France Telecom’s plan to merge its Swiss operations with those of TDC has been rejected by the country’s Competition Commission (ComCo). The combination of the companies’ local Orange and Sunrise units would, the watchdog ruled, create a ‘dominant position’ in the market. The new company would have been Switzerland’s second-largest mobile operator behind Swisscom. France Telecom was expected to take 75% of the enlarged entity. Under the deal agreed last November, France Telecom also had an option to eventually buy the rest of the combined unit from TDC for EUR1.2 billion (USD1.61 billion). France Telecom and TDC issued a statement criticising the decision, adding that it would ensure Swisscom to maintain a ‘dominant position.’ The pair said they will consider their options for potential next steps.
ComCo’s investigation into the merger’s effects on the Swiss mobile market came to the conclusion that the merger would not in fact lead to more competition, as both parties have been claiming since the merger was announced. If the merger went ahead the Swiss mobile market would be home to just two mobile operators (Swisscom and Orange/Sunrise), both with significant market power. ComCo ruled that this situation would not lead to more competitive offers from either operator and did not expect that a new third mobile operator would enter the market. The authority also found no evidence that the synergies from the merger, which should flow through to end-user prices, would be enough to offset less competition from the duopoly.