Bloomberg News

EU Drops Collusion Probe of Europe’s Biggest Phone Companies

March 07, 2013

Deutsche Telekom AG (DTE), Telefonica SA (TEF) and three other European phone companies no longer face a European Union probe over possible collusion when they held talks on technical standards.

An agreement by the companies to transfer responsibility for standard setting to other trade groups including the mobile carriers’ association GSMA was “a positive step that reduces the risk of standard-setting work affecting competition negatively,” the Brussels-based European Commission said in a statement today. The other companies involved were Telecom Italia SpA (TIT), France Telecom SA (FTE) and Vodafone Group Plc. (VOD)

“We welcome the EU commission’s decision,” Philipp Blank, a spokesman for Bonn-based Deutsche Telekom, said in an e-mail. “The meetings and discussions were always transparent and closely involved the commission.”

In March last year, the five carriers and the GSMA were asked to supply information to European Union regulators about their talks on technology standards. The CEOs of the companies, four of which are former state monopolies, met for the first time in Paris in October 2010. The discussions focused on operating systems and capacity to handle surging data traffic on wireless networks as consumers use technology from companies such as Google Inc. (GOOG:US) and mobile devices such as Apple Inc. (AAPL:US)’s iPhone.

‘Remain Watchful’

“The commission’s policy is to ensure that standardization processes led by major telecom operators are not being used strategically to foreclose other companies,” the authority said today. “The commission will remain watchful of how standardization processes evolve in this sector.”

Current market dynamics “require that open standards are developed more rapidly than in the past, so that the European telecommunications industry -- large and small companies -- can hold their own amid global competition,” Blank said.

Deutsche Telekom advanced 0.1 percent to close at 8.29 euros in Frankfurt. Telefonica climbed for the sixth day in seven, gaining 1.3 percent to 10.75 euros. Telecom Italia rose 2.9 percent to 57.8 cents in Milan. Vodafone fell 0.8 percent to 178.60 pence in London and France Telecom slid 0.2 percent to 7.62 euros in Paris.

“We’re happy that the commission has validated, from a regulatory standpoint, the work that has been done since 2010 between the five big European carriers and the GSMA, following France Telecom’s initiative,” Sebastien Audra, a Paris-based France Telecom spokesman, said in a statement.

Amanda Andrews, a spokeswoman for Newbury, England-based Vodafone, and Miguel Angel Garzon, a spokesman for Madrid-based Telefonica, couldn’t immediately comment. A Telecom Italia representative declined to comment.

‘Positive Move’

“This is a positive move for telecom operators,” Borja Mijangos, a Madrid-based analyst at Interdin Bolsa in Madrid, said by telephone. Still, he said “EU regulators should increase their focus on allowing telecom companies to boost their return on investment instead of just increasing competition.”

European telecommunications companies are preparing to ask the commission to allow more mergers within individual countries in exchange for their backing for the regulator’s push to develop a regional market, people familiar with the matter said last month. The proposal will outline the need to reduce fragmentation in fixed-line and wireless markets, the people said.

EU Competition Commissioner Joaquin Almunia, who scrutinizes large deals in the 27-nation bloc, said last month that consolidation couldn’t be justified by increased investment if it also meant higher prices and less choice for consumers.

To contact the reporters on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net; Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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