European Commission clears Orange’s €1.8 billion acquisition of VOO and Brutélé

The European Commission cleared Orange’s €1.8 billion acquisition of VOO and Brutélé, subject to a number of behavioural commitments. Orange, VOO and Brutélé are all active in the Belgian fixed and mobile telecommunications sector, as well as in offering TV & internet services. Compass Lexecon advised Orange and its counsel Latham & Watkins during the pre-notification, Phase I and Phase II investigations by the European Commission.

Orange is Belgium’s second-largest mobile network operator and provides fixed telecom services over third-party networks. In contrast, VOO and Brutélé own their own fixed networks in Wallonia and Brussels, but rely on third-party access for mobile telecom services. During the investigation, the European Commission expressed concerns that in areas where VOO and Brutélé have their own fixed networks, the transaction would be tantamount to a 3-to-2 horizontal merger removing Orange as an important competitor thus reducing competition in markets for the retail supply of (i) fixed internet access, (ii) audio-visual services, and (iii) multiple-play bundles (including fixed-mobile convergent (‘FMC') services). The European Commission also considered the risk of coordinated effects. To allay those concerns, Orange committed to provide Telenet, the country’s largest cable broadband provider, access to the fixed networks in Wallonia and Brussels, as well as access to its to-be-rolled out FTTP network, for the coming ten years.

Compass Lexecon assisted with various aspects of the competitive assessment across the pre-filing, the Phase I and the Phase II assessment. We analysed geographical market delineation and the extent of price constraints created by operators with a national presence. We supported the assessment of horizontal effects over different retail markets [fixed internet services, TV services, fixed and mobile telecommunication services and multi-play services (including fixed-mobile convergent (‘FMC') services)], as well as over different wholesale markets. We assisted through market share calculations and the assessment of current and expected closeness of competition between the merging parties based on, e.g., tariff analysis, switching data/diversion ratios, and service offering in a market evolving rapidly towards convergence. In response to the Commission’s concerns, we also analysed the risk of coordinated effects (or lack thereof), the likelihood of and conditions for potential market entry and the absence of vertical customer foreclosure risk. Finally, during the Phase II investigation, we assisted Orange with the precise design of an access remedy package allaying the Commission’s concerns.

The Compass Lexecon team led byDavid Sevy comprised Ciara Kalmus, Antoine Gracia Victoria, Thibaut de Bernard, Alexandre Nouvel, Marion Chabrost, Natalia Losurdo, Adrien Damade, Claire Kraemer and Antoine Golovtchenko. Throughout the investigation, we worked in close cooperation with the Latham & Watkins team counselling Orange, led by Jacques-Philippe Gunther and John Wileur, comprising Laure Maes, Juliette Raffaitin, Julien Morize and Axelle Aubry.