Competition watchdog to impose conditions on Entel/GTD merger

5 Jan 2012

The National Economic Prosecutor (Fiscalia Nacional Economica) has submitted recommendations to anti-trust regulator, the Free Competition Tribune (Tribuna de Defensa de la Libre Competencia, TDLC) regarding the proposed merger of Grupo GTD with Entel Chile. The regulator identified four areas that might present a risk to competition in the sector. Firstly, the merger would concentrate spectrum in the 3.4GHz-3.6GHz band to the extent that, in some regions, the combined company would hold three-quarters of all assigned spectrum. Secondly, in Los Lagos, Aisen and Los Rios (regions X, XI and XIV) the enlarged Entel would be the dominant provider of fixed telephony and broadband services, creating the opportunity for anti-competitive behaviour. Thirdly, the watchdog raised concerns over the continuation of wireless services from the mobile virtual network operator (MVNO) arm of Telsur, a subsidiary of GTD; whilst Entel has its own mobile subsidiary, Telsur operates over the network of rival operator Telefonica Moviles (Movistar). Lastly, the prosecutor noted the Entel would be absorbing a competitor that was ‘developing innovative service solutions, with no guarantee for its continuation’.

In order to balance these issues, the prosecutor has suggested that the following conditions be imposed on the merger: Entel must sell 50MHz of spectrum in the 3.4GHz-3.6GHz band; in the regions where Entel will have market dominance it must offer wholesale services to other providers; Telsur will either sell its MVNO arm or abandon its agreement with Movistar; and, for two years after the finalisation of the merger, Entel will keep GTD products available to the public.

Chile, Entel Chile, Grupo GTD (incl. Telsur)