The Icelandic Competition Authority rejects the merger of Vodafone and Tal due to adverse effects on the telecommunications market
The Icelandic Competition Authority received a merger notification on May the 13th 2011 between Eignarhaldsfélagið Fjarskipti ehf. (Vodafone) and IP-Fjarskipti ehf. (Tal). The merger involves Vodafone acquisition og all outstanding shares of Tal.
The Icelandic Competition Authority has concluded that, in a decision published today, the merger of Vodafone and Tal would lead to significantly higher concentrations in oligopolistic telecommunications markets in Iceland which would result in a duopoly market structure in various submarkets in the telecommunications sector. Without intervention, the situation would be that only two major parties, Síminn hf. and Vodafone, would offer integrated telecommunications services. Several smaller parties would however provide services in certain designated areas in the retail market.
Tal is an important competitor of both Síminn and Vodafone as the company offers complete solutions in the telecommunications sector in the retail market and has a greater range of service availability than other competitors of Síminn and Vodafone. These three companies are the only ones in Iceland that provide full telecommunications services on the retail market. Small competitors in the telecommunications market are dependent on Síminn and Vodafone for access to wholesale networks in order to provide telecommunications services in competition with Síminn and Vodafone in the retail market. The Competition Authority has therefore concluded that the merger would significantly reduce the buying power of these smaller competitors at the wholesale level, and that it would thereby place them at a competitive disadvantage.
The Icelandic Competition has annulled the above merger in its decision no. 31/2011.