Melita takeover of Vodafone subject of in-depth investigation by competition watchdog

MCCAA in-depth investigation into Melita-Vodafone merger seeks information on how takeover affects competition and market

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Matthew Vella
12 July 2017, 3:10pm
The Malta Competition and Consumer Affairs Authority (MCCAA) has initiated a so-called ‘Phase 2’ in-depth investigation of Melita’s proposed takeover of Vodafone’s Malta business.

The investigation serves to see whether the proposed market concentration could have an impediment on effective competition in the market.

GO plc, the main competitor for the prospective merger, said that the Office for competition will be expected to carry out detailed research and analysis on issues such as the possible increase in prices that the acquisition may cause, and possible anti-competitive behaviour from the creation of dominance in the market.

“The proposed takeover of Vodafone, in a critical sector such as telecommunications, is unprecedented as it reduces the number of major competitors in the market down to two,” a spokesperson GO plc said.

“This would be, by far, the largest market concentration in Malta’s history and, unless it is properly implemented and adequate remedies and safeguards are provided for, it could have very far reaching and long term implications and negative outcomes for consumers and ultimately for the whole country. It is hardly surprising therefore that the case is being followed closely in Malta and beyond, and that objections have been raised by consumers groups.”

Vodafone said that it was expected that such a transaction would require a more in-depth analysis and move to a Phase 2 investigation.

“Vodafone Malta will continue to assist and cooperate fully with the Office for Competition in this important process. Vodafone Malta believes that the merger will produce an entity with the necessary scale to be able to compete with GO much more effectively than the two entities can on their own. A merger is the only means by which this can be achieved,” the company said in a statement.

“If the merger is approved, Melita’s mobile customers will very quickly experience the much superior Vodafone mobile network. Vodafone customers on the other hand will be able to access Melita’s internet and television bundles, and will be able to use Melita’s extensive public WIFI network.

“There is a very real demand for convergence from both companies and consumers in Malta and the combined company will have a strong quad play bundle (mobile, fixed internet, fixed telephony and TV service) that will rival GO’s.”

GO said that the Phase 2 investigation means that the merger will need adequate safeguards to ensure the telecoms sector “remains viable and that consumers continue to enjoy real choice”.

“Naturally, as an interested third party, GO will continue to collaborate fully with the Office for Competition and present detailed technical economic assessments on the matter. As we have repeatedly stated, GO does not fear competition – indeed we welcome it because healthy market competition benefits consumers and drives innovation. However unless there is a proper level playing field one might end up in a scenario where ultimately competition and the consumer lose out. We augur that this can be averted.”

GO plc has over 500,000 customer connections and its majority shareholder today is TT Malta Limited, a wholly owned subsidiary of Tunisie Telecom. 

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Matthew Vella is executive editor at MaltaToday.