The GSMA, on behalf of Europe's mobile network operators, have submitted a response to the European Commission's public consultation on new draft guidelines for reviewing company mergers.
In particular, the mobile industry believes it is a priority that the revised rules provide a framework that supports Europe's competitiveness, encourages investment in critical digital infrastructure, and recognises the benefits that mergers can bring to consumers. The industry response was drafted jointly with Connect Europe.
It comes against the backdrop of a pronounced and widening investment gap in Europe's mobile sector, with recent analysis finding that of the ?475 billion required to upgrade networks to leading global standards, only ?270 billion is currently expected to materialise - leaving a shortfall of more than ?200 billion.
A key barrier to investment in Europe's mobile sector is the long-term uncertainty around the ability to scale. A more dynamic approach to assessing in-market consolidation is therefore vital and the revised merger guidelines arrive at a critical time for Europe's competitiveness.
A growth mindset for a competitive Europe
It is almost two years since the Draghi report highlighted the need for consolidation, in particular in the telecoms sector, as a means of improving the bloc's ability to compete with other major markets globally.
The draft merger guidelines are a positive step in addressing existing shortcomings. What is now essential is to preserve the Commission's intended clarity by simplifying areas of unnecessary complexity and where further revisions could help ensure a balanced and dynamic framework. These include:
- The fair treatment of benefits: The new rules should give equal weight to both the potential harms and the potential benefits of a merger. Currently, companies appear to have higher standards to prove benefits than the Commission faces to identify concerns.
- Recognising the value of scale: In industries requiring heavy investment - including telecoms, energy, and transport - larger companies may be better positioned to make the substantial investments needed to serve consumers. The rules should acknowledge that in some sectors, bigger can mean better service and stronger competition.
- Looking at the long term: Many important investments take years to pay off. The Commission should not focus only on short-term effects when these industries operate on 8-10 year investment cycles.
- Moving beyond market share: A company's size in the market doesn't automatically mean it has too much power. The rules should look at real-world competitive dynamics, not just market share numbers.
- Supporting resilience: Mergers can create stronger, more resilient companies better able to withstand economic shocks and invest in network security - benefits that ultimately protect consumers.
Vivek Badrinath, Director General at the GSMA, comments: "For Europe to regain its position as a global digital leader, its key players need the long-term confidence to be able to invest properly in critical infrastructure. Scale is one way of bolstering mobile operators' ability to underpin European growth, innovation and competitiveness.
"The draft merger guidelines represent a crucial moment that will contribute to Europe's investment conditions for the years ahead. It is essential they reflect modern market dynamics and give industries the opportunity to explore the potential of market structures that can deliver higher standards for consumers and businesses."
To read the full industry response, see here.
