The European Commission has given the all-clear for the UK’s three biggest operators, Vodafone, Everything Everywhere and O2, to form a joint venture that will act as a single entity to provide mobile payments, advertising and commerce services.
The intention to form the JV, named Project Oscar, was announced in June 2011. Fourth UK operator Three UK immediately cried foul, angered that it had not been invited to be a founder member of the JV. The JV was referred to the European Commission, where an in-depth enquiry was opened in April 2012 to establish if the JV would have an anti-competitive effect on other efforts to launch mobile wallet and advertising services.
The Commission’s preliminary investigation had indicated “potential competition concerns in the nascent markets of mobile payment applications supply (so-called “mobile wallets”), mobile advertising and related data analytics services”.
Further investigation seems to have allayed those fears, however. The Commission said that other alternatives to mobile operator controlled mobile wallet applications already exist, and there are likely to be more in future. Although the three operators will have a de-facto stranglehold on SIM-based implemenations of mobile payments services, the Commission found that other ways of delivering mobile wallet and payments services, that do not rely on the SIM to host the secure element, could still flourish. An EC statement said: “It is unlikely that the creation of the joint venture will allow the parent mobile network operators to block these alternative routes to market using technical or commercial means.”
The Commission also found that “as regards the joint venture’s advertising and data analytics activities, the market investigation revealed that there will be various other players who have access to a comparable set of data and who will offer services in competition with the joint venture.”
As a result, “the Commission concluded that the joint venture will not likely lead to a significant impediment to effective competition in the EEA within the meaning of the Merger Regulation.”
However, the EC statement contained no mention of the fourth mobile operator Three UK, referring only to non-SIM based approaches to market.
Mobile Europe has asked Three UK for a comment on the ruling* (SEE BELOW).
Whilst the Commission has been investigating, all the three operators involved in Project Oscar have advanced their own payment services and schemes, striking partnerships with Visa (Telefonica, Vodafone) and Mastercard (Everything Everywhere), and launching NFC-based payments (Orange). The operators have stated that such individual approaches do not conflict with the aims of Project Oscar, which they want to use to provide a standardised, single point of contact for merchants, brands and agencies to engage campaigns and offers to customers.
UPDATE (15:15, 05/09/12):
We’ve received the following boilerplate response from Three. If you’re looking to read between the lines, the relevant words are probably “on the same terms”.
A Three spokesperson said: “We are pleased the EC has taken a thorough look at the proposed m-commerce joint venture. We are still studying the detail but we understand that its investigation has found no significant competition issues. We will continue to monitor developments closely and look forward to the invitation to become a customer of the joint venture on the same terms as all participating UK mobile operators.”