ERGER CONTROL POLICY AND INVESTMENT IN EUROPEAN MOBILE MARKETS
| Autor: | PhDr. Goran Serdarević M.A., Foster, David |
|---|---|
| Typ: | Ostatní |
| Rok: | 2014 |
| Číslo: | 0 |
| ISSN / ISBN: | |
| Publikováno v: | CRESSE conference 2014 |
| Místo vydání: | |
| Klíčová slova: | regulace, hospodářská soutěž, investice, telekomunikace |
| JEL kódy: | |
| Citace: | |
| Abstrakt: | There is an intense and ongoing debate on whether further mobile consolidation in Europe is desirable or not. There have been calls for competition regulators to adopt a less stringent approach to consolidation in Europe, as a necessary step to support investment in rolling out next generation technology. The European Commission has approached such arguments with some scepticism, in the context of three recent proposed deals in Europe (Austria, Ireland and Germany). There have been two main arguments in favour of consolidation put forward to date. First, market analysts and investment banking commentators have argued that there is a need for higher margins and cash-flow to fund greater investment. Second, in the context of merger reviews, the parties have argued that mergers would generate efficiency savings (particularly in relation to the roll out of new technology) that will benefit the consumer. The mobile industry is currently moving from third (3G) to fourth generation (LTE/4G) mobile technology, and this requires significant investments. Whilst there is a consensus that demand for data will grow, there is significant uncertainty about the likely evolution of demand, partly as a result of the economic slowdown in Europe and the much slower rate of recovery of the telecoms sector in Europe compared to the US. In this paper we consider the role of uncertainty in affecting investment decisions by developing a simple model. We show that, if operators are making their investment decisions under uncertainty about future demand, then a ‘strict’ merger policy regime risks creating a barrier to exit that reduces firms’ incentives to undertake investments. We then show that a relaxation of the “failing firm” test for merger clearance could produce more efficient incentives to undertake risky investments and potentially lead to lower prices for consumers. |
