PR: Vodafone/Melita Merger is not beneficial to consumers

In a new press statement the Association reiterated its opinion that this merger is not beneficial to consumers.  This was confirmed by the press statement that Vodafone had recently issued.  Vodafone said that the merger would benefit consumers as the services of both companies would improve through the amalgamation of the best of services that each provides.

The Association does not agree for the simple reason that the merger would not provide any new service to consumers.  At present consumers can still access the best services from each provider by subscribing to such services.  There is nothing which prohibits consumers from getting a service from one company and another from the others.

Not surprisingly, Vodafone’s statement does not refer to any price changes which may be in the pipeline for bundling these services.  The Association notes that in this sector it has become a common practice that consumers are notified that prices are to increase due to a ‘better service’.  In such cases the consumer has no choice but to accept to pay for the price increase.

Another thing which has not been tackled by Vodafone’s statement is whether subscribers would be allowed to be released from a contract due to the fact that they had chosen a particular provider and now they would be finding themselves bound to another provider which they had purposely avoided.

The Association is also concerned whether this concentration in the market would make it impossible for a new provider to enter the market.  The more providers the more competition there would be and, hopefully, the more better services they would provide.

Vodafone is also reported by stating that this merger is also being demanded by consumers.  From the consumers’ comments that we receive and see on the media we believe that the situation is completely the opposite.

Finally, the Association also asked what position the Malta Communications Authority and the Office for Consumers Affairs had taken on this issue.  We sincerely hope that they had taken a position to ensure consumer rights.

Vodafone’s press statement was issued after the Director General of the Office for Competition issued a statement.

The statement said that it has opened an in-depth investigation to assess whether the proposed concentration of Apax Partners Midmarket SAS (Paris, France) (hereinafter referred to as ‘Apax’) and Vodafone Malta Limited (Luqa, Malta) (hereinafter referred to as ‘Vodafone’) is in line with the Control of Concentrations Regulations (Subsidiary Legislation 379.08).

It also stated that the Office has serious concerns that the transaction could prima facie limit competition, mainly in the mobile telephony market and possibly in the fixed markets, without providing sufficient pro-competitive effects. This is primarily based on the potential harm to competition and consumer welfare arising from the fact that the concentration would significantly curtail the possibility for three players to operate in the relevant markets, as it would instead create a dominant player within a duopolistic set-up. This assessment reflects serious concerns arising from the proposed concentration with regards to the horizontal effects of the transaction in the mobile-only market, and the potential for co-ordinated and foreclosure effects in the mobile-only and multi-play markets.  The Office will therefore assess the proposed transaction in-depth by opening a Phase II investigation.

CA Malta was informed that the MCA submitted and published its views re this issue.  The submissions justify our concerns.

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