OREANDA-NEWS. July 28, 2015. The European Commission has approved under the EU Merger Regulation the proposed acquisition of Alcatel-Lucent by Nokia. Both companies are global providers of telecommunications equipment and related services. The Commission concluded that the transaction would not raise competition concerns, in particular because the parties are not close competitors and since a number of strong global competitors will remain active after the transaction.

The Commission assessed the effects of the transaction on competition in the field of mobile network equipment, including Radio Access Network equipment (for connecting mobile devices to networks) and Core Network Systems (that for example route telephone calls and data traffic). The Commission found that, despite the merged entity having combined market shares around or above 30% for several specific types of equipment, the overlaps between the two companies' activities are effectively limited. Indeed, Nokia has a strong presence in the European Economic Area, where Alcatel-Lucent is a small player, and conversely Alcatel-Lucent has a strong presence in North America, where Nokia's activities are rather limited.

Moreover, several other strong players are active on the market: Ericsson and Huawei, which together with Nokia are the main players in Europe, along with the Chinese ZTE and the Korean Samsung. Although ZTE and Samsung currently have small market shares, the Commission considered that those market shares do not fully reflect the competitive importance of their offerings. In particular, Samsung is expected to play a more significant role in the near future in relation to the newest generation mobile telecommunications equipment (so-called 4G, currently being deployed, and 5G). Finally, the Commission's investigation did not find that the transaction would make it harder for new or small players to enter and expand in the market.

The Commission also looked into the possibility of the transaction leading to the markets concerned being more susceptible to coordination between the remaining players. However, it concluded that the transaction would not significantly change the market structure to make coordination easier, in particular given the importance of technological innovation and a lack of transparency in the markets concerned.

The transaction was notified to the Commission on 19 June 2015.

Companies and products

Nokia Corporation of Finland is a global provider of mobile network equipment and networks service platforms, active also in the provision of professional services to telecommunications network operators and service providers. Nokia's network equipment activities have a geographic focus on the European and Asian markets.

Alcatel-Lucent S.A. of France and the United States is active in the provision of fixed and mobile network equipment, as well as related services to telecommunications network operators worldwide. Alcatel's activities are mainly focused on the North American continent.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the European Economic Area 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.7632.