The Office for Competition has flagged “serious concerns” with regard to the planned merger between Vodafone and Melita. It fears the transaction could limit competition “without providing sufficient pro-competitive effects”. Such concern is mainly based on the fact that the move would significantly curtail the possibility of having three players, creating a dominant operator within a duopolistic set-up.
When they announced the merger, the chief executive officers of both companies reassured customers it would mean more competition. The crux of their argument is that, for their own convenience, customers increasingly want to get all four services – fixed line and mobile telephony, television and internet – from one provider.
The idea behind the decision, so the CEOs argue, was to build on the respective strengths to be able to offer another ‘quad-play’ package, thus, more competition for GO, the other player.
GO objects, stressing the importance of maintaining a “fair competitive and regulatory environment” for consumers but also for operators, such as itself.
Of course, the two companies see value in amalgamating but would the final result be a better deal for consumers in terms of price and reliability/customer care? The Consumers’ Association does not believe prices will go down or that customers will get a better choice, especially because other operators would be deterred from entering the market, a point also raised by the Office for Competition.
Operators have occasionally had to remind consumers complaining about the “good deal” enjoyed by phone subscribers in other countries about the difficulties they face because of economy of scale. In much larger markets costs can be spread across more subscribers. Consumers also want the best technology.
Telecommunications companies around the world are expected to invest huge sums to prepare for the future while, at the same time, they are being squeezed by regulatory pressures to cut the most lucrative sections of their revenue like roaming, seeing other income being whittled away by free-to-use apps like Skype and WhatsApp, not to mention unlicensed or illegal ways of streaming content. Thus, commercial feasibility cannot be overlooked. It demands careful attention by all stakeholders because commercial problems usually amount to a lousy service.
Still, consumers argue – and they can hardly be blamed – that once they pay the rates fixed by the service providers themselves they expect the same efficient and reliable service offered elsewhere and at good prices too.
Competition usually takes care of that – although, as a former finance minister once said, competition in this minuscule island does not always yield the same results as it does in bigger markets – and that is why the planned merger raises a number of issues, which must all be taken into consideration by the Malta Communications and Consumer Affairs Authority. The Competition Office is gathering the information and expert advice it needs to evaluate and assess the proposal. Technical experts are also being consulted.
It is no mean feat for the regulator, given the many factors at play. In a way, however, it has a simple decision to make: if the planned merger will make for more competition, better prices, a more reliable service and ensure a level playing field for present and future operators without putting their feasibility at risk, then let it be.