EU clears merger of Franco-German mobile subsidiaries in Britain

Mar 1, 2010, 14:24 GMT

Brussels - The European Commission is to allow France Telecom and Deutsche Telekom to merge their mobile phone subsidiaries in Britain, after they agreed to divest some of their combined assets to leave space for the competition, officials said Monday.

The planned Orange/T-Mobile conglomerate is set to dominate the British mobile phone market, leapfrogging current leader Vodafone as well as other players such as O2 and 3.

The EU executive said that the initial version of the merger could threaten 3's viability on the market and possibly eliminate a competitor' by ending the network sharing agreement the company had in Britain with T-Mobile.

The commission also found that the Orange/T-Mobile entity could be the only British mobile phone operator able to offer the new Long Term Evolution (LTE) technology by virtue of having a far larger share of radio spectrum than its competitors.

In order to address these competition concerns, France Telecom and Deutsche Telekom agreed to revise the network sharing agreement with 3 and pledged to divest a quarter of the total radio spectrum held by Orange and T-Mobile.

'I am happy that we managed to resolve the competition issues in this case quickly in close cooperation with the member state concerned,' the EU's competition commissioner Joaquin Almunia commented in a statement.

The revised terms of the merger also satisfied the Office of Fair Trading - Britain's antitrust authority - which dropped an earlier request to examine the deal separately.