EU antitrust chief warns against telecoms mergers

EU competition chief Margrethe Vestager has issued a stern warning against further consolidation in the bloc’s telecommunications industry, countering a recent EU report that advocated for mergers among operators to bolster networks.

Speaking at a conference in Brussels, Vestager forcefully rejected the notion that more concentrated national telecoms markets would lead to better outcomes.

“No evidence suggests that more concentrated national markets lead to better outcomes,” Vestager said.

Vestager’s comments came just days after a high-profile report commissioned by EU leaders called for allowing more consolidation among telecoms companies as a means of improving mobile and fixed broadband infrastructure across the 27-nation bloc.

The report, authored by former Italian Prime Minister Enrico Letta, was welcomed by major telecoms operator Telefonica as identifying the sector as “one of the strategic levers for competitiveness, innovation, citizens’ well-being, and the EU’s resilience.”

Telefonica highlighted that the Letta report “stresses the need to promote the economic sustainability of telecoms operators in order to ensure the continuity of their investment efforts” in 5G and fibre broadband buildouts. The Spanish operator noted the report advocates “a certain degree of consolidation in national markets in order to achieve the local scale necessary to make the sector attractive to investors and to ensure its viability and dynamism.”

However, Vestager, whose tenure as European Competition Commissioner has been defined by a strict stance against anti-competitive mergers, stood firmly against Letta’s recommendations.

“To the contrary, it would lead to less competitive national markets and to a more fragmented single market,” Vestager stated.

Telecoms companies have chafed at EU resistance to in-country mergers that would leave only three major players, a level of concentration regulators view as risking higher prices and poorer service for consumers. But Vestager showed no signs of softening her opposition, potentially setting up a clash with the next European Commission over merger policy in the critical connectivity sector.  

While the Letta report and comments from other European leaders raised telecoms’ hopes for a more permissive merger regime after the EU’s mid-2024 leadership transition, Vestager’s stern warning indicates significant inertia against further market consolidation absent evidence it would benefit consumers.

Telefonica says the upcoming Digital Networks Act presents “a unique opportunity” to address regulatory imbalances between telecoms operators and large tech platforms that have hampered investment in state-of-the-art networks.

(Image Credit: Radikale Venstre under CC BY-NC 2.0 DEED license)

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Tags: 5G, antitrust, competition, connectivity, Enrico Letta, eu, europe, european union, government, law, legal, Margrethe Vestager, mobile, Networks, politics, regulation, report, telecoms