By Eric King
The Office for Competition, part of the Malta Competition and Consumer Affairs Authority, has opened an investigation into a previously proposed Melita-Vodaphone merger, the eye of media.com has heard.
The merger deal which comprises a combination of Vodaphone Malta covering 99% of the Maltese population is now under investigation. The proposed deal with Melita, Malta’s cable, broadband and pay TV provider was tipped to be a business success but had to first be approved by the competition authorities. That approval has not been granted
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Melita offers a range of content and superfast broadband download speeds of up to 250Mbps.
The combined company’s mobile and enterprise business will operate under the Vodafone brand, distribute a wide range of services including Vodafone’s global portfolio of products and services and benefit from access to Vodafone’s expertise in mobile and fixed operations worldwide.
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Under the terms of the deal, the current shareholders of Melita will own 51% of the combined company and Vodafone Europe BV, the current shareholder of Vodafone Malta, will own the remaining 49%. The transaction values Vodafone Malta at an enterprise value of €208 million.
The Melita shareholders planned to appoint the current CEO of Melita, Harald Rösch, as CEO of the combined company, with Vodafone appointing the current CFO of Vodafone Malta, Caroline Farrugia, as CFO. Vodafone will announce a new role for Amanda Nelson, the current CEO of Vodafone Malta, in due course.
Melita was sold by GMT to Apax France and Fortino Capital in 2016.
In a statement the Autjority said “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. This will deeply investigate issues raised in this assessment, as well as others which may arise in the course of the Phase II process.”
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