THE CREATION OF GROUP 4-MATÁVŐR TÁVFELÜGYELETI ÉS BIZTONSÁGI SZOLGÁLTATÓ RT UNDER THE JOINT CONTROL OF MATÁV RT AND GROUP 4 SECURITAS BIZTONSÁGI SZOLGÁLAT KFT AND THE ACQUISITION OF CONTROL OVER MONITORING SECURITY VAGYONVÉDELMI ÉS SZOLGÁLTATÓ KFT BY GROUP 4-MATÁVŐR TÁVFELÜGYELETI ÉS BIZTONSÁGI SZOLGÁLTATÓ RT
The Competition Council approved the creation of Group 4-Matávőr Távfelügyeleti és Biztonsági Szolgáltató Rt under the joint control of Matáv Rt and Group 4 Securitas Biztonsági Szolgálat Kft (hereinafter applicants) and the acquisition of control over Monitoring Security Vagyonvédelmi és Szolgáltató Kft by Group 4-Matávőr Távfelügyeleti és Biztonsági Szolgáltató Rt.
The applicants created Group 4-Matávőr Távfelügyeleti és Biztonsági Szolgáltató Rt (hereinafter Group 4-Matávőr Rt), in which they acquired 50-50 per cent of ownership. At the same time, Group 4-Matávőr Kft singed an agreement with Matávőr Vagyonvédelmi és Szolgáltató Kft (hereinafter Matávőr Kft), which is owned nearly exclusively by Matáv Rt to take over its system-installation and monitoring branch. The applicants agreed to give control over Monitoring Security Vagyonvédelmi és Szolgáltató Kft (hereinafter Monitoring Security Kft) - formerly owned by Matávőr - , to Group 4-Matávőr Kft. Matáv Rt and Group Securitas Holding - which controls Group 4 Securitas Biztonsági Szolgálat Kft (hereinafter Group 4 Kft) - signed a contract in which Group Securitas Holding BV took an option on shares to be owned by Matáv Rt in Matávőr Rt that entitled it to exercise 50 per cent control over Matávőr Rt (this transaction was not dealt with by the Competition Council).
The parties concerned
1. Matáv family: Matáv Rt provides public wired telephone services. Under concession contracts concluded on the 20th of May 1993 Matáv Rt acquired the exclusive right of operating long distance domestic and international service as well as operating 36 primer local public telephone services out of 54 for the period of eight years. Matáv Rt is controlled by Deutsche Telecom AG. Matáv Rt has control over several undertakings (e.g. Westel Mobil Távközlési Rt and Westel Rádiótelefon Kft); most of which provide supplementary services.
99,77 per cent of Matávőr Kft is owned by Matáv Rt; it provides complex material security services.
Monitoring Security Kft owned exclusively by Matávőr Kft provides monitoring and security services in the territory of Győr, Sopron and Mosonmagyaróvár.
2. Group 4 Securitas family: The family is controlled by Group 4 Securitas Holding BV seated in the Netherlands and it directly owns 4 undertakings in Hungary, one of them is Group 4 Kft. The latter deals with cash and valuables delivery and processing, security guarding, including electric protection and march out, excluding monitoring.
3. The company under joint control: Group 4-Matávőr Rt. It takes over the system-installation and monitoring branch from Matávőr Kft. It offers a complex security services to a wide range of consumers.
Material security services include the following activities: guarding of assets (manpower protection), planning, installation, operation, supervision and maintenance of security systems (electronic protection). Electronic systems are supplemented by monitoring services, which give an alert or error signal to a monitoring centre. The undertaking which installs a security system can take an advantage on the market by offering monitoring services and an efficient march out.
The transmission of signals is possible through a) radio waves; telephone systems, the latter include b) public switched telephone network provided by local operators, c) extraband transmission performed exclusively by Matáv Rt and d) GSM offered by a GSM operator. a) can be blocked easily. b) is the cheapest solution and most widespread. c) is the safest, but it can be provided only by Matávőr Kft owned by Matáv Rt.
The incumbents in the latter market can only provide their services in a few towns and its surroundings, because a countrywide service would need extremely great efforts, and companies with a large network did not tend to sign a contract with one service provider for their entire network. Only Matávőr Kft and Multialarm Kft could provide a countrywide service before the concentration in question. The Competition Council stated that only few bigger incumbents compete with a lot of small companies in this market and their market shares do not exceed 10 per cent substantially.
Therefore the relevant product markets are a) electronic protection supplemented by monitoring services (including the installation, monitoring and march out), b) telecommunication as a supplement to monitoring services. The relevant geographical market is the territory of Hungary.
The Decision of the Competition Council
The Competition Council stated that the take over of system-installation and monitoring branch from Matávőr Kft to Group 4-Matávőr Kft would have no effects on the concentration of the monitoring services market, but it will increase the concentration of installation and march out markets by approx 10 per cent and the maximum market share of the new undertaking will be about 20 per cent. This latter does not restrict competition significantly.
The Competition Council examined the transmission services market as a supplementary upstream market of monitoring services. Matáv Rt has a share of 80 per cent in this market, and the incumbents of the monitoring market cannot apply any other solution easily and with low costs for transmission, that is why Matáv Rt is in a dominant position in the public telephone market.
On one side, the entrance of Group 4-Matávőr Kft has positive effects on competition, because it can provide services to consumers more effectively, and it reduces the chance of unfair market practices made by Matáv Rt, i.e. the sole accessibility of extraband transmission for Matávőr Kft.
On the other side, Matáv Rt could make use of its dominant position in supplementary markets to strengthen the position of Group 4-Matávőr Kft, considering their vertical relationship.
The Competition Council approved the creation of Group 4-Matávőr and the acquisition of control. The Council imposed an obligation on Matáv Rt to make extraband transmission accessible to every incumbent in the monitoring market, and this way the chance of unfair market practices will be reduced.