Magic Numbers and Merger Control in the Telecommunications Sector

Pranvera Kellezi, Nov 11, 2015

“There is no magic number,” stated the European Commissioner Margrethe Vestager in early October of this year. The statement followed the withdrawal of the merger planned by Telenor and TeliaSonera, after the European Commission  objected, which would have merged the second and third largest Danish mobile operators and reduced the number of mobile network operators (“MNOs”) to three. It was also a response to the calls for consolidation in the mobile telecom sector and the argument that markets with four mobile operators could not keep up with investments. While four is a must for some regulators, “three is the magic number,” according to the industry.

A few years ago, the number “three” seemed to have magical powers, this time for the Swiss Competition Commission who blocked the merger between the second and the third largest mobile operators in 2010, which would have created a MNO duopoly. Switzerland does not have the luxury of having four mobile network operators; the same investment imperative was raised by telecom companies to justify a sustainable telecom market with only two players. This shows that after ongoing consolidation toward three MNOs, the industry would put forward the same arguments for a sustainable “magical duopoly” case in Europe.

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