The Netherlands Authority for Consumers and Markets (ACM) has decided that the planned acquisition of telecom provider Youfone by rival telecom company KPN needs further investigation. The acquisition of Youfone by KPN could result in a loss of significant competitive pressure in the budget or no-frills segment of the market for mobile telecommunication services. That could lead to higher prices or a reduced selection for consumers.
Why is further investigation needed?
Youfone is a rapidly growing and highly competitive provider of predominantly mobile-telecommunication services, and focuses on a broad target audience. Youfone is able to do so by offering a limited number of competitively priced mobile plans. Those are so-called no-frills plans. By taking this position in the market, Youfone exerts pressure on the prices of other telecommunication-service providers.
Youfone does not have a network of its own, and uses KPN’s mobile network. Youfone could also use the networks of Odido or VodafoneZiggo. That may boost Youfone’s bargaining position in the negotiations with KPN about the use of its network, and it enhances Youfone’s ability to compete on low prices.
With the acquisition, competition in the no-frills segment of the mobile-telecommunications market could deteriorate. In a follow-up investigation, ACM will further investigate this. Additionally, it will also look into whether other providers are able to take over Youfone’s position as the driving force of competition.
In what situations is the acquisition not allowed to go through?
An acquisition or a merger is not allowed to go through if the consolidation of the merger parties will have negative consequences for competition and, therefore, on prices, quality, or innovation, and, ultimately, if it also has negative consequences for consumers. The merger parties can put forward solutions in order to take away the merger’s or acquisition’s effects on competition, for example hiving off divisions or subunits of the businesses. If ACM considers the proposed solutions to be sufficient, the merger or acquisition is allowed to go through. If the solutions are not sufficient or if no solutions are offered at all, the acquisition cannot go through.
Why does ACM assess acquisitions?
With every acquisition, there is the question whether sufficient competition remains, directly after the transaction as well as in the subsequent years. Competition ensures that products or services are of high quality and that they are offered on the market at competitive prices. Competition also promotes innovation. That is why ACM decides in advance whether or not businesses are allowed to join forces. ACM assesses whether the markets will continue to work well for people and businesses, now and in the future.
14-9-2023 KPN wishes to acquire Youfone (concentration notification) (in Dutch)