EU competition commissioner Margrethe Vestager has warned operators that consolidation won’t lead to greater investment.
The antitrust chief explained that while operators make the case that consolidation will benefit the consumer and encourage future investment, she ‘has not seen evidence that this is the case’. Vestager hit back at telco companies, claiming that a competitive market creates the incentives to invest in innovation.
She said: ‘Incumbent operators argue that if they cannot merge with their rivals in the same country they will be unable to increase their investment. I’ve heard this claim quite often, but I have not seen evidence that this is the case.
‘There is ample evidence that excessive consolidation may lead not only to less competition and more expensive bills for consumers, but that it also reduces the incentives in national markets to innovate. In fact, infrastructure investment can be stimulated by competition.’
The warnings come as consolidation in the UK market heats up, with BT and EE preparing to merge companies, while the O2 and Three deal awaits regulatory approval. While her predecessor, Joaquin Almunia, enabled a number of EU countries to reduce mobile operators from four to three, Vestager took a tougher stance, challenging telecom players who ‘abuse their dominant positions’.
She said: ‘In these markets, we have seen established players abuse their dominant positions to try and prevent competition from alternative operators. And we shouldn't forget that these alternative operators are also behind major network investments in the EU.
‘When do firms invest? They invest in order to out compete their rivals. Competition spurs them to invest in differentiation. In other words, they need to innovate to stay ahead of the game. We all know the old saying that necessity is the mother of invention. My key point is that competitive markets create that necessity.’