Telemach Hrvatska Gets Approval for Optima Telekom Acquisition

Telemach Hrvatska Gets Approval for Optima Telekom Acquisition

Foto: Telemach Hrvatska

Based on the provisions of the Competition Protection Act, the Agency for the Protection of Market Competition (CCA) approved the concentration of Telemach Hrvatska and OT-Optima Telekom at the first level, the domestic market regulator explains.

This concentration achieved the goal that the CCA wanted to achieve with the decisions of 19 March 2014 and 9 June 2017 on the conditionally permitted concentration of HT and Optima and of 9 June 2017 on the conditionally permitted concentration of Optima and H1, based on which HT managed Optima, which is the preservation of Optima, ie the creation of a third market competitor in the market of electronic communications services, according to AZTN.

Until July 2021, Optima was managed by the company Hrvatski Telekom on the basis of a decision of the CCA which prescribed appropriate measures, the purpose of which was to preserve Optima as a third market competitor.

Telemach Croatia is part of the United Group, over which the ultimate control is exercised by the company BC Partners based in London, explained in AZTN and added that in this case, it is a vertical concentration, as Telemach and Optima operate in vertically connected and complementary markets.

By implementing the concentration in question, Telemach will primarily enter the market for the provision of electronic communications services in fixed networks in which only Optima is present, and will take over Optima's market shares. In the horizontal sense, there will be a minimal overlap of activities with Optima, in the retail markets of broadband Internet access and the transmission of television programs for a fee, in which Telemach is currently present marginally.

"Following the above, it was determined that there will be no increase in market shares in any of the identified relevant markets due to the implementation of the concentration in question. With the acquisition of Optima, Telemach will become an integrated operator in the mobile and fixed network that will be able to offer convergent services, and as the third integrated provider of electronic communications services in the Croatian market will be able to compete with existing competitors in the market.

In addition to the market of electronic communications services in which the concentration will primarily have effects, the company Telemach, through related companies, including the most important broadcaster Nova TV, is present in the television advertising market where RTL and HRT are the most important competitors to related companies Telemach. that market. It is also present on the market for the provision of wholesale television channel services in the territory of the Republic of Croatia, in which Optima and other operators of electronic communications services participate as customers.

"In the context of the potential effects of the concentration, and given the market share of Nova TV in the television advertising market, CCA considered the possibility of vertical effects by unilaterally closing the television advertising market to competitors in the electronic communications services market as a result of the concentration. The CCA received one opinion based on the published Public Invitation of 1 December 2021 of one of the market competitors, telecom operators, with regard to the TV advertising market, conducted a detailed analysis and came to conclusions from the totality of data, in this case, to assume that the providers of electronic communications services Telemach and Optima, by their presence through the associated company Nova TV in the television advertising market, in the downstream market of electronic communications services could jeopardize the position of leading competitors, HT and A1, since both Optima and Telemach the smallest fixed and mobile network operators on the Croatian market ", claim the CCA.

In this evaluation procedure, the CCA requested an expert opinion from the Croatian Network Regulatory Agency (HAKOM) as a sectoral regulator in the markets for electronic communications services. In its statement, HAKOM stated that in the future it expects positive synergy effects of the concentration in question on further sustainable market competition and accelerated development of the electronic communications market in the Republic of Croatia.

The CCA also sought the opinion of the Electronic Media Agency (AEM) as the sectoral regulator of the electronic media markets. In its statement, AEM stated that the implementation of the concentration does not violate the provisions on media concentration from the Electronic Media Act, given the provisions related to the protection of pluralism and diversity of electronic media, and due to relatively small share and impact on the electronic media market. media services of Optima. According to the regulator, the CCA will monitor the television advertising market in the Republic of Croatia within its competence.

Following all the above, it is expected that the implementation of the concentration in question will result in positive effects, which arise primarily and z the fact that the third competitor in the market of electronic communications services in the fixed network survives and that a third integrated operator in the mobile and fixed network will emerge, which will be able to compete more effectively with existing leading operators, offering converged services.

The creation of a third fully integrated competitor in the electronic communications sector points to potential efficiencies stemming from the ability of integrated mobile and fixed network operators to offer converged products, thus counterbalancing existing competitors in the market and ultimately better conditions for end-users. Therefore, this concentration will have positive effects on strengthening competition by creating a third market competitor to long-time leading competitors in the market, and thus should benefit consumers, "concluded the CCA.

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