OREANDA-NEWS. April 21, 2015. The European Commission has authorised under the EU Merger Regulation the proposed acquisition of the Portuguese telecommunications operator PT Portugal by the multinational cable and telecommunications company Altice. The decision is conditional upon the divestment of Altice's current Portuguese businesses ONI and Cabovis?o. The Commission had concerns that the merged entity would have faced insufficient competitive constraint from the remaining players on the market for fixed telecommunications. This could have led to higher prices for clients. The divestments offered by Altice address these concerns. The Commission has also rejected a request to refer the examination of the transaction to the Portuguese competition authority.

EU Commissioner in charge of competition policy Margrethe Vestager said: "Telecoms play an essential role in our digital society. My wish is to ensure that the merger will not lead to higher prices and less competition for Portuguese consumers. The commitments offered by the parties address this concern".

Altice operates via two subsidiaries in Portugal, Cabovis?o and ONI. Cabovis?o provides pay TV, fixed internet access and fixed telephony services essentially to residential customers. ONI provides services to business customers, including fixed telecommunication services, in particular voice, data and internet access services as well as IT services.

PT Portugal is a telecommunications and multimedia operator with activities extending across all telecommunications segments in Portugal. It offers fixed, mobile voice and data services; broadband internet access services and pay TV services to residential customers. PT Portugal’s offer for business customers includes fixed and mobile voice services data services and IT services, comprising data centre solutions, virtualisation services, cloud, business outsourcing process and other additional value-added services.

The Commission had concerns that the merger, as initially notified, would have reduced competition in a number of telecommunications markets in Portugal. These markets include the wholesale markets for leased lines and for call transit services, the provision of fixed voice services, fixed internet access services and pay TV services to residential customers and the provision of telecommunication services to business customers. The merger would have removed a strong competitor from these markets, with the risk of leading to higher prices and less competition in Portugal.

In order to remove these concerns, Altice offered to sell its Portuguese subsidiaries Cabovis?o and ONI.

These clear-cut structural commitments completely remove the overlap between the activities of Altice and PT Portugal within Portugal and are therefore appropriate to address the initial competition concerns identified by the Commission. The Commission concluded that the transaction, as modified by the commitments, would raise no competition concerns. The decision is conditional upon full compliance with the commitments.

The Commission cooperated closely with the Portuguese competition authority in the assessment of the proposed transaction.

Rejection of referral request

In parallel, the Commission has today also rejected a request from Portugal to refer the merger to the Portuguese competition authority ("PCA") for assessment under Portuguese competition law.

On 5 March 2015, the PCA submitted a referral request pursuant to Article 9(2)(a) and (b) of the EU Merger Regulation.

Article 9(2)(a) allows the Commission to refer all or part of the assessment of a case to a Member State provided that the competitive effects are restricted to national markets. In deciding whether to refer a case to a Member State under Article 9(2)(a), the Commission particularly takes into account which authority is better placed to deal with the case. The Commission concluded that, given its extensive experience in assessing cases in this sector and the need to ensure consistency in the application of merger control rules in the fixed telecommunications sector across the European Economic Area (EEA), it was better placed to deal with this case.

Article 9(2)(b) provides that the Commission must refer the assessment of a case to a Member state when the relevant markets affected by the transaction can be understood to be a distinct market that and do not constitute a substantial part of the internal market. The Commission concluded that the latter condition was not met, since each of the relevant markets affected by the transaction constitutes a substantial part of the internal market.

The Commission therefore rejected the request.

Merger control rules and procedure

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (phase I) or to start an in-depth investigation (phase II).

More information will be available on the competition website, in the Commission's public case register under the case number M.7499.