The Malta Competition and Consumer Affairs Authority will investigate whether the proposed merger of Apax Partners-backed Melita and Vodafone Malta could limit competition, mainly in the mobile telephony market and possibly in the fixed markets, without providing sufficient pro-competitive effects to outweigh the downside.
“This is primarily based on the potential harm to competition and consumer welfare arising from the fact that the concentration would significantly curtail the possibility for three players to operate in the relevant markets, as it would instead create a dominant player within a duopolistic set-up,” the MCCAA said.
“This assessment reflects serious concerns arising from the proposed concentration with regards to the horizontal effects of the transaction in the mobile-only market, and the potential for co-ordinated and foreclosure effects in the mobile-only and multi-play markets.”
In response, Vodafone said that a phase two probe under Maltese law was “expected”. It said it would “continue to assist and cooperate fully” with the Office for Competition.
Vodafone said that the merger would be pro-competitive because it would produce an entity with he necessary scale to compete with the country’s main telco, GO.
It said that a merger would enable Melita’s mobile customers to benefit from the superior Vodafone mobile network and enable Vodafone customer to gain access to Melita’s fixed internet and TV packages as well as the latter’s WiFi network.
“There is a very real demand for convergence from both companies and consumers in Malta and the combined company will have a strong quad play bundle (mobile, fixed internet, fixed telephony and TV service) that will rival GO’s,” the company said.
“The combined entity will also be much better placed to bring about continued improvements in technology in fixed line internet and in mobile, more quickly than either of the two entities could achieve on their own.”
The pair’s deal, agreed in May, would see Vodafone Malta and Melita merge, with the shareholders of Melita taking a 51% stake. The agreement valued Vodafone Malta at €208 million and Melita at €298 million. Under the agreement the joint company will operate under the Vodafone brand.
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21st February 2019