EU Merger Regulation: The GSMA Supports Transaction Value-Based Threshold

Mobile Operators Encourage the Commission to Carry Out a Further Consultation When Assessment Parameters Will Be Defined in More Detail

Brussels: The GSMA, in its response to the European Commission’s consultation on merger control, supports the introduction of a value-based threshold in the EU Merger Regulation. Moreover, we encourage the European Commission to consider an in- depth review of its procedural and methodological approach to assessing those mergers that are assessed in details (during a second phase investigation), including in the mobile sector.

The current consultation demonstrates that the European Commission is open to reviewing the current rules and approaches, in the light of the changing realities of the digital economy, and the GSMA welcomes this flexiblity. Of necessity, this is an initial consultation with very open- ended questions. We urge the European Commission to carry out a second public consultation when the parameters of any new value based thresholds and other proposed changes become clearer.

In particular, the GSMA supports the argument that high-value acquisitions of target companies that have not yet generated substantial turnover (e.g. the Facebook/WhatsApp decision) are not always captured by the current (revenue-based) EU Merger Regulation thresholds. The GSMA therefore supports the adoption of an extra threshold, based on the value of the transaction.

In its reply, however, the GSMA insists that two main issues be clarified when assessing whether a value of transaction threshold should be included as a criterion for merger control: the value itself and the territorial nexus. Whilst such clarification is a complex exercise, it is important in order to avoid a proliferation of multi-jurisdictional filings. It would be counter- productive if the adoption of value thresholds led to the need for notification of transactions in one or more member states and at the EU level, for example.

The Commission should explore in detail whether competitively significant transactions in the digital economy that may not be captured by the current turnover-based threshold have some specific features, such as:

• One of the parties holds a strong/dominant position in one of the markets affected by the transaction; and
• The proportion of the value of the transaction relative to the revenues is noticeably unbalanced.

“The telecom industry supports the Commission’s efforts to improve the merger control process for the digital economy,” said Afke Schaart, Vice-President Europe at GSMA. “Whilst this consultation is key to evaluating the effectiveness of merger regulation in Europe, the GSMA encourages the European Commission to engage with stakeholders further, after identifying a set of possible alternative proposals that could be adopted.”

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About the GSMA
The GSMA represents the interests of mobile operators worldwide, uniting nearly 800 operators with almost 300 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organisations in adjacent industry sectors. The GSMA also produces industry-leading events such as Mobile World Congress, Mobile World Congress Shanghai, Mobile World Congress Americas and the Mobile 360 Series of conferences.

For more information, please visit the GSMA corporate website at www.gsma.com. Follow the GSMA on Twitter: @GSMA and @GSMAPolicy.

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