The Competition Authority has been investigating the merger involving the acquisition by Eignarhaldsfélagsins Fjarskipta ehf. (Vodafone) of all shares in IP-Fjarskiptum ehf. (Tal). The Authority has concluded, in a decision published today, that the merger of Vodafone and Tal would lead to a significant increase in market concentration and to a duopoly on various sub-markets within the telecommunications sector. Without intervention, the situation would be that only two major players, Síminn and Vodafone, would offer comprehensive telecommunications services, while several smaller operators would provide services in specific, limited areas of the retail market. Tal is a significant competitor to both Síminn and Vodafone, offering comprehensive telecommunications solutions in the retail market and providing a wider range of services than the other competitors of Síminn and Vodafone. These three companies are the only ones in the country to provide comprehensive telecommunications services on the retail market, which are also used by, for example, households. Smaller competitors in the telecommunications market are dependent on Síminn and Vodafone for access to their networks at the wholesale level in order to provide telecommunications services in competition with Síminn and Vodafone in the retail market. The Competition Authority's conclusion is that the merger would significantly reduce the bargaining power of these smaller competitors at the wholesale level, thereby weakening their competitive position.
Tal has focused on providing price competition to Símanum and Vodafone and has offered consumers various innovations. Furthermore, previous rulings by the Competition Authority have shown that Tal has provided significant competitive pressure to at least Vodafone, see e.g. its decision No. 27/2009 Breach of the Competition Authority's decision No. 36/2008 The merger of Teymir hf. and IP-fjarskipta ehf. and Article 10 of the Competition Act. The merger of Talk and Vodafone is therefore liable to to cause consumers serious competitive harm in a significant business sector.
The merging parties submitted proposals to remedy the competition concerns that the Competition Authority considers to arise from the merger. As is set out in the Competition Authority's decision, these proposals are insufficient and the Authority has therefore prohibited the merger.
See the decision for details No. 31/2011.
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