LONDON (Alliance News) - The European Commission said Tuesday it is launching an in-depth probe into the proposed acquisition by Vodafone Group PLC of the global business of US cable firm Liberty Global amid competition worries.
In May, telecommunications firm Vodafone announced a deal which will see it acquire the "highly complementary" operations of Liberty Global in Germany, the Czech Republic, Hungary and Romania for an enterprise value of EUR18.4 billion.
"It's important that all EU consumers have access to affordable and good quality telephone and TV services," European Commissioner Margrethe Vestager said. "Our in-depth investigation aims to ensure that Vodafone's acquisition of Liberty Global's telecommunications businesses in Czechia, Germany, Hungary and Romania will not lead to higher prices, less choice and reduced innovation in telecoms and TV services for consumers."
In the Czech Republic - officially known as Czechia - the EC is concerned that as Vodafone operates mainly as a mobile network firm and Liberty as a fixed telecommuncations operator, the merger of the two could see rivals "shut out" from the retail market due to the "converged products that the merged entity could offer."
In Germany, FTSE 100-listed Vodafone and Unitymedia - a Liberty Global subsidiary - currently compete with one another on fixed telecommunications and TV markets.
"The Commission has concerns that the transaction would eliminate competition between the merging companies, reduce the number of players and limit the merged entity's incentives to compete effectively with the remaining operators, both in areas already served by Unitymedia and in Germany as a whole," the EC explained.
At present, the EC has not identified any "specific competition concerns" regarding the acquisition of the Hungarian and Romanian markets.
The EC explained it would now "carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed." It has until May 2, 2019 to make a decision.
Shares in Vodafone were 2.55 higher at 163.34 pence on Tuesday.