prosegur  Alarmas represent […] share of the total revenues of 
TEF’s rival telecommunications  providers. In particular, accor ding to the Notifying Parties, Prosegur 
Alarmas’ expenditure in telecommunication services  (including M2M services as one service)  represents 
less than [0-5]% of the total joint revenues of TEF’s rivals  (Form CO, Annex 1.1, section 2.3, page  19). 
Therefore , TEF’s rivals would not face any appreciable competitive disadvantage if the JV started 
acquiring services exclusively from T EF. 
105  Form CO, paragraphs 188 -207. 
106  Form CO, Annex 1.1, section 2.2.1, pages 9 -12. 
 
 
28 (131)  Second, the Notifying Parties submit that TEF would not have  a significant degree of 
market power in the upstream market. On the one hand, the Notifying Parties point 
out that TEF’s market share in the provision of M2M services in Spain has decreased 
from [40-50]% in 2016 to [30-40]% in 2018 while TEF’s main competitors, Orange 
and Vodafone , were able to increase their market shares. On the other hand, they 
explain that TEF would cont inue to face substantial competition from international 
operators (e.g. AT&T, SFR, TIM, Telenor, T -Mobile), that provide M2M services in 
Spain based on roaming agreements and which would be credible alternative 
suppliers for alarm services providers.107 
As regards incentives  
(132)  The Notifying Parties emphasise that TEF would never jeopardi se its position in the 
telecom munication  market, which is its core business, in favour of Prosegur 
Alarmas’ presence in alarm services. In 2018, TEF has more than […] subscriber s to 
its Movistar Fusión multiple play product alone whereas Prosegur Alarmas has only 
[…] subscribers to its alarm services.108 
(133)  Moreover, Prosegur Alarmas would have a moderate market share of about [10-
20]% in the downstream market  for the provision of alarm services , which would 
limit the base of sales on which the JV could potentially enjoy increased margins 
following a foreclosure strategy.109 
As regards effects  
(134)  The Notifying Parties argue that even if TEF tried to foreclose competing suppliers 
of alarm se rvices, TEF would not be able to generate a competitive disadvantage to 
competitors given the low share that M2M services represent of the total costs for 
alarm services providers and the existence of credible alternative suppliers of M2M 
services.110 
5.4.2.2.  The Commission’s assessment  
(135)  For the reasons set out below, the Commission considers that TEF will not have the 
ability and incentive to foreclose non -integrated competitors by engaging in input 
foreclosure, e.g. by stopping the supply of M2M services to the JV ’s rivals or to 
provide M2M services at less favourable terms and conditions than pre -Transaction. 
Furthermore, even if TEF tried to engage in input foreclosure, such a strategy would 
not have a significant ly detrimental effect on competition.  
As regards a bility  
(136)  The Commission considers that TEF is unlikely to have the ability to engage in an 
input foreclosure strategy.  
(137)  As explained by the Notifying Parties, alarm services can and are often provided 
based on the fixed telecommunication service contracted by  the end customer. In this 
                                                 
107  Form CO, Annex 1.1, section 2.2.1, pages 12-15. 
108  Form CO, Annex 1.1, section 2.2.2, pages 15 -18. 
109  Form CO, Annex 1.1, table 8, page 23 . 
110  Form CO, Annex 1.1, section 2.2.3, pages 18 -19. 
 
 
29 case, there is no wholesale relationship between the telecommunication operators 
and alarm services providers, as the alarm systems use the fixed internet access 
already installed at the client’s property.111 
(138)  However, all alarm ser vices providers responding to the market investigation 
confirmed that they also use M2M services in their alarm systems.112 While many 
alarm services providers use M2M services as primary source of connectivity, others 
employ M2M services only as  a back -up line. There are mixed views as to whether a 
M2M connection is essential for the provision of alarm services, but the majority of 
respondents are of the view that a M2M connection, either as primary or back -up 
solution, is very important for the provision of  alarm services. One respondent 
explains that M2M services deliver an essential component of its services, allowing 
for access control, alarm triggering, SOS requests and general communication with 
the ARC.113 Therefore, the Commission considers that it cann ot be excluded that 
M2M services constitute an important input without which alarm services could not 
effectively be sold on the market.  
(139)  For input foreclosure to be a concern, the Parties must have a significant degree of 
market power and a significant in fluence on the conditions of competition in the 
upstream market.  TEF is the market leader in the provision of M2M services with a 
share of [30-40]% in 2018, followed by Orange and Vodafone with market shares of 
[30-40] and [20-30]%, respectively.114 The three Spanish MNOs are the main 
providers of M2M services in an overall concentrated market. Each of the MNOs 
active on this market is likely to have some degree of market power but not a 
significant degree of market power in light of the existence of  at least two alternative 
suppliers with strong positions.  
(140)  Moreover, the results of the market investigation provided further elements to 
support the view that TEF is unlikely have to a significant degree of market power in 
the upstream market, both in gen eral and specifically with regard to providers of 
alarm services.  
(141)  First, respondents to the market investigation indicated that there are several credible 
alternative suppliers of M2M services for alarm services providers in Spain.115 
Respondents mentioned O range and Vodafone but also referred to Másmóvil and 
Euskaltel, for which the Notifying Parties have not provided market share estimates. 
Therefore, there are at least three main competitors and two smaller competitors 
active on the Spanish market for M2M services.  
(142)  Second, some alarm services providers indicated that international 
telecommunication operators and/or resellers offering M2M services in Spain based 
on roaming agreements can be considered as credible alternative suppliers.116 While 
the provision o f M2M services by non -Spanish operators is not considered to be part 
                                                 
111  Form CO, paragraph 17.  
112  Replies to questionnaire Q2 to alarm services provider s, question 13.  
113  Repl ies to questionnaire Q2 to alarm services providers, questions 13.1 -13.5; non -confidential submission 
of a competitor of Prosegur Alarmas of 13 February 2020, page 2.  
114  Form CO, table 39.  
115  Replies to questionnaire Q1 to telecommunications  operators, question 16; Replies to questionnaire Q2 to 
alarm services provider s, question 16.  
116  Replies to questionnaire Q2 to alarm services providers, question s 10 and 10.1 . 
 
 
30 of the relevant market (as explained in section 4.3.1.2 ), the results of the mar ket 
investigation suggest that non -Spanish operators and/or resellers represent a certain 
competitive constraint for some alarm services providers. Nevertheless, other alarm 
services providers indicated that non -Spanish operators are not competitive in ter ms 
of price and service.117 
(143)  Third, respondents to the market investigation explained that alarm services 
providers do not have any special requirements in terms of price, quality or 
coverage. One Spanish MNO explained: “ M2M services provided to security 
services providers are similar to M2M services offered to other customers, they do 
not have specific requirements in terms of price, quality or coverage. Services are 
based on mobile voice, data or SMS services to connect the alarm systems of end 
customers .”118 
(144)  Fourth, the results of the market investigation confirmed that there are generally no 
spots or wider geographic areas in Spain where TEF is the only viable operator with 
sufficient network coverage.119 This is also in line with the results of Umlaut’s 2019 
study on data service network coverage for the main Spanish mobile 
telecommunication providers, in urban and non -urban areas.120 The results of this 
study show that the level of coverage is close to 100% for all providers. This is 
further corroborated by the fact that not all alarm services providers responding to 
the market investigation currently purchase M2M cards from TEF. Some rely 
exclusively on TEF’s competitors, such as Vodafone and Orange, which shows that 
TEF is dispensable.121  
(145)  In case mobile connecti vity of one or several MNOs should be poor or unstable in a 
very specific location of the alarm device, respondents explain that alarm services 
providers can still ensure connectivity by relying either on roaming agreements 
between different MNOs or on a f ixed internet access connection.122   
(146)  In the course of the market investigation, only one alarm services provider submitted 
a significantly different view and considered that TEF’s M2M services are an 
essential input which is not replicable by other supplier s in certain areas of Spain.123 
This complainant itself acknowledges that “ all these three telecoms operators [TEF, 
Vodafone, Orange] can grant coverage in more than 99% of Spain ”124, however, it 
submits that the strength of the signal can vary between operato rs which could have 
an impact of the reliability of the alarm system. These concerns are inconsistent with 
the majority view expressed by other alarm services providers which explain that 
                                                 
117  Replies to questionnaire Q2 to alarm services providers, question s 10 and 1 0.1. 
118  Replies to questionnaire Q1 to telecommunications operators, question 13.1; Replies to questionnaire Q2 
to alarm services providers, question 13.1.  
119  Replies to questionnaire Q1 to telecommunications operators, question 16.3; Replies to questionna ire Q2 
to alarm services providers, question 13.1.  
120  Umlaut, 2019, El análisis de las redes de telefonía móvil en España en 2019. This study is based on 1 600 
million observations obtained from 154 000 users between April and September 2019.  
121  Replies to questionnaire Q2 to alarm services provider s, question 15.1.  
122  Replies  to questionnaire Q1 to telecommunications  operators, question 11; Replies  to questionnaire Q2 to 
alarm services provider s, question 13.2. 
123  Replies to questionnaire Q2 to a larm services providers, questions 13 -16.3.  
124  Replies to questionnaire Q2 to alarm services provider s, question 16.1.  
 
 
31 there are numerous alternative suppliers of M2M services with a suff icient level of 
service.  
(147)  Finally, as explained by the Notifying Parties, M2M services represent about […] of 
the total cost of Prosegur Alarmas’ products and services.125 Hence, any partial 
foreclosure strategy consisting in increasing the price of TEF’s M2 M services would 
not result in a significant increase in rival alarm services providers’ costs.  The 
market investigation did not provide any elements contesting the Notifying Parties’ 
argument that M2M services do not constitute an important cost factor fo r alarm 
services providers.126  
(148)  In light of the explanations given in paragraphs (136)  to (147) , and in particular 
given the existence of alternative credible suppliers of M2M services, which are able 
to satisfy the requirements of alarm services providers in terms of price, quality and 
coverage, th e Commission considers that TEF would not have the ability to foreclose 
its downstream rivals with regard to M2M services.  
As regards incentives  
(149)  The Commission considers that TEF is unlikely to have an incentive to engage in an 
input foreclosure strategy.  
(150)  First, the Commission notes that TEF’s main business focus are telecommunications 
rather than alarm services. Therefore, unless clearly profitable, it is unlikely that TEF 
would risk reputational damage by foreclosing its telecommunication customers 
from its M2M services.  
(151)  Second, the Notifying Parties’ submission evidences that a potential foreclosure 
strategy would not be profitable. If TEF stopped supplying Prosegur Alarmas’ main 
rivals, which are large corporate clients for TEF, this would lead to a ce rtain and 
immediate loss of annual revenues which ranged between  EUR  […] and […]  over 
the last four years.127 It is unlikely that this loss would be compensated by any 
potential gain of customers or revenues in the alarms business, which is an ancillary 
activity for TEF and where TEF only has a 50% shareholding  in the JV . Such gain in 
terms of additional clients and revenues in the alarms business due to the input 
foreclosure strategy is particularly unlikely considering that alarm services providers 
have eq ually credible alternative suppliers to TEF.128 
(152)  Third, a partial foreclosure strategy consisting in increasing the price of TEF’s M2M 
services, would equally not be profitable. Considering that M2M services represent a 
very low proportion of alarm services p roviders’ costs ( […]), such a strategy would 
                                                 
125  Form CO,  paragraph  191. 
126  Replies to questionnaire Q2 to alarm services providers, question 13. 
127  Form CO, Annex 1.1, Table 5 , page  16. 
128  The numerical analysis carried out by the Notifying Parties shows that the JV would need to obtain nearly 
[…] as a result of the potential foreclosure strategy in order to compensate the loss of revenues from M2M 
services that TEF currently provide s to Prosegur Alarmas’ rival alarm operators (Form CO, Annex 1.1, 
Table 6, page 18). The analysis does not take into account that the JV may also be able to benefit from 
higher price levels downstream as a result from the lessening of competition. However,  in any case, a 
foreclosure strategy is unlikely to be profitable also when taking this effect into account.  
 
 
32 not significantly raise downstream rivals’ costs and hence would not divert a 
significant share of customers from rival alarm services providers to TEF.  
(153)  Finally, the vast majority of respondents to the market in vestigation, both 
telecommunication and alarm services providers, indicated that TEF would not have 
the incentive to foreclose downstream competitors with regard to the provision of 
M2M services, i.e. to stop supplying M2M services or to provide M2M servic es at 
less favourable terms and conditions than today.129  
(154)  The Commission therefore concludes that TEF is unlikely to have the incentive to 
foreclose competing alarm services providers from its M2M services in Spain.  
As regards effects  
(155)  Regardless of whether TEF has either the ability or the incentive to foreclose 
competing downstream rivals with regard to the supply of M2M services, such 
strategy would be unlikely to have any material impact on competition.  
(156)  First, if TEF decided to increase the price of M2M s ervices, as explained in 
paragraph (147) , this would not significantly raise rivals’ costs and would hence not 
lead to increased prices in the downst ream market.  
(157)  Second, if TEF decided to discontinue the supply or reduce the quality of its M2M 
services, alarm services providers could switch to alternative telecommunication 
operators. As explained in paragraphs (139)  to (146) , there are sufficient alternative 
suppliers of M2M services active o n the Spanish market.  
(158)  Switching M2M services provider for new end users is costless for alarm services 
providers. There are some costs associated to switching M2M services provider for 
the existing customer base. In particular, alarm operators would have t o replace the 
SIM card installed in the alarm equipment located in the end user’s premises. 
According to internal estimates of Prosegur Alarmas, the costs of replacing the SIM 
card of an existing customer ranges between EUR […] and EUR […], comparable to 
[…].130  
(159)  However, switching costs can be mitigated. First, most alarm services providers 
multi -source M2M services and hence would not have to replace all of their M2M 
cards. For instance, Prosegur Alarmas’ main provider is [COMPANY] , with […]% 
of its install ed SIM cards, followed by [COMPANY]  with […]% and [COMPANY]  
with […]%. Based on the number of its supplied SIM cards, TEF estimates that it 
represents less than […]% of the installed SIM cards in Securitas Direct’s and 
Tyco’s alarm systems and even less for other competitors. Second, the main cost 
associated to SIM cards replacement is the cost of the personnel who visits the end 
user’s premises. The cost of switchin g can be reduced to EUR […], according to 
Prosegur Alarmas, if the SIM card is replaced during the alarm equipment 
maintenance operations that alarm operators need to carry out on an annual basis.131 
                                                 
129  Replies  to questionnaire Q1 to telecommunications  operators, question 15; Replies  to questionnaire Q2 to 
alarm services provider s, question 15.  
130  Form CO, Annex 1.1, section 2.2.1.3, pages 11 -12. 
131  Form CO, Annex 1.1, section 2.2.1.3, pages 11 -12. 
 
 
33 5.4.2.3.  Conclusion  
(160)  In light of the above considerations and based on the results of the market 
investigation, the Commission considers the Transaction does not give rise to serious 
doubts as to its compatibility with the internal market as a result of any input 
foreclosure strategy by the Parties with regard to M2M servi ces. 
5.5. Conglomerate effects  
5.5.1.  Legal framework  
(161)  According to the Non -Horizontal Merger Guidelines, in most circumstances, 
conglomerate mergers do not lead to competition problems.132 
(162)  However, foreclosure effects may arise when the combination of products in relate d 
markets may confer on the merged entity the ability and incentive to leverage a 
strong market position from one market to another closely related market by means 
of tying or bundling or other exclusionary practices. The Non -Horizontal Merger 
Guidelines d istinguish between bundling, which usually refers to the way products 
are offered and priced by the merged entity133 and tying, usually referring to 
situations where customers that purchase one good (the tying good) are required to 
also purchase another good  from the producer (the tied good).  
(163)  Tying and bundling as such are common practices that often have no anticompetitive 
consequences. Nevertheless, in certain circumstances, these practices may lead to a 
reduction in actual or potential rivals’ ability or incentive to compete. Foreclosure 
may also take more subtle forms, such as the degradation of the quality of the 
standalone product.134 This may reduce the competitive pressure on the merged 
entity allowing it to increase prices.135  
(164)  In assessing the likelihoo d of such a scenario, the Commission examines, first, 
whether the merged firm would have the ability to foreclose its rivals,136 second, 
whether it would have the economic incentive to do so137 and, third, whether a 
foreclosure strategy would have a significan t detrimental effect on competition, thus 
causing harm to consumers.138 In practice, these factors are often examined together 
as they are closely intertwined.  
(165)  In order to be able to foreclose competitors, the merged entity must have a 
significant degree of market power, which does not necessarily amount to 
dominance, in one of the markets concerned. The effects of bundling or tying can 
only be expected to be substantial when at least one of the merging parties’ products 
is viewed by many customers as particu larly important and there are few relevant 
                                                 
132  Non-Horizontal Merger Guidelines, paragraph 92.  
133  Within bundling practices, the distinction is also made between pure bun dling and mixed bundling . In the 
case of pure bundling the products are only sold jointly in fixed proportions. With mixed bundling the 
products are also available separately, but the sum of the stand -alone prices is higher than the bundled 
price.  
134  Non-Horizontal Merger Guideli nes, paragraph 33.  
135  Non-Horizontal Merger Guidelines, paragraph 93.  
136  Non-Horizontal Merger Guidelines, paragraphs 95 to 104.  
137  Non-Horizontal Merger Guidelines, paragraphs 105 to 110.  
138  Non-Horizontal Merger Guidelines, paragraphs 111 to 118.  
 
 
34 alternatives for that product.139 Further, for foreclosure to be a potential concern, it 
must be the case that there is a large common pool of customers, which is more 
likely to be the case when the products are com plementary.140 Finally, bundling is 
less likely to lead to foreclosure if rival firms are able to deploy effective and timely 
counter -strategies, such as single -product companies combining their offers.141 
(166)  The incentive to foreclose rivals through bundling or tying depends on the degree to 
which this strategy is profitable.142 Bundling and tying may entail losses or foregone 
revenues for the merged entity.143 However, they may also allow the merged entity 
to increase profits by gaining market power in the tied good s market, protecting 
market power in the tying good market, or a combination of the two.144   
(167)  It is only when a sufficiently large fraction of market output is affected by 
foreclosure resulting from the concentration that the concentration may significantly 
impede effective competition. If there remain effective single -product players in 
either market, competition is unlikely to deteriorate following a conglomerate 
concentration.145 The effect on competition needs to be assessed in light of 
countervailing facto rs such as the presence of countervailing buyer power or the 
likelihood that entry would maintain effective competition in the upstream or 
downstream markets.146  
5.5.2.  Assessment of potential conglomerate effects  
(168)  There are a number of recent examples of alliances  between telecommunication 
operators and alarm services providers, as well as examples of telecommunication 
operators developing security solutions, both in Spain and worldwide. Some of them 
offer bundles of telecommunication and alarm services to resident ial and SME 
customers.147 In light of this development, TEF’s telecommunication offering can be 
seen as complementary to the alarm services supplied by Prosegur Alarmas, because 
some end customers may procure fixed telephony, fixed internet access, mobile, T V 
and alarm services from one and the same provider.  
(169)  This section therefore examines whether , given the conglomerate relationship 
identified above,  the Transaction could lead to  the foreclosure of alarm services 
providers that compete with Prosegur Alarma s, and/or the foreclosure of suppliers of 
telecommunication and TV services that compete with TEF, as a result of a bundling 
or tying strategy by the Parties.  
                                                 
139  Non-Horizontal Merger Guidelines, paragraph 99.  
140  Non-Horizontal Merger Guidelines, paragraph 100.  
141  Non-Horizontal Merger Guidelines, paragraph 103.  
142  Non-Horizontal Merger Guidelines, paragraph 105.  
143  Non-Horizontal Merger Guidelines, paragraph 106.  
144  Non-Horizontal Merger Guidelines, paragraph 108.  
145  Non-Horizontal Merger Guidelines, paragraph 113.  
146  Non-Horizontal Merger Guidelines, paragraph 114.  
147  Similarly to multiple play telecommunication bundles, t he benefits may accrue irrespective of whe ther 
customers have a single contract or separate contracts with the same provider  or commercial partners for 
these services.  
 
 
35 5.5.2.1.  The Notifying Parties’ views  
(170)  The Notifying Parties submit that the Parties will not have the abil ity or the incentive 
to adopt a bundling strategy aimed at foreclosing rivals post -Transaction.  
As regards ability  
(171)  First, the Notifying Parties emphasise that the CNMC found TEF to have significant 
market power in the supply of fixed internet access (broa dband) services. TEF is 
therefore subject to special rules including the replicability test  (further discusse d in 
paragraphs (187)  to (193) ). Should TEF bundle its fixed internet access services and 
the JV’s services, the replicability obligation would also apply in relation to alarm  
services and TEF would be required to guarantee the replicability of that offer in 
terms of price.148 
(172)  Second, according to the Notifying Parties, alarm services have very specific 
features and requirements which are well differentiated from telecommunicatio n 
services. Therefore, it would not make sense from a commercial point of view to 
bundle these products.149 This would also be evidenced by TEF’s past […] a bundled 
product in cooperation with Securitas Direct, which was sold between 2015 and 
2018, […].150 
(173)  Third, the Notifying Parties submit that they do not have a significant degree of 
market power neither with respect to multiple play services nor in any plausible 
market definition related to alarm services, the latter being dominated by Securitas 
Direct, whi ch has a market share of at least over [40-50]%.151 
(174)  Fourth, according to the Notifying Parties, competitors have effective counter -
strategies available. Telecoms operators have started to developed their own security 
systems and/or have alliances with alarm services providers.152 Besides such 
alliances, alarm services providers can find partners in other sectors, e.g. banks or 
insurance companies, to facilitate the commercialisation of their services.153 
As regards incentives  
(175)  The Notifying Parties emphasise again  that TEF would never jeopardize its position 
in the telecom munication  market, which is its core business, in favour of Prosegur 
Alarmas’ presence in alarm services.154 
As regards effects  
(176)  The Notifying Parties argue that even if TEF adopted a bundling strate gy aimed at 
foreclosing rivals post -Transaction, the replicability test would prevent TEF from 
                                                 
148  Form CO, paragraphs 216 -221; Notifying Parties’ reply to RFI 10 of 5 February 2020, question 2; 
Notifying Parties’ reply to RFI  11 of 13 February 2020, question 5.  
149  Form CO, paragraph 222.  
150  Form CO, paragraph 204.  
151  Form CO, paragraph 223.  
152  Form CO, Annex 1.1, Table 13, pages 27 -28. 
153  Form CO, paragraph 223.  
154  Form CO, paragraphs 226 -227 and Form CO, Annex 1.1, section 3. 3, pages 28 -31. 
 
 
36 launching a non -replicable offer and hence there would be no material effect on the 
market.155 
5.5.2.2.  The Commission’s assessment  
(177)  The Commission carries out two assessmen ts in relation to possible conglomerate 
effects between:  
(a) The provision of telecommunication and TV services, i.e., concerning the  
markets for (i) mobile telecommunication services, (ii) fixed telephony 
services, (iii) fixed internet access services, (iv)  TV services and (v) multiple 
play services for residential and SME customers in Spain; and  
(b) The provision of alarm services, i.e., concerning the possible markets for (i) 
alarm installation and maintenance and (ii) alarm monitoring and response 
services fo r residential and SME customers in Spain.  
(178)  The first assessment consists in determining whether the Transaction would likely 
confer on the Parties the ability and incentive to leverage TEF’s strong market 
position in the telecommunication markets into the a larm services markets, and 
whether this would have a significant detrimental effect on competition in the alarm 
services markets, thus causing harm to customers.  
(179)  The second assessment consists in determining whether the Transaction would likely 
confer on the Parties the ability and incentive to leverage Prosegur Alarmas’ market 
position in the alarm services markets into any possible telecommunication markets, 
and whether this would have a significant detrimental effect on competition in the 
telecommunicat ion markets, thus causing harm to customers.  
(180)  In relation to both assessments, the Commission focusses its analysis on the Parties’ 
ability and incentive to engage in a mixed bundling strategy, i.e. incentivising the 
joint purchase of the Parties’ own produ cts by offering higher prices for the 
standalone products as compared to the price of the bundle of telecommunication 
and alarm services. In contrast, the Commission excludes from the outset the 
possibility that the Parties would have the incentive to enga ge in pure bundling or 
tying practices. Considering the relatively low penetration of alarm services in Spain 
and the existence of alternatives to TEF’s telecommunication services and Prosegur 
Alarmas’ alarm services, such strategy would have a significant  cost in terms of loss 
of customers and revenues in TEF’s core telecommunication business. Indeed, less 
than […]% of Spanish households currently use alarm services.156 On the one hand, 
TEF, whose main business focus are telecommunication services, would nev er tie its 
services to the purchase of alarm services, which have a lower penetration. On the 
other hand, in order for the tying of alarm services to be profitable, the majority of 
telecommunication customers, which have not shown to effectively value or n eed 
alarm services in the past, would have to start purchasing alarm services.157 
Therefore, the Commission considers that it is highly unlikely that TEF would agree 
                                                 
155  Notifying Parties’ reply to RFI 10 of 5 February 2020, question 2.  
156  Form CO,  paragraph 310. 
157  The numerical analysis carried out by the  Notifying Parties shows that a pure bundling strategy is 
profitable for TEF only when the majority  of customers ( […]%) who are not interested in alarm services 
accept the bundle deal (Form CO, Annex 1.1, Table 14, page 30).  

 
 
38 Euskaltel. The market share information suggests that TEF may have a significant 
degree of market power in several telecommunicati ons and TV markets.  
(185)  On this basis, several respondents to the market investigation submitted that TEF 
would be able to leverage its strong market position in several telecommunication 
and TV markets into the market for alarm services.160 These respondents feared that 
TEF would, by offering a discounted bundled product consisting of 
telecommunication and alarm services, foreclose standalone providers of alarm 
services.  
(186)  The Commission considers that TEF would not be able to leverage its str ong market 
position in the telecommunication markets into the market for alarm services.  
(187)  Importantly, TEF’s ability to provide discounted bundled products is constrained by 
the applicable regulation. In the context of ex -ante regulation in the 
telecommunic ation sector, the CNMC identified TEF as an operator with significant 
market power in 2016.161 Consequently, TEF is subject to specific obligations, 
including, amongst others, to guarantee that its conduct does not distort competition 
and infringe article 10 2 TFEU and to ensure replicability of TEF’s retail broadband 
offer in terms of price. The objective of the replicability test is to assess the 
possibility of an alternative operator to replicate the retail offer of the incumbent 
operator. In March 2018, th e CNMC approved a detailed methodology for turning 
the replicability obligation into a concrete test, the economic replicability test 
(“ERT”), where all the relevant revenues and costs incurred in the broadband bundle 
provision are identified, as well as o ther relevant information needed for the margin 
calculation, the customer life period or the identification of the flagship broadband 
bundles.162 
(188)  Before explaining the functioning of the ERT, it is important to note that the ERT 
applies to any components bun dled with TEF’s broadband product. This obligation 
would also apply in relation to alarm services as long as the alarm services are sold 
in a package with TEF’s broadband product. In this case, TEF would be compelled 
to consider the additional costs referr ed to this service in a manner comparable to 
other additional components in the past.163  
(189)  In practice, the ERT covers the majority of TEF’s fixed telecommunication and TV 
sales . In fact, besides TEF’s […] subscribers of standalone fixed telephony services 
and […] subscribers of standalone TV services, its remaining subscribers purchase 
2P ( […]), 3P ( […]) or 4P ( […]) bundled products, which always contain a 
broadband component.164 In addition, TEF has […] subscribers of standalone mobile 
services . However, due to its product characteristics, the mobile component is less 
prone to be bundled with alarm services , which are more closely related to fixed 
telecommunication services. This was also confirmed by the market investigation. 
Respondents expect TEF to bundle Prosegur Alarmas’ alarm services with TEF’s 
                                                 
160  Replies to questionnaire Q2 to ala rm services providers, questions 17 and 17.1 ; non-confidential 
submission of a competitor of Prosegur Alarmas of 13 February 2020 , page 2.  
161  Resolución de 24 de febrero de 2016. The resolution also defined the relevant markets (i.e., the markets 
for wholesale local access and wholesale broadband access) and the w ay they should be assessed.  
162  Notifying Parties’ reply to RFI 10 of 5 February 2020, question 2.  
163  Notifying Parties’ reply to RFI 10 of 5 February 2020, question 2.  
164  Notifying Parties’ reply to RFI 10  of 5 February 2020 , question 7  
 
 
39 existing bundles, in particular its 4P bundle consisting of fixed telephony, fixed 
internet access, TV and mobile services, but not with its standalone mobile 
telecommunication services.165 As for TEF’s TV services , as mentioned, TEF has 
[…] standalone TV subscribers.  
(190)  As for the functioning of the ERT, the CNMC regularly arranges TEF’s fibre -based  
products by number of customers (from highest number of customers to lowest) until 
reaching 80% of TEF's fibre customer base.166 All of TEF’s current flagship 
products are 4P bundles.167 The margin of each of these flagship products is 
calculated as the Net Present Value (“NPV”) of all revenues generated and costs 
incurred in the provision of the flagship bundle during the cust omer life period with 
a discount rate equivalent to the last WACC168 approved by CNMC. If the NPV of 
the flagship bundle is greater or equal to zero, the flagship bundle is held to be 
replicable by an alternative operator, otherwise wholesale network access service 
(“NEBA”) charges must be reduced in order to restore the economic replicability of 
the flagship bundle.169 
(191)  For this analysis, the following cost categories are included: commercial costs, 
broadband (wholesale regulated) costs and internal network cos ts. In addition, 
depending on the product bundle, the following costs for the provision of additional 
components are included: fixed telephony costs (network access and traffic), mobile 
communication costs (voice, SMS and data), audio -visual costs (content  rights and 
production) and any additional component costs. The last category includes any 
other components of the bundle such as software, online content (e.g., music, books, 
games) and any other value added services (e.g., parental control, antivirus, cl oud 
storage or, in the future, alarm services). The value of the additional components is 
calculated according to the acquisition costs incurred by TEF.170 
(192)  The ERT ensures that any product which is offered in a bundle with a broadband 
product is replicable f rom TEF’s various wholesale products so that (i) each of the 
telecoms element in the bundle has an associated wholesale product that is 
technically and economically replicable; and (ii) the bundle’s overall margin (i.e., 
including telecoms elements and non -telecoms elements) is always positive.171 In 
this context, the replicability test ensures that the associated cost of the “non -
telecoms elements” is covered by the bundle revenues. As a result of the 
methodology implemented for this replicability test, TEF would sacrifice its NEBA 
wholesale revenues if any of its offers were not replicable.  
(193)  The CNMC applies the test to TEF’s commercial offers at least every 6 months. This 
means that, in the hypothetical event that TEF launched a non -replicable offer, the 
                                                 
165  Replies to questionnaire Q1 to telecomm unications operators, question 18.2 . 
166  These flagship products are those most commonly contracted by TEF’s customers  
(https://blog.cnmc.es/2019/05/03/test -de-replicabilidad -y-productos -emblematicos -de-que-estamos -
hablando/ ). In addition, the CNMC has the ability to identify a product as “flagship” because of its 
characteristics or the high impact on the market, even if the product does not meet the  80% rule (for 
example, a new attractive product or a product that is disruptive in the market) . 
167  Notifying Parties’ reply to RFI 12 of 14 February 2020 , question 1.  
168  WACC stands for weighted average cost of capital.  
169  Notifying Parties’ reply to RFI 10 of 5 February 2020, question 3, Annex 1, section 2, pages 3 -5. 
170  Notifying Parties’ response to RFI 10 of 5 February 2020, question 2.  
171  Notifying Parties’ response to RFI 10 of 5 February 2020, question 2b.  

 
 
41 services and mobile telecommunication services. In the supply of TV services, they 
both have mar ket shares in the range of 10 -20%. While Orange is the market leader 
with respect to the supply of 3P bundles (about 50% market share), Vodafone and 
Orange are respectively the second (20 -30%) and third largest (10 -20%) suppliers of 
4P bundles after TEF wi th a market share of about 50%. Moreover, TEF’s market 
share in the various telecommunication and TV markets has been decreasing over 
the last three years and has further decreased in the first three quarters of 2019.173 In 
the same period, Másmóvil has incr eased its market share from a de minimis  position 
to [5-10]% in the supply of fixed telephony and [5-10]% in the supply of fixed 
internet access services in 2018 (and further to [5-10]% in the first three quarters of 
2019).  
(198)  Finally, it is important to mention that competing alarm services providers have 
effective counterstrategies available, such as entering into similar co -operations or 
proposing different kinds of bundles, if the offering of a bundled product became an 
impo rtant competitive advantage. Competitors are already employing such strategies 
today. For instance, Tyco, the third largest provider of alarm services in Spain (and 
second largest in terms of sales values), has entered into a commercial partnership 
with Or ange (for more details see Table 13 below).  
(199)  In addition to alliances with telecommunication operators, alarm services providers 
have other alternatives  to replicate any competitive advantage that the proposed JV 
may achieve thanks to a potential bundled offer. In particular, alarm operators could 
use companies from other sectors (for example, the financial sector) in order to 
increase their distribution channels and effectively compete. In fact, in June 2018, 
Securitas Direct made a commercial alliance with CaixaBank by virtue of which the 
financial entity distributes through its 4 743 distribution points of sales the alarm 
systems developed by Securitas Direct with advantageous financial conditions. 
According to the Notifying Parties, the number of distribution points owned by 
CaixaBank is significantly higher than the number of TEF’s distribution points 
([…]). In addition, Securitas Direct has a commerci al agreement with one of the 
main insurance companies in Spain, Mapfre, by virtue of which Mapfre distributes 
Securitas Direct’s alarm services.174 
(200)  Hence, competing alarm services providers have already started entering into 
partnerships and they can continu e to team up, with telecommunication operators or 
other partners, if the provision of a bundled product should become an important 
competitive advantage.  
As regards incentives  
(201)  The Commission distinguishes between TEF’s incentive to engage in a mixed 
bundl ing strategy offering a (i) non -replicable bundled product and (ii) a replicable 
bundled offer.  
(202)  With regard to a non -replicable offer, the Commission considers that it is highly 
unlikely that TEF would have incentives to launch a non -replicable offer to th e 
market, considering that any significant commercial offer by TEF is subject to a 
                                                 
173  Form CO, Annex 1.1, Table 10, pages 24 -25. 
174  Form CO, Annex 1.1, section 3.2.3 , pages 26 -28. 
 
 
42 replicability test and that if any of TEF’s offers does not pass the test this would 
automatically lead to a significant loss in terms of reduction of TEF’s wholesale 
NEBA p rices and revenues.  
(203)  With regard to a replicable bundled product, the Commission considers that TEF  has 
not only the technical ability to offer such a product but that it is likely to have the 
incentive to offer it. 
(204)  First, mixed bundling strategies do not generally involve substantial costs in terms of 
customer losses and thus companies will have the incentive to undertake them to the 
extent that products are sufficiently related and have a relevant common customer 
base.  
(205)  Second, the recent industry trend fo r co-operations between telecommunication and 
alarm services providers confirm that these products can be successfully bundled, are 
sufficiently related and have a relevant common customer base. In Spain, Orange 
and Tyco have entered into a commercial agre ement. In addition, several Spanish 
telecommunication service providers, such as Vodafone, Euskaltel and R, have 
developed Peace of Mind solutions. Even if the latter are not considered to be part of 
the same product market as professional alarm services  (as explained in section 
4.2.1.3 ), bundles of telecommunication and Peace of Mind solution exert some 
competitive pressure on  professional alarm servi ces and more importantly point 
towards the same industry trend.  
(206)  Similar developments can be found in other European countries. Examples include 
the alarm and/or Peace of Mind solutions offered by SFR and Orange in France, 
British Telecom in the UK, and TIM  in Italy. In particular, “Sicuritalia Protection 
24” was developed by TIM and the alarm services provider Sicuritalia. There are 
further examples on a worldwide level, such as alarm services offered by AT&T in 
the US.  
  



 
 
46 of Prosegur Alarmas’ customers ( [5-10]%) in 2018.178 This could provide an 
additional incentive for TEF to bundle its telecommunication and TV services wit h 
alarm services.  
As regards effects  
(225)  The Commission considers that TEF will neither have the ability nor the incentive to 
offer a non -replicable product bundle. However, the Commission considers that TEF 
will have both the ability and incentive to offer a replicable bundled product.  
(226)  The Commission considers that a mixed bundling strategy would be unlikely to 
result in a significant reduction of sales prospects by standalone rivals in the market 
leading to a reduction in rivals’ ability or incentive to comp ete. 
(227)  In particular with regard to competing telecommunication operators, the vast 
majority of their customers, currently more than […], do not purchase any alarm 
services. Even if the Parties would manage to attract additional customers, as 
estimated in Table 14, there remains a sufficiently large fraction of the market that is 
unaffected.  
5.5.3.  Assessment of possible leakage/misuse of information  
5.5.3.1.  Potential con cern 
(228)  One respondent to the market investigation explained that TEF currently has access 
to different types of confidential and commercially sensitive information: (i) 
confidential end customer data; (ii) information derived from the provision of 
corporate telecommunication services to alarm services providers; and (iii) 
commercially sensitive or confidential data shared in the framework of commercial 
and R&D cooperation projects. The respondent expressed concerns that, following 
the Transaction, TEF could m isuse this information, in particular by sharing it with 
Prosegur Alarmas, giving it an anti -competitive advantage in the alarm services 
market.179  
(229)  In particular, the respondent pointed to the following strategies TEF could deploy. 
First, TEF already today has access to a significant amount of personal data of its 
own customers of telecommunication services. On the one hand, it could pass this 
data on to Prosegur Alarmas, allowing it to develop new products and services 
tailored to meet each customer’s speci fic needs. On the other hand, TEF could use 
this data to identify the customers of alarm services providers competing with 
Prosegur Alarmas and target them with advertising or promotional campaigns to 
make them switch to the security systems provided by Pr osegur Alarmas.180 
(230)  Second, the respondent claimed that because TEF currently provides corporate 
telecommunication services to alarm services providers, it has access to their 
corporate communications with alarm service customers (even if these are not 
themselves TEF customers). TEF could use this information to target the end 
                                                 
178  Notifying Parties’ reply  to RFI 10 of 5 February 2020, question 3, Annex 1, section 3.1.2, pages 9 -11. 
179  Replies to questionnaire Q2 to alarm services provider s, question 24.  
180  Non-confidential submission of a competitor of Prosegur Alarmas of 13 February 2020, page 2.  
 
 
47 customers with advertising or promotional campaigns to make them switch to the 
security systems provided by Prosegur Alarmas.181 
(231)  Finally, the respondent has been involved in differen t commercial and R&D 
cooperation projects with TEF and has shared commercially sensitive information 
and internal know -how with it in this context. While this information was covered by 
confidentiality and non -disclosure obligations, the respondent fears t hat post -
Transaction, TEF would share this information with Prosegur Alarmas in order to 
strengthen their position in and exclude competitors from the market for alarm 
systems.182 
(232)  In this context, the Commission has assessed the potential concern that TEF wo uld 
misuse, and in particular pass on to Prosegur Alarmas personal data of end 
customers or commercially sensitive information of competing alarm operators, 
which Prosegur Alarmas could use to favour its own position on the alarm services 
market.  
5.5.3.2.  Commissio n’s assessment  
(233)  The Commission notes that different considerations apply to personal data of end -
customers and to commercially sensitive or confidential information of alarm 
operators.  
(234)  Regarding personal data of end -customers of telecommunication services, the 
Commission considers that the Parties would not have the ability to misuse this 
information, for the following reasons. First, if the final customer of security systems 
is not a TEF customer, but TEF provides the alarm operator with an M2M card, TEF 
is unable, from a technical point of view, to identify the customers of competing 
alarm services providers. Second, if the end customer purchases telecommunication 
services from TEF, but the alarm service it uses contains a M2M card provided by a 
different t elecommunications provider, TEF would be technically unable to identify 
whether the customer has an alarm service and who the provider of such a service is. 
Finally, there are cases in which TEF provides both the telecommunication services 
of the end custo mer and the M2M card used by the alarm operator. In these cases, 
while under certain circumstances TEF might be able to technically identify and 
approach customers of competing suppliers, it would not have the legal ability to use 
the data for purposes tha t are not compatible with the original purpose for which the 
data was collected. This is because TEF has to comply with the Regulation (EU) 
2016/679183, which requires it to process data in a lawful and transparent manner and 
prevents TEF from using the pers onal data for other purposes that are not compatible 
with the original purpose the data was collected for.  
(235)  Regarding personal data of end -customers of alarm services, the Commission notes 
that while TEF provides the corporate telecommunication services to  the alarm 
services providers, it does not collect the communication data between them and 
their customers.184 Moreover, the Commission notes that, according to the Notifying 
                                                 
181  Non-confidential submission of a competitor of Prosegur Alarmas of 13 February 2020, page 3.  
182  Replies to questionnaire Q2 to alarm services providers, question 24.  
183  OJ L 119 , 4.5.2016, p. 1 (the “General Data Protection Regulation” or “GDPR ”). 
184  Notifying Parties’ reply to RFI 11 of 13 February 2020, question 8.d . 
 
 
48 Parties, TEF has no means to know who the specific end customers of alarm services 
providers are. Therefore, the Commission considers that TEF would not have the 
ability to misuse the communication data between alarm services providers and their 
customers in order to favour Prosegur Alarmas.   
(236)  As for confidential and/or commercially sensi tive information that TEF has received 
from competing alarm services providers in the context of cooperation projects, the 
Commission notes that such information was protected by confidentiality and/or 
non-disclosure agreements between TEF and the alarm se rvices providers.185 These 
agreements prevent TEF from disclosing the information to third parties, during and 
even after the termination of the specific cooperation project.186 The Commission 
also notes that both PCS and Prosegur Alarmas will remain third par ties post -
Transaction. In particular, Prosegur Alarmas will remain a separate legal entity, in 
which TEF will only own 50% of the shares. The Commission therefore considers 
that the information TEF received from competing alarm services providers is 
suffic iently protected, and that TEF does not have the ability to share any 
confidential and/or commercially sensitive information with Prosegur Alarmas in 
order to strengthen their position in and exclude competitors from the market for 
alarm systems.   
(237)  The Comm ission therefore considers that TEF would not have the ability to leak or 
misuse personal data of end customers or confidential and/or commercially sensitive 
information of competing alarm operators in order to favour Prosegur Alarmas on 
the market for ala rm services.  
5.5.4.   Conclusion  
(238)  In light of the above considerations and based on the results of the market 
investigation, the Commission considers that the Transaction does not raise serious 
doubts as to its compatibility with the internal market with respect to  the vertical, 
conglomerate and other effects resulting  from the relationship between the markets 
for the supply of security systems and the markets for the supply of 
telecommunication services.  
  
                                                 
185  Notifying Parties’ reply to RFI 12 of 17 February 2020, question 3.b and annexes 1 -4. 
186  Notifying Parties’ reply to RFI 12 of 17 February 2020, question 3.b and annexes 2 -4. 
 
 
49  
6. CONCLUSION  
(239)  For the above reasons, the European Commission has  decided not to oppose the 
notified operation and to declare it compatible with the internal market and with the 
EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the 
Merger Regulation and Article 57 of the EEA Agreement.  
For th e Commission  
 
 
(Signed)  
Margrethe VESTAGER  
Executive Vice -President