Summary of Commission Decision of 20 March 2023 declaring a concentration compatible with the internal market and the functioning of the EEA Agreement (Case M.10663 – ORANGE / VOO / BRUTÉLÉ) (notified under document number C(2023) 1800) – On 20 March 2023 the Commission adopted a Decision in a merger case under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, and in particular Article 8(2) of that Regulation. A non-confidential version of the full Decision can be found in the authentic language of the case on the website of the Directorate-General for Competition, at the following address: http://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=2
Date: 2023-03-20
Institutions: Directorate-General for Competition, European Commission
Subjects: Belgium, economic concentration, merger control, telecommunications








C_202301523EN.000101.fmx.xml












Official Journal of the European Union


EN
Series C













C/2023/1523


18.12.2023







            SUMMARY OF COMMISSION DECISION
         
of 20 March 2023
         
declaring a concentration compatible with the internal market and the functioning of the EEA Agreement
(Case M.10663 – ORANGE / VOO / BRUTÉLÉ)


(notified under document number C(2023) 1800)


(Only the English version is authentic)
(Text with EEA relevance)
(C/2023/1523)


On 20 March 2023 the Commission adopted a Decision in a merger case under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings
                (1)
, and in particular Article 8(2) of that Regulation. A non-confidential version of the full Decision can be found in the authentic language of the case on the website of the Directorate-General for Competition, at the following address: http://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=2



1.   INTRODUCTION









(1)


On 22 June 2022, the European Commission (‘Commission’) received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which the Notifying Party will acquire, within the meaning of Article 3(1)(b) of the Merger Regulation, sole control over the Targets (the ‘Transaction’) (2).












(2)


After a preliminary examination of the notification and based on the first phase market investigation, the Commission raised serious doubts as to the compatibility of the Transaction with the internal market and adopted a decision to initiate proceedings pursuant to Article 6(1)(c) of the Merger Regulation on 28 July 2022 (3).












(3)


On 8 August 2022, the second phase investigation period was extended by 10 working days at the request of the Notifying Party pursuant to the first sentence of the second subparagraph of Article 10(3) of the Merger Regulation.












(4)


On 22 August 2022, the Notifying Party submitted its written comments to the Article 6(1)(c) Decision.












(5)


On 31 August 2022, a state of play meeting between the Notifying Party and the Commission took place.












(6)


Between 12 October 2022 and 21 October 2022, the second phase investigation period was extended by a total of 10 working days at the request of the Notifying Party pursuant to the third sentence of the second subparagraph of Article 10(3) of the Merger Regulation.












(7)


On 26 October 2022, the Commission adopted a decision pursuant to Article 11(3) of the Merger Regulation, addressed to the Notifying Party following the conclusion of two memorandums of understanding (‘MoUs’) between Orange and Telenet (‘Orange Article 11(3) Decision’). The Notifying Party complied with the Orange Article 11(3) Decision on 30 January 2023. Therefore, the suspension of the time limits expired at the end of 30 January 2023.












(8)


On 30 January 2023, the Notifying Party submitted commitments pursuant to Article 8(2) of the Merger Regulation in order to address the competition concerns identified by the Commission. On 31 January 2023, the Commission launched a market test of the commitments submitted by the Notifying Party on 30 January 2023.












(9)


The Commission gave the Parties detailed feedback on the outcome of the market test during a call on 10 February 2023.












(10)


The Decision was consulted with the Member States during the Advisory Committee on Concentrations on 8 March 2023, which provided a positive opinion. The Hearing Officer provided its favourable opinion on the proceedings in his report which was submitted on 9 March 2023.




2.   THE PARTIES









(11)



Orange is a French global telecommunications operator, active in Belgium primarily through OBE and through other subsidiaries (Orange Business Services SA, Business & Decision SAS, Orange Cyberdefense Belgium NV and Orange Bank SA via its subsidiary Anytime SA) (4). OBE primarily offers mobile telecommunications services based on its own mobile network in Belgium. OBE also provides fixed telecommunications services in Belgium based on third-party fixed networks. To provide its fixed services, OBE relies on Telenet Group Holding NV’s (‘Telenet’, Belgium) (5) network in Flanders and two-thirds of Brussels and on the Targets’ networks for the rest of Belgium.












(12)



VOO is a cable operator mainly active in the Walloon region of Belgium. VOO primarily provides fixed telecommunications services through its own cable network, and, to a limited degree, mobile telecommunications services based on third-party mobile networks (currently including Telenet and Proximus NV/SA (‘Proximus’, Belgium) (6). VOO also has television (‘TV’) activities in Belgium through its solely controlled subsidiary BeTV S.A. (‘BeTV’). VOO is currently solely controlled by Nethys S.A. (‘Nethys’, Belgium), in turn solely controlled by Enodia S.C. (‘Enodia’, Belgium). Enodia is ultimately owned by the province of Liège (owning 53.91 % of Enodia’s shareholding) and other municipalities.












(13)



Brutélé is a cable operator mainly active in the Brussels-Capital Region and in certain municipalities in the Walloon region of Belgium (essentially around the city of Charleroi in the Province of Hainaut, in the Province of Namur and in the Walloon Brabant Province). Brutélé provides fixed telecommunications services through its cable network. Brutélé is currently owned by 30 Brussels and Walloon municipalities, including the municipality of Charleroi (27.5 %), Ixelles (10.4 %), Uccle (8.5 %) and Saint-Gilles (6.4 %). All other municipalities own less than 5 % of Brutélé’s share capital.












(14)


VOO and Brutélé market, at the retail level, their telecommunications services under the common brand VOO.




3.   RELEVANT MARKETS









(15)


In the decision, the Commission considered that, for the assessment of the Transaction, the relevant markets are:






(a)


The retail supply of fixed internet access services in the Targets' footprint;










(b)


The retail supply of (linear) audio-visual (‘AV’) services in the Targets' footprint;










(c)


The hypothetical market for the retail supply of multiple-play bundles in the Targets' footprint;










(d)


The hypothetical market for the retail supply of fixed-mobile convergent (‘FMC’) bundles in the Targets' footprint;










(e)


The hypothetical market for the retail supply of fixed-only bundles in the Targets’ footprint;










(f)


The retail supply of mobile telecommunications services in Belgium;










(g)


The retail supply of fixed telephony services in the Targets’ footprint;










(h)


The retail supply of business connectivity services in Belgium;










(i)


The wholesale supply of pay television (‘TV’) and Free-To-Air TV channels either in the French speaking part of Belgium, or the Targets’ footprint;










(j)


The wholesale supply of premium TV channels either in the French speaking part of Belgium, or the Targets’ footprint;










(k)


The wholesale supply of access to TV services in the coverage area of each cable operator;










(l)


The wholesale supply of access and call origination services on mobile networks in Belgium;










(m)


The wholesale supply of broadband access services in the coverage area of each cable operator;










(n)


The wholesale supply of call termination services on fixed networks in Belgium;










(o)


The wholesale supply of call termination and hosting of calls to non-geographic numbers services in Belgium;










(p)


The wholesale supply of domestic call transit services on fixed networks in Belgium;










(q)


The wholesale supply of internet connectivity services in the European Economic Area (‘EEA’) or worldwide;










(r)


The wholesale supply of call termination services on mobile networks in Belgium; and,










(s)


The wholesale supply of international roaming services in Belgium.








4.   COMPETITIVE ASSESSMENT

4.1.   Introduction









(16)


In the decision, the Commission found that the Transaction gives rise to the following horizontally affected markets:






(a)


Retail supply of fixed internet access services in the Targets’ footprint;










(b)


Retail supply of linear AV services in the Targets’ footprint;










(c)


Retail supply of multiple-play bundles in the Targets’ footprint;










(d)


Retail supply of FMC bundles in the Targets’ footprint (together with the market for the retail supply of fixed internet access services in the Targets’ footprint, the market for the retail supply of linear AV services in the Targets’ footprint and the market for the retail supply of multiple-play bundles in the Targets’ footprint, the ‘Relevant Markets’);










(e)


Retail supply of fixed-only bundles in the Targets’ footprint;










(f)


Retail supply of mobile telecommunications services in Belgium;










(g)


Retail supply of fixed telephony services in the Targets’ footprint;










(h)


Wholesale supply of basic pay TV and FTA TV channels in the Targets’ footprint (demand side); and,










(i)


Wholesale supply of premium pay TV channels in the Targets’ footprint (demand side).
















(17)


Furthermore, the Transaction gives rise to the following vertically affected markets in relation to the links between the following markets:






(a)


Vertically affected markets arising from the relationships between the market for the wholesale supply of broadband access services (upstream), and the markets for the retail supply of fixed internet access services, multiple-play bundles, fixed-only bundles, FMC bundles and business connectivity services (downstream) in the Targets’ footprint;










(b)


Vertically affected markets arising from the relationships between the market for the wholesale supply of access to TV services (upstream), and the markets for the retail supply of AV services, multiple-play bundles, fixed-only bundles, FMC bundles and business connectivity services (downstream) in the Targets’ footprint;










(c)


Vertically affected markets arising from the relationships between the market for the wholesale supply of premium pay TV channels (upstream), and the markets for the retail supply of AV services, multiple-play bundles, fixed-only bundles and FMC bundles (downstream) in the Targets’ footprint;










(d)


Vertically affected markets arising from the relationships between the market for the wholesale supply of access and call origination services on mobile networks (upstream), and the markets for the retail supply of mobile telecommunications services, multiple-play bundles and FMC bundles (downstream) in the Targets’ footprint;










(e)


Vertically affected markets arising from the relationships between the market for the wholesale supply of call termination services on fixed networks (upstream), and the markets for the retail supply of fixed telephony services, mobile telecommunications services, multiple-play bundles, fixed-only bundles and FMC bundles (downstream) in the Targets’ footprint;










(f)


Vertically affected markets arising from the relationships between the market for the wholesale supply of termination and hosting of calls services to non-geographic numbers (upstream), and the markets for the retail supply of multiple-play bundles, fixed-only bundles and FMC bundles (downstream) in the Targets’ footprint;










(g)


Vertically affected markets arising from the relationships between the market for the wholesale supply of domestic call transit services on fixed networks (upstream), and the markets for the retail supply of multiple-play bundles, fixed-only bundles and FMC bundles (downstream) in the Targets’ footprint;










(h)


Vertically affected markets arising from the relationships between the market for the wholesale supply of internet connectivity services (upstream), and the markets for the retail supply of fixed internet access services, multiple-play bundles, fixed-only bundles and FMC bundles (downstream) in the Targets’ footprint;










(i)


Vertically affected markets arising from the relationships between the market for the wholesale supply of call termination services on mobile networks (upstream), and the markets for the retail supply of fixed internet access services, mobile telecommunications services, multiple-play bundles, fixed-only bundles and FMC bundles (downstream) in the Targets’ footprint;










(j)


Vertically affected markets arising from the relationships between the market for the wholesale supply of international roaming services (upstream), and the markets for the retail supply of mobile telecommunications services, multiple-play bundles and FMC bundles (downstream) in the Targets’ footprint.
















(18)


In the majority of the above-mentioned markets, the Commission did not identify competition concerns, nor did it receive complaints. To the extent the Commission identified concerns or complaints were submitted by market participants, the Commission’s findings are summarised in the following sections




4.2.   Horizontal non-coordinated effects in the Relevant Markets









(19)


In the decision, the Commission concludes that the Transaction would significantly impede effective competition as a result of horizontal non-coordinated effects in the Relevant Markets for the following reasons:






(a)


The combined market shares of the Parties in each Relevant Market in the Targets’ footprint would near or exceed 40 %, with non-negligible increments. Furthermore, by additionally relying on the market shares of the gross (subscribers) additions and the high margins of the Parties, the Commission found that the market shares of the Parties materially underestimate the actual market power the merged entity would enjoy post-Transaction.










(b)


The Transaction will result in a 3-to-2 merger in the Targets’ footprint, thereby significantly limiting the ability of end-users to switch to alternative suppliers. In particular, the Commission only identified Proximus as a genuine alternative available to end-users post-Transaction.










(c)


The Commission’s investigation further revealed that the Parties are close competitors, on the basis of internal documents of the Parties, regulatory reports, diversion ratios and implied market shares calculation (7).










(d)


The Commission also found that the Transaction would eliminate Orange as an important competitive force that had been spurring competition and innovation since its entry on the relevant fixed markets in 2016.










(e)


Finally, the Commission found that (i) given the dispersed customer base of the Parties, there is very limited actual countervailing buyer power; (ii) any entry would be unlikely and untimely; and, (iii) the efficiencies presented by the Parties to be insufficiently substantiated.








4.3.   Horizontal coordinated effects in the Relevant Markets









(20)


In the decision, the Commission assessed whether the Transaction would give rise to anticompetitive horizontal coordinated effects in the Relevant Markets. In particular, the Commission found that the Transaction reduced the number of market participants on the Relevant Markets and aligned the structure of the merged entity to that of Proximus. However, the Commission found that the remedy resolves any potential significant impediment to effective competition as a result of horizontal coordinated effects in the Relevant Markets and accordingly did not conclude on the existence of horizontal coordinated effects in the Relevant Markets.




4.4.   Horizontal non-coordinated effects on the acquisition side of the market for the wholesale supply of basic pay TV and FTA TV channels in the Targets’ footprint and the wholesale supply of premium pay TV channels in the Targets’ footprint









(21)


In the decision, the Commission concludes that the Transaction would not significantly impede effective competition as a result of horizontal non-coordinated effects on acquisition side of the market for the wholesale supply of basic pay TV and FTA TV channels in the Targets’ footprint and the wholesale supply of premium pay TV channels in the Targets’ footprint. In particular, the Commission found that despite the large combined market shares of the Parties post-Transaction, the market investigation largely concluded that the Transaction would not impact the Parties’ bargaining power. Furthermore, the Commission found that wholesale providers of TV channels have an interest in supplying their TV channels as broadly as possible.




4.5.   Foreclosure of wholesale suppliers of access and call origination services on mobile networks in Belgium









(22)


The Commission found that the Transaction would not give rise to a significant impediment to effective competition as a result of anticompetitive customer foreclosure on the market for the wholesale supply of access and call origination services on mobile networks.












(23)


First, in relation to the Parties’ ability to engage in a customer foreclosure strategy, the Commission noted that the Targets represent a very small share of Telenet’s revenues.












(24)


Second, in relation to the Parties’ incentive to engage in a customer foreclosure strategy, the Commission found that the Transaction would not materially affect the Parties’ incentives to engage in any customer foreclosure strategy.












(25)


Finally, in light of the national regulatory coverage obligations and recent spending in 5G spectrum allocation, the Commission found that the Transaction would not affect Telenet’s mobile network deployment plans in the Targets’ footprint and would therefore not generate any anticompetitive effects on the market for the wholesale supply of access and call origination services on mobile networks.




5.   UNDERTAKINGS SUBMITTED BY THE PARTIES

5.1.   Description of the commitments









(26)


On 30 January 2023, in order to address the aforementioned competition concerns in the Relevant Markets, the Notifying Party has submitted the undertakings whereby Orange will provide access to Telenet to:






(a)


the exisiting fixed network infrastructure it is acquiring from the Targets; and,










(b)


Orange's future fibre-to-the-Premises (‘FTTP’) network, which it plans to roll out in the coming years.
















(27)


In line with previous access undertakings accepted by the Commission in the past, the Notifying Party’s proposal includes a fast track dispute resolution mechanism and the appointment of a Monitoring Trustee.




5.2.   Assessment of the commitments









(28)


The Commission considers that the proposed undertakings are effective and suitable to resolve the concerns raised by the Transaction in the Relevant Markets. In particular, the Commission considers that, as a result Telenet’s entry in the Targets’ footprint, the undertakings enable the near immediate entry of a reputable and reliable player into the Targets’ footprint. As such, the submitted undertakings seek to replace Orange, an access seeker, by Telenet, another access seeker. This maintains a ‘3-to-3’ market structure in the Targets’ footprint.












(29)


The Commission concludes that the commitments address the competition issues raised by the Transaction in their entirety. The Commission also concludes that the commitments are capable of being implemented effectively within a short period of time.




6.   CONCLUSION









(30)


For the reasons mentioned above, in the Decision the Commission concluded that, subject to compliance with the commitments given by the Notifying Party, the Transaction would not significantly impede effective competition in the internal market or in a substantial part of it. Consequently, the Decision declares the concentration compatible with the internal market, in accordance with Articles 2(2) and Article 8(2) of the Merger Regulation and Article 57 of the EEA Agreement.






(1)  
            OJ L 24, 29.1.2004, p. 1-22 (‘Merger Regulation’).

(2)  Publication in the 
Official Journal of the European Union No C 246, 29 June 2022, p. 5.

(3)  Publication in the 
Official Journal of the European Union No C 315, 19 August 2022, p. 1.

(4)  References to OBE shall be understood as covering all the activities of Orange in Belgium, even those that are not directly supplied by OBE.

(5)  Telenet is ultimately controlled by Liberty Global Plc (United Kingdom).

(6)  Proximus is the Belgian telecommunications incumbent and is currently controlled by the Belgian government.

(7)  Implied market shares indicate how large the Parties’ market shares would have to be for them to give rise to the observed diversion ratios.


ELI: http://data.europa.eu/eli/C/2023/1523/oj
ISSN 1977-091X (electronic edition)