• Regulator says Austrian prices doubled post mobile consolidation 
• Decision on merger of O2 and Three in the UK due next month
• Demanding remedy expected

The Austrian regulator has grasped the nettle and admitted that the pro-competitive ‘remedies’ imposed on Hutchison Whampoa's Drei Austria when it merged with Orange Austria three years ago, had spectacularly failed to maintain competition in what became a three-player market.

In fact the merger seemed to stimulate mobile service price increases of between 50 and 90 per cent for average Austrian smartphone users in 2013 and 2014, says the Austrian telecoms regulator, RTR, which has just completed a study into the matter.

These ‘official’ statistics from RTR don’t exactly help the case for the ‘copycat’ merger of Three and Telefonica’s O2 in the UK, which would similarly slash the number of competitive players from the current four (Three, O2, Vodafone and EE - now part of BT) down to three.

To get the deal past the commission it’s thought that Three would have to undertake to enable - in one way or another - a whole new operator (complete with spectrum and infrastructure) to take the competitor numbers back to four again. In which case, as appears to have happened in Denmark last year, the whole exercise might not be worth the effort. After all the cunning plan, as expressed by the ‘markets’ which have been urging the consolidations in Europe, was to effect “market repair” - that is, to zap up the prices. A new competitor thus enabled might produce a less repairable market than existed before.

That spectre - of the introduction of a rabid competitor - was raised earlier this year when rumours surfaced that Xavier Nuel of Iliad might be interested in ‘engaging’ with Three over the possibility of starting a new ‘Four’ (see - Who’s afraid of the big bad wolf? Probably Telefonica and Hutchison).

Back in Austria the remedy applied in 2012 by the Europe’s Competition Commission as a condition of the merger was for the newly combined entity (Three and Orange) to enable two new mobile virtual network operators (MVNOs) by leasing capacity on their network. In the event it took two years for just one of the promised rival services to be launched. At the same time Austrian mobile prices shot up.

According to Finnish pro-competitive consultancy, Rewheel, which has been diligently making a nuisance of itself around this issue for several years, the situation is even worse than indicated by Austria’s RTR.

In a research note Rewheel points out:  “Three years after the 4 to 3 merger €25 buys Austrians only half [as much data] as it did before the merger approval. Moreover, before the merger, in December 2012, Austria was ranked [by Rewheel]  as the third most competitive mobile market in the 28 countries making up the EU28. Three years later, in October 2015, Austria has fallen significantly behind in competitiveness and is now ranked tenth by the same metric.

Rewheel says that where consolidation “hasn’t impeded effective competition, consumers are now getting several times more [data] than Austrian consumers for the same money.”