Updated at 6.30pm with GO's statement
An in-depth investigation on the integration of Vodafone Malta into MelitaLink Ltd, the current holding company of Melita Ltd, has been opened by the Office for Competition within the Malta Competition and Consumer Affairs Authority.
Read: Vodafone and Melita to merge into combined company
The Office said it feared that the transaction could limit competition, mainly in the mobile telephony market and possibly in the fixed markets, without providing sufficient pro-competitive effects.
This was 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.
The merger does not need to be approved by Brussels.
More in-depth analysis was expected - Vodafone
In a statement, Vodafone said it was expected that such a transaction would require a more in-depth analysis and investigation. It said it would continue to assist and cooperate fully with the Office for Competition in this important process.
"Vodafone Malta believes that the merger will produce an entity with the necessary scale to be able to compete with GO much more effectively than the two entities can on their own. A merger is the only means by which this can be achieved."
It said that if the merger was approved, Melita’s mobile customers would, very quickly, experience the much superior Vodafone mobile network.Vodafone
Vodafone customers, on the other hand, would be able to access Melita’s internet and television bundles, and would be able to use Melita’s extensive public wifi network.
"There is a very real demand for convergence from both companies and consumers in Malta and the combined company will have a strong quad play bundle (mobile, fixed internet, fixed telephony and TV service) that will rival GO’s.
"The combined entity will also be much better placed to bring about continued improvements in technology in fixed line internet and in mobile, more quickly than either of the two entities could achieve on their own," Vodafone said.
GO welcomes investigation decision
In a statement, GO welcomed the decision for an indepth investigation to be held over the proposed Melita takeover of Vodafone's Malta business.
“The proposed takeover of Vodafone in a critical sector such as telecommunications is unprecedented as it reduces the number of major competitors in the market down to two.
"This would be, by far, the largest market concentration in Malta’s history and, unless it is properly implemented and adequate remedies and safeguards are provided for, it could have very far reaching and long term implications and negative outcomes for consumers and ultimately for the whole country.
"It is hardly surprising therefore that the case is being followed closely in Malta and beyond, and that objections have been raised by consumers groups," GO said.
GO said that as an interested party, it would continue to collaborate fully with the Office for Competition and present detailed technical economic assessments on the matter.
"As we have repeatedly stated, GO does not fear competition – indeed we welcome it because healthy market competition benefits consumers and drives innovation.
"However, unless there is a proper level playing field one might end up in a scenario where ultimately competition and the consumer lose out. We augur that this can be averted.’’