On Tuesday, Orange (ORAN.PA) and MasMovil’s planned merger of their Spanish operations may weaken competition and raise prices. EU antitrust officials said that the telecoms carriers may need to submit major remedies to approve the transaction.
Orange, Spain’s second-largest telecoms carrier, and MasMovil, fourth, announced the deal in July 2022 with an enterprise value of 18.6 billion euros ($20.3 billion).
The merger will challenge the European Commission’s stance on mergers that reduce a market’s main mobile telecom providers to three from four.
The EU competition enforcer filed a statement of objections to the companies on Tuesday, expressing concerns about four-to-three mergers. Orange and MasMovil compete with Spain’s Telefonica (TEF.MC) and Vodafone (VOD.L).
“The Commission is concerned that the proposed transaction may reduce the number of network operators in Spain, thereby eliminating a significant competitive constraint and innovative rival in the Spanish retail markets for mobile telecommunications services, fixed internet services and multiple-play bundles,” the EU executive said.
It warned that the merger could raise retail prices significantly.
“Predicted anticompetitive effects are substantial even after taking potential cost savings into account, in a context where competition has been a driving force for investment and quality of services in the Spanish market,” the Commission stated.
Orange said it would continue to explain to the Commission how the transaction would help consumers and businesses, including more innovative services and 5G and fiber optics investments in Spain.
Before the EU enforcer decides on the contract on Sept. 4, the corporations can request a closed hearing to defend their case.
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