European Commission approves Orange's Jazztel acquisition
The European Commission (EC) has approved Orange’s €3.4 billion acquisition of Jazztel, subject to several concessions from the French operator.
Orange announced in September 2014 that it was to acquire the fixed-line company. The EC said three months later that it would probe further into the deal, citing competition concerns.
To address the concerns, Orange has committed to divest an independent fibre-to-the-home (FTTH) network covering between 700,000 and 800,000 building units. The high speed network covers 13 urban districts located in five of the largest Spanish cities including Madrid, Barcelona, Valencia, Sevilla and Malaga.
The operator has also committed to grant the purchaser of the FTTH network wholesale access to Jazztel’s national ADSL network for up to eight years.
According to the EC, the vast majority of fixed internet contracts in Spain are bundled with mobile services. As such, an entrant would require access to a mobile network to compete effectively. Orange is committed to grant the purchaser of the FTTH network wholesale access to its mobile network including 4G services, unless the purchaser already has access to a mobile network.
The EC’s approval of the deal follows earlier comments from Margrethe Vestager, the EU’s competition commissioner, that mergers must not undermine competition. Vestager has expressed concerns that mergers could lead of an increase in prices for consumers.
“A very important thing before agreeing to Orange's takeover of Jazztel was to make sure that consumers in Spain would not suffer from higher prices for fixed internet access services. With the remedies in this merger a new player may enter the market and compete as strongly as Orange and Jazztel do today,” said Vestager.