• Many major European telcos have been urging the region’s lawmakers to relax M&A and competition rules
• They claim that the only way Europe can compete is to allow companies to gain greater national and regional scale
• Now the EC has started a consultation process on its merger guidelines 
• But not everyone’s in favour of helping the regions’s big guns get bigger

Under intense lobbying pressure from a wide range of companies (including telcos of course) to revamp the European Union’s mergers and acquisitions (M&A) and antitrust regulations, the European Commission (EC) has launched a public consultation on its merger guidelines that will run until 3 September this year. That means the process will last for just four months, which is lightning speed for EU institutions that, more often than not, grind along at the stately rate of a geriatric tortoise. 

The EC says the “review process will focus on how the commission’s assessment should give adequate weight to innovation, efficiency, resilience, the time horizons and investment intensity of competition in certain strategic sectors, sustainability, the changed defence and security environment and other acute transformational needs of our times.”

Many members of the region’s telecom operator sector are hoping that any new or amended regulation that might be introduced as the result of the feedback will take due cognisance of the overarching benefits that, they claim, can accrue from the innovation and investments that accompany or follow mergers and acquisitions, rather than an over-focus on consolidation causing reduced competition and price increases for customers. Fuelled in parts by major reports from the likes of Mario Draghi and Enrico Letta, the calls from Europe’s telco sector for a relaxation of M&A rules have been growing in volume in recent years, with the latest coming earlier this month – see Euro telcos maintain M&A drumbeat.

The public consultation will examine seven topics of particular relevance to the telco sector, ranging from competitiveness and resilience through to market power, innovation, decarbonisation, digitalisation, efficiencies and implications for labour. 

Teresa Ribera, who was appointed last September as the EU’s executive VP for a clean, just and competitive transition, is responsible for modernising the EU’s competition policy to support European companies in “innovating, competing, and leading worldwide”. 

She also oversees the “strengthening and speeding up enforcement of competition rules and tackling anticompetitive practices” to ensure “the commission takes rapid and effective enforcement actions under the Digital Markets Act.” 

Commenting on the public consultation, Ribera said: “This is a pivotal moment for Europe, and it is only by evolving that we can ensure that our merger control policy continues to serve people, drive innovation, and strengthen Europe’s resilience and leadership. We count on your help. We stand ready to hear the views of consumers and businesses all across Europe on how our merger review framework can be made fit for the future.”

Telcos will welcome the chance to make another plea for the consolidation they long for on the grounds it is the only way to achieve the scale required to enable massive investment in networks and new technologies. That’s the story they repeat at any given opportunity, but it already seems unlikely there will be any radical changes to Europe’s existing M&A regulations which, despite a few tweaks along the timeline, remain substantially what they were when they were first introduced in 2004. 

And the pressure isn’t all in favour of deregulation. Ribera is already on notice from a powerful group of like-minded national bodies not to attempt an overturn of the status quo and revolutionise Europe’s telecom regulations. For instance, the national competition authorities of Austria, Belgium, Czech Republic, Ireland, the Netherlands and Portugal recently signed a joint statement that said M&A within a single EU member state continues to require careful scrutiny, and stressed that a reduced number of players in any single market would lessen incentives to improve service quality, network coverage, density and innovation as well as undermining resilience and supply security. The joint statement noted: “The narrative that fragmentation in the electronic communications sector, hindering investment and innovation, allegedly results from unduly strict competition rules is misplaced.” 

Trouble looms. A relatively short consultation could easily lead to a year or more of wrangling. It wouldn’t be the first time.

– Martyn Warwick, Editor in Chief, TelecomTV