UK m-commerce JV may harm future competition - EC

Features

EC launches 90 day investigation following m-wallet competition concerns

The European Commission has announced that it will extend its investigation into Project Oscar, the proposed creation of a mobile commerce joint venture by UK mobile operators Telefónica, Vodafone and Everything Everywhere.

Late on 13 April, the Commission reported that its preliminary examination, begun on 6 March, "indicated potential competition concerns in the nascent markets of mobile payment applications supply (so-called "mobile wallets"), mobile advertising and related data analytics services, where the joint venture may have very high market shares".

The Commission said that its initial investigation revealed that the joint venture and its three parent companies may have the technical and commercial ability and incentive to block future competitors from offering their own mobile wallet services to customers in the UK, or to degrade the quality of these competing mobile wallets so that they become less attractive.

As a result, the investigation will be extended by 90 days, with a final decision due on 27 August. The initial indication of potential concerns will not prejudice the fuller investigation, the Commission said.

“The Commission is in favour of any initiative that will develop the promising mobile commerce sector in Europe and bring new and innovative payment and interactive advertising experience to consumers. At the same time, we need to make sure that competing services can keep emerging on this market, so that incentives to innovate remain and customers get the best mobile commerce services at the best cost." said Joaquín Almunia, Commission Vice President in charge of Competition policy.

The three operators behind the JV issued a joint statement (reproduced in full below) that said that they believed the creation of mobile wallet services were the main sticking point. The operators said, "We remain confident that an extended review will conclude that the proposed joint venture is pro-competitive and will provide robust competition to global players."

Three UK, the UK operator excluded from the JV, welcomed the EC's announcement. A Three spokesperson said, "The proposed joint venture raises serious competition concerns. We support the Commission's finding that this JV could block future initiatives in the area of mobile commerce services. We are pleased that it has moved to launch an in-depth  investigation into the scope, activities and impact on consumers of this venture as well as the future development of the market for these services."

Full statement from the JV operators (bold characters Mobile Europe's own):

“Everything Everywhere, Telefonica UK and Vodafone UK have been informed by the European Commission that their plans to form a mobile commerce joint venture in the UK will require further discussions.
 
The EC decision to enter into a second phase of investigation follows constructive discussions with the EC about the purpose and scope of the joint venture. The discussions have been positive and the shareholders in the proposed joint venture remain focused and determined to progress with the project.
 
During the course of discussions with the EC it has become apparent that the embryonic nature of the mobile payments market in particular means that more time is needed to fully consider the proposed joint venture’s plans for a mobile wallet and engage with the views of other interested parties. We remain confident that an extended review will conclude that the proposed joint venture is pro-competitive and will provide robust competition to global players.
 
The joint venture shareholders believe the proposed joint venture will bring significant benefits to consumers as well as all businesses and organisations that want to offer mobile market and m-payments services. At the heart of the proposed joint venture is a desire to bring to the UK an easy and simple solution for businesses to create and consumers to enjoy m-commerce services.
 
The proposed joint venture will make it easy for companies of all sizes, to create brand new services that will sit in the mobile wallet. The proposed joint venture will also provide a single contact point for advertisers, media agencies, retailers and brands that will enable them to book advertising space and create campaigns across all opted-in mobile users, affording economies of scale that they could not ordinarily achieve. For consumers, this means they will be able to receive the discounts and offers that they want to receive from the brands that are relevant to them.
 
The partners in the proposed joint venture want to keep UK PLC at the forefront of digital innovation, creating jobs, promoting innovation, fostering competition, investing in and contributing to the growth of new digital industries.”