Acquisition of control over Pannon GSM Távközlési Rt by
Telenor Mobile Communication AS


The Competition Council cleared the acquisition of control over Pannon GSM Távközlési Rt (Pannon GSM) by Telenor Mobile Communication AS (Telenor).

The operation

The applicant entered into a share-acquisition agreement with KPN Mobile International BV, KPN Mobile NV, Sonera Holding BV, TDC Mobile International A/S, TDC A/S and Sonera Corporation concerning their equity stake in Pannon GSM.

Prior to the transaction the Dutch KPN Group had the biggest portion of shares with 44.6 per cent and was entitled to appoint 3 out of 7 directors in the administrative board. At the same time the Norwegian Telenor owned directly and indirectly 25.78 per cent of Pannon GSM and appointed 2 members of the board. Through the transaction Telenor acquired sole control over the Hungarian mobile operator.

The parties

Telenor as part of the Norwegian Telenor group provides telecommunication, data transmission and media communication services. The parent company Telenor ASA provides an extensive range of telecommunication services in Norway and is also active in other Scandinavian countries and internationally mainly on the markets of fixed and mobile telephony, broadband data transmission and Internet access (under the brand Nextra).

Pannon GSM is the second largest mobile telephone operator in Hungary with a market share of 40,2% (September 2001), furthermore it provides Internet access, leased line and other communication services as well.

Telenor ASA through its subsidiary Nextra AS controls Nextra Hungary Számítástechnikai Kft which is present on the Hungarian market as an Internet service provider dealing with small and medium enterprises.

The relevant market

The Competition Council determined the following relevant markets:

On the market of public mobile telephony the concession agreements ensure exclusivity for the present operators until the end of 2002. New entrants can challenge the market only following the termination of this exclusivity. With this transaction one of the potential competitors could disappear, however within a reasonable time this possibility has no restrictive effects.

As to the market of Internet access both Pannon GSM and Nextra has a market share not exceeding 2 per cent, while the market leader is Axelero with 43 per cent.

Similarly, on the market of business communication Pannon GSM and Nextra by offering complex communication packages and dedicated Internet access obtained only an insignificant market share.

One of the dynamically developing markets is Internet telephony where Pannon GSM proved to be a significant market player with its "plusznulla" service holding approximately 15-20 per cent, however Nextra`s market share is negligible.

Finally on the market of mobile phones and accessories the concentration has no effects since only Pannon GSM holds a market share.

The parties` activities overlap on three of the afore-mentioned markets, nevertheless none of them raised serious competition concerns.

The application

The aggregate annual turnover of the parties concerned exceeded the threshold laid down in the Competition Act, therefore the concentration was subject to authorisation.

The decision

Under Article 30 of the Competition Act, the Office of Economic Competition may not refuse
to authorise a concentration if it does not create or strengthen a dominant position. The Competition Council cleared the transaction as a first phase case pursuant Article 63(3) which states that a decision on the merits of a case shall be made within 45 days, where granting authorization for the concentration may clearly not be refused pursuant Article 30(2).

According to the Competition Council concentrations, which do not produce any horizontal, vertical or portfolio effects may clearly be authorized. Furthermore concentrations producing these affects without the parties exceeding 20 per cent market share in the case of horizontal concentrations and/or 25 per cent at least for one of the parties in the case of concentrations with vertical and/or portfolio effects would be regarded as clearly permissible.

It follows from the whole of the forgoing considerations that the Competition Council cleared the acquisition of Pannon GSM by Telenor.