Assessing the impact of a merger – or predicting the impact of a merger – is a matter of both law and practice.
Authorities strive for consistency of approach with assessments generally based on an analysis of price, quality and innovation – all three contributing to a determination on how any merger would impact consumer welfare. This “golden rule” of analysis should ensure that the impact of all three factors are adequately assessed and contribute to a holistic analysis of the potential impact of any merger.
However, is this always the case? Is sufficient and equal analysis been given to all three? What is peculiar to mobile and what learnings can we take from recent mergers?
Our most recent study aims to address these questions, looking in detail at the aspects that are particular to mobile, and presenting evidence on factors or potential consumer impacts that should be considered in the early stages of a merger review.
Generally speaking the main source of evidence relied on in an early stage of a merger review is pricing i.e., could the proposed merger increase prices in the short-term? How harmful would this be for the consumer?
In the case of mobile mergers, however, our study finds that whilst price is an important factor, experience has shown that, to date, there has been an over reliance on this single aspect and less consideration on quality and innovation.
Taking the merger of Hutchison and Orange in Austria as a case study we provide evidence that other features of mobile services, such as network coverage and quality of service, are equally important and present findings that demonstrate the need for these aspects to be given sufficient weight in an initial analysis.
The report finds that:
- The merger had a significant positive impact for Austrian consumers. Within two years of the merger, Hutchison was able to accelerate population coverage of its 4G network by 20–30 percentage points
- Hutchison’s 4G network quality increased significantly, with 4G download and upload speeds increasing by 7 Mbps and 3Mbps respectively two years after the merger.
Although the study and its findings are specific to Austria, the results show that a 4-to-3 mobile merger intensified competition in quality-related aspects and that a three-player market delivered more widely available and faster 4G services than those experienced in four-player markets. It also shows that a merger between the two smallest operators in Austria allowed them to significantly outperform other operators in Europe with a similar position in the market.
PDF Downloads: