The European Commission (EC) confirmed it has opened an in-depth investigation to assess whether the proposed joint venture between CK Hutchison and VimpelCom in Italy is in line with merger regulations.
The move means that the commission, which said it was informed of the transaction on Feb. 5 this year, now has 90 days -- or until Aug. 10 -- to reach a decision.
In August last year, CK Hutchison Holdings and VimpelCom said they had agreed to form a 50:50 joint venture that would own and operate their respective mobile businesses in Italy, bringing together Three Italy and Wind Italy into a single entity. At the time, the companies hailed the transaction as the largest M&A deal in Italy since 2007, with a total value of €21.8 billion ($24.8 billion).
However, approval by the EC is far from assured: under new competition commissioner Margrethe Vestager the commission has taken a harder stance on proposed mergers that reduce the number of mobile network operators within a national market.
Hutchison, which has previously won approval for similar deals in Ireland and Austria, is also embroiled in a battle with regulators over its plan to buy O2 in the UK. The company recently said it was now considering the sale of a stake in Three UK to another investor, in a move that could lead to Three and O2 being maintained as separate entities in future should the group's proposal to buy O2 be approved. The EC has until May 19 to make its decision on this merger proposal.
With regard to the planned deal in Italy, Vestager said in a statement: "We need to make sure that the proposed transaction will not lead to higher prices or less choice in mobile services for Italian consumers."
The transaction would bring together Three Italy and Wind to create a combined company with more than 31 million mobile and 2.8 million fixed-line subscribers in Europe's fourth-largest telecoms market, competing with Telecom Italia and Vodafone Italy.
The EC said its concerns related to a reduction in competition in the mobile retail market; a reduction in the number of MNOs that host MVNOs; and a possible increase in retail and wholesale mobile prices.
For more:
- see the EC release
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