Vodafone, KPN knock EU over opposition to mergers

Vodafone and KPN criticised the European Union for hampering mergers and investments across Europe. The CEOs of both operators say that antitrust regulators are taking a too narrow view on consolidation within the operator community, pointing to the ongoing difficulties Hutchison Whampoa is facing in its bid for France Telecom's Orange Austria.

The heads of Vodafone, KPN and France Telecom have called for a regulators to reconsider their stances on industry consolidation, according to Reuters, arguing that more mergers were needed in Europe to meet the need for investment in networks and to stimulate economic recovery in the region. EU Competition Commissioner Joaquin Almunia recently questioned whether Hutchison could offer sufficient concessions to satisfy regulators that competition would not be harmed if it acquired Orange Austria.

"The solution has to be found in scale and consolidation," Vodafone CEO Vittorio Colao told attendees at the FT ETNO Summit in Brussels. "EU Commissioner Almunia has complained that there are not enough cross-country deals--he needs to ask the question why."

"We need to allow consolidation," he added, according to Reuters. "We should not worry how many operators a single country has, we should be a bit more American."

KPN CEO Eelco Blok echoed this view. "Today the regulatory environment is an obstacle to growth, and scale is very important in the telco business," he told the conference. "Consolidation or network sharing is an issue today, and this needs to change in Europe to be able to sustain competitiveness."

The worry surrounding Hutchison's €1.2 billion deal for Orange Austria is a reduction in the number of mobile operators in Austria from four to three. "We have recently adopted a statement of objections in relation to this proposed merger. At this stage, the question remains whether effective remedies will be found," Almunia said, according to Dow Jones Newswires.

However, France Telecom CEO Stephane Richard slammed the hard line approach,  according to Reuters. "The Austrian example is quite illustrative. There are four operators, and now there is a crazy foolish project to go from four to three operators and this causes a problem for the EU," he said. "Just recall that in China there are only three operators and that is not a small country compared with Austria. We need a deep, deep change in competition policy in Europe."

For more:
- see this Reuters article
- see this Dow Jones Newswires article

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