Phone Mergers Can’t Mean Higher Price, Less Competition, EU Says

European Union Competition Commissioner Joaquin Almunia said companies’ expansion can’t come at the expense of customers or competition, in a response to a call by telecommunications operators for looser merger reviews.

“We do not -- and will not -- hinder corporate efforts to scale up,” Almunia said in a speech in Brussels today. “At the same time, we ought to make sure that companies do not carry out their plans at the expense of European consumers, of their business partners and the competition conditions in the EU.”

The European Telecommunications Network Operators’ Association, which represents 37 carriers including Deutsche Telekom AG and France Telecom SA, plans to submit a proposal to the commission in the coming weeks that outlines the need for consolidation to strengthen the industry, said people, asking not to be identified because the plan is private. According to the group, countries can sustain at most three national wireless network operators and two fixed-line carriers in the long term, the people said.

Almunia favors a single European market for telecommunications and the industry would do well to consolidate across national borders if such deals would lower prices and bring new and better services, he said.

So far that’s not been the case, he said, as countries have a few network operators that face little prospect of new rivals emerging because of the costs of entering the market.

“Let us not forget that around 80 percent of mobile-phone subscriptions are with four leading European groups,” he said today. “Roaming prices remain high and prices vary a great deal.”

Users pay as much as ten times more to use their smartphones in countries where the biggest European operators have no local competitors, Almunia said, citing research.

“This is the context in which some operators keep asking us to favor consolidation in the industry,” Almunia said.