CELEX: 31998J0009
Language: en
Date: 1998-08-18 00:00:00
Title: COMMISSION DECISION of 18/08/1998 declaring a concentration to be compatible with the common market (Case No IV/JV.9 - * TELIA / SONERA / MOTOROLA / OMNITEL) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31998J0009

COMMISSION DECISION of 18/08/1998 declaring a concentration to be compatible with the common market (Case No IV/JV.9 - * TELIA / SONERA / MOTOROLA / OMNITEL) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal 178 , 23/06/1999 P. 0017 - 0017

COMMISSION DECISION of 18/08/1998 declaring a concentration to be compatible with the common market (Case No IV/JV.9 - * TELIA / SONERA / MOTOROLA / OMNITEL) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)Brussels, 18.08.1998    To the notifying parties Dear Sirs,Subject :  Case No. IV/JV.9 - Telia/Sonera/Motorola/UAB Omnitel Notification of 22 July 1998 pursuant to Article 4 of Council Regulation No. 4064/891.  On 22 July 1998, Telia AB ("Telia"), Sonera Oy ("Sonera") and Motorola Lithuania Telecom, Inc. ("MLT") notified the Commission, pursuant to Article 4 of Council Regulation (EEC) No. 4064/89 (1) (the "Merger Regulation"), of a transaction under which Telia and Sonera have acquired a 55% interest in UAB Omnitel ("Omnitel"), a Lithuanian telecommunications operator.(1)        OJ L 395 of 30.12.1989, p. 1, corrigendum in OJ L 257 of 21.9.1990, p. 13; as last amended by Regulation (EC) No. 1310/97, OJ L 180 of 9.7.1997, p. 1, corrigendum in OJ L 40 of 13.2.1998, p. 17.2.  After examination of the notification, the Commission has concluded that the operation falls within the scope of the Merger Regulation and does not raise serious doubts as to its compatibility with the common market and the EEA agreement.3.  On 17 July 1998, Telia and Sonera had notified a transaction under which they acquired a 60 % share in Lietuvos Telekomas, another telecommunications operator in Lithuania. This transaction was the subject of a separate notification under the Merger Regulation (Case No. IV/JV.7 - Telia/Sonera/Lietuvos Telekomas of 14 August 1998).I.  PARTIES4.  Telia is the parent company of the Telia group. The Telia group provides a wide range of telecommunications services to private and business customers, such as fixed and mobile telephony, information and media services. Telia is the national public telecommunications operator in Sweden. It is wholly-owned by the Swedish State.5.  Telia is also active outside Sweden, notably through its subsidiary Telia UK (United Kingdom) and its participations in Telecom Eireann (the national public telecommunications operator in Ireland) and Unisource NV (a joint venture between Telia, PTT Telecom BV and Swisscom AG). Telia is also providing fixed network services in Finland and has begun providing mobile telephony services there.6.  Sonera (formerly known as Telecom Finland Ltd) is a wholly-owned subsidiary of Sonera-Yhtymä Oyj, the parent company of the Sonera group of companies. Sonera-Yhtymä Oyj is wholly-owned by the Finnish State. Sonera is likewise a national public telecommunications operator in Finland, providing a wide range of telecommunications services to business and private users.7.  Sonera is also active outside Finland, notably through subsidiaries in Sweden, Germany and Belgium.8.  MLT is a wholly-owned subsidiary of Motorola Inc. ("Motorola"), an American company which is mainly active in the design, manufacture, marketing, distribution and installation of cellular telephone and derivative products as well as in services related thereto. Motorola is a public quoted company which is not directly or indirectly controlled by any other person or entity. MLT is a holding company whose sole assets are its shares in Omnitel.II.  THE OPERATION9.  The notified transaction concerns the acquisition by Telia and Sonera, through Amber Mobile Teleholding AB ("Amber Mobile"), a joint holding company, of an interest in Omnitel from Victor Gruodis, Joseph P. Kazickas, Joseph M. Kazickas, Michael V. Kazickas, John Kazickas, Jurate Kazickas, The Alexandra Kazickas Trust, The Joseph P. Kazickas Trust and December Investments, L.P. (hereinafter together referred to as the "Other Shareholders") and MLT. Amber Mobile does not have any other activities or assets. Prior to the transaction, MLT (which held 45 % of the shares) and the Other Shareholders (55 % of the shares) had joint control over Omnitel.10.  Under the notified transaction, Telia and Sonera, through Amber Mobile, acquire a 55% stake in Omnitel. MLT will continue to hold 35 % of the shares in Omnitel. The remaining 10% are retained by the Other Shareholders.11.  The transaction notified consists of (a) the Stock Purchase Agreement between Amber Mobile, MLT and the Other Shareholders, (b) the Second Amended and Restated Shareholders' Agreement between Omnitel, Amber Mobile, MLT and the Other Shareholders (the "Shareholders' Agreement"), (c) the Put Agreement between Omnitel and the Other Shareholders and (d) a draft Shareholders' Agreement between Telia and Sonera with regard to Amber Mobile.III.  CONCENTRATIONJoint control12.  Telia and Sonera hold 50 % each of the shares in Amber Mobile. Since there are no agreements or provisions which would allow one of the two parent companies to exercise decisive influence over Amber Mobile on its own, the company is jointly controlled by its two shareholders. The shareholders' agreement has not been finalized yet but the parties have confirmed that there will be no material differences between the draft submitted and the final version. The draft Shareholders' Agreement between Telia and Sonera provides that each parent company will appoint two of the four members of Amber's board of directors. It is envisaged that decisions of the board and of the shareholders' meeting will be taken unanimously in so far as this is possible. Decisions on several important issues (such as the final adoption of the budget) require unanimous approval in any event. In the case of deadlock, the matter may be referred to the presidents of Telia and Sonera, neither of whom has a casting vote. It follows that Amber Mobile will be jointly controlled by Telia and Sonera.13.  Under the Shareholders' Agreement the board of directors of Omnitel will consist of seven members, four of whom will be appointed by Amber Mobile, two by MLT (as long as MLT holds at least 25 % of the shares in Omnitel) and one by the Other Shareholders. The board of directors shall be responsible for supervising the activities of Omnitel and for determining the overall policies and objectives of the company. As a rule, the board and the operating committee will decide by simple majority. However, certain decisions require the vote of no less than five directors including the vote of at least one director nominated by MLT for as long as MLT holds at least 25 % of the shares in Omnitel ("Director Supermajority"). These include decisions on the establishment of financial and business objectives and the approval of the annual budget and the business plan. If the requisite majority cannot be obtained, such matter shall, at the request of any director, be referred for resolution to a committee of representatives of the shareholders of Amber Mobile and MLT which decides unanimously. The President and Chief Financial Officer of Omnitel shall be nominated by Amber Mobile with the advice and consent of MLT and confirmed by the board of directors.14.  It follows that certain decisions concerning key commercial matters require the approval of both Amber Holding and MLT. Telia and Sonera, through their joint venture company Amber Mobile, and MLT will therefore have joint control over Omnitel.Full-function entity15.  Omnitel is a fully-fledged mobile telecommunications operator which in 1997 had a turnover of around US$ 50.4 million). It performs all the functions of an autonomous economic entity. The services provided by Omnitel include digital GSM services, paging, data transmission and Internet services in Lithuania. It also operates a satellite communications system. Omnitel does not have any investment, assets, subsidiaries or other operations in the EEA.IV.  COMMUNITY DIMENSION16.  The combined aggregate world-wide turnover of Telia (ECU 5.369 billion), Sonera (ECU 1.313 billion), Motorola (ECU 26.272 billion) and Omnitel exceeds ECU 5 billion. The aggregate Community-wide turnover of each of these companies apart from Omnitel is more than ECU 250 million. The undertakings concerned do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The concentration therefore has a Community dimension within the meaning of Article 1 of the Merger Regulation.17.  The notified transaction does not constitute a concentration to which the co-operation procedure provided for in Articles 57 and 58 and Protocol 24 of the EEA Agreement applies.V.  RELEVANT PRODUCT MARKETMobile telephony18.  In recent decisions the Commission has considered whether mobile telecommunications systems using the GSM standard and systems using other standards (such as the DCS 1800 standard) belong to different markets (see cases IV/JV.2 - ENEL/FT/DT of 22 June 1998 and IV/JV.4 - Orange/VIAG of 11 August 1998). However, the definition of the relevant product market in this case may be left open since, regardless of which market is considered to be the relevant market, the transaction does not create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the common market, the EEA or a substantial part thereof, as it is set out in the competitive assessment under point VII. below.Other services19.  Apart from mobile telephony (GSM) services, Omnitel also provides paging, data transmission and Internet services in Lithuania. The definition of the relevant product markets in this case may however be left open since, regardless of which market is considered to be the relevant market, the transaction does not create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the common market, the EEA or a substantial part thereof, as it is set out in the competitive assessment under point VII. below.VI.  RELEVANT GEOGRAPHIC MARKET 20.  The scope of the relevant geographic market in telecommunications is determined by the extent and coverage of the network and the customers that can economically be reached and whose demands may be met on the one hand and the legal and regulatory system on the other hand. The parties argue that the notified transaction has an impact only on the markets in Lithuania.Mobile telephony21.  The geographic scope of the licence granted to Omnitel covers the entire territory of Lithuania. The Commission has however considered in recent decisions that there is an increasing trend towards a European market for mobile telephony service provision (see most recently case IV/JV.4 - Orange/VIAG of 11 August 1998). In the present case the definition of the relevant geographic market may nevertheless be left open since, on the basis of the assessment set out below, the concentration would not in any event create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the common market, the EEA or a substantial part thereof.Other services22.  In view of the competitive assessment set out below under VII, it is not necessary to define the relevant geographic market with regard to the other services provided by Omnitel either.VII.  COMPETITIVE ASSESSMENTA  Dominance23.  Omnitel operates only in Lithuania which is outside the EEA. The Commission is not therefore competent to make a competitive assessment of the creation or strengthening of a dominant position on the markets in this country.24.  Such an assessment would however be possible with regard to mobile telephony services if the market could be considered as being European in scope. Omnitel's share of this market would be minimal. MLT and Motorola are not active on this market. Telia and Sonera are the most important providers of mobile telecommunication services in Sweden and Finland respectively. However, even if their market shares were to be added to each other the companies would not be dominant on this market where a considerable number of other competitors are active. The impact of the transaction on the European market for mobile telephony services is thus very limited.25.  Such assessment would also be possible with regard to the other services provided by Omnitel if the relevant geographic market for these services was European in scope. However, even if this was the case there is no indication that the transaction would result in the creation of a dominant position with regard to any of the services concerned.26.  The concentration will therefore not result in the creation or strengthening of a dominant position on any of the markets referred to above as a result of which effective competition would be significantly impeded in the common market, the EEA or a substantial part thereof.B  Co-ordination of competitive behaviour27.  Pursuant to Article 2 (4) of the Merger Regulation, to the extent that the creation of a joint venture has as its object or effect the co-ordination of the competitive behaviour of undertakings that remain independent, such co-ordination shall be appraised in accordance with the criteria of Article 85 (1) and (3) of the EC Treaty. In order to establish a restriction of competition in the sense of Article 85 (1) of the EC Treaty, it is necessary that the co-ordination of the parent companies' competitive behaviour is likely and appreciable and that it results from the creation of the joint venture, be it as its object or its effect.1.  Definition of candidate markets for co-ordination28.  According to Article 2 (4) (2) of the Merger Regulation, the Commission shall, when making the said appraisal, take into account in particular whether two or more parent companies retain to a significant extent activities in the same market as the joint venture or in a market which is downstream or upstream from that of the joint venture or in a neighbouring market closely related to this market.29.  Since the Commission would not be competent to take any position on competition on the Lithuanian market, only closely related markets within the EU are to be looked at as possible candidate markets. As to mobile telephony, Telia and Sonera are - depending on the definition of the relevant geographical market chosen - either actual competitors of Omnitel or could at least be potential competitors on markets which could be considered to be neighbouring markets closely related to the Lithuanian market. Neither MLT nor Motorola are active on the mobile telephony service markets either in Sweden or in Finland. For the reasons set out in the assessment below, the definition of further possible candidate market with regard to the other services mentioned above and to the telecommunications equipment marketed by Motorola (but not Telia or Sonera) can however be left open.2.  Assessment under Article 2 (4)30.  There are no indications which would allow the conclusion that the acquisition of joint control in Omnitel has the object of co-ordinating the competitive behaviour of Telia and Sonera on any of the markets referred to above, but the acquisition of the 55 % share in Omnitel might have the effect of co-ordinating the competitive behaviour of Telia and Sonera.Mobile telephony31.  To the extent that the market for the provision of mobile telephony services should be European in scope, the combined market share of Omnitel, Telia and Sonera would be rather modest and in any event substantially below 10 %. It would therefore not be likely that the acquisition of control over Omnitel by Telia and Sonera would lead to a co-ordination of the competitive behaviour of these companies on that market. If the markets were to be considered as being national in scope, neither Telia nor Sonera would be active on the markets of the other company to a noticeable degree. As indicated above, the size of the telecommunications market in Lithuania is very small compared to the markets in both Finland and Sweden and the possible share in that market of Telia and Sonera is even more limited. Therefore, no co-ordination is likely on these markets either.Other services or products32.  As regards the other services and products mentioned above, there are no indications which would allow the conclusion that the acquisition of joint control over Omnitel by Telia and Sonera together with MLT/Motorola will lead to a co-ordination of the competitive behaviour of these companies on any of the markets concerned.33.  In the light of the above analysis, there appears to be no likelihood of co-ordination on any candidate market and it is therefore not necessary to establish a causal link between the creation of the joint venture and the behaviour of the parent companies outside the joint venture on any candidate market.VIII.  ANCILLARY RESTRAINTS34.  The notifying parties have identified two restrictions in their agreements which they consider to be directly related and necessary to the implementation of the concentration: