title: Commission Decision of 09/07/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.8808 - Deutsche Telekom AG / UPC Austria GmbH) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

text:
                                EUROPEAN COMMISSION
                                                                 Brussels, 9.7.2018
                                                                 C(2018) 4535 final
  In the published version of this decision, some
  information has been omitted pursuant to
  Article 17(2) of Council Regulation (EC)
  No 139/2004 concerning non-disclosure of business
  secrets and other confidential information. The                        PUBLIC VERSION
  omissions are shown thus […]. Where possible the
  information omitted has been replaced by ranges of
  figures or a general description.
                                                                 To the notifying party
Subject:             Case M.8808 – T-Mobile Austria / UPC Austria
                     Commission decision pursuant to Article 6(1)(b) of Council
                     Regulation No 139/20041 and Article 57 of the Agreement on the
                     European Economic Area2
Dear Sir or Madam,
      (1)      On 18.05.2018, the European Commission received notification of a proposed
               concentration pursuant to Article 4 of the Merger Regulation by which
               T-Mobile Austria Holding GmbH ("TMA-H", Austria), controlled by
               Deutsche Telekom AG ("DTAG", Germany), intends to acquire sole control
               of the whole of UPC Austria GmbH ("UPC", Austria), controlled by Liberty
               Global Group ("LG", United Kingdom) within the meaning of Article 3(1)(b)
               of the Merger Regulation, by way of purchase of shares (the "Transaction").3
               TMA-H is a holding company which conducts its business operations mainly
               through its subsidiary T-Mobile Austria GmbH ("TMA", Austria). DTAG,
               TMA-H and TMA are designated hereinafter as the 'Notifying Party' and,
               together with UPC, as the 'Parties'.
      (2)      On 18 June 2018, after the Commission informed the Parties that it could not
               be excluded that the Transaction would raise serious doubts on a potential
1     OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
      the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
      replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
      the TFEU will be used throughout this decision.
2     OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3     Publication in the Official Journal of the European Union No C 179, 25.05.2018, p. 7.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak---            market for home internet services, the Notifying Party submitted
           commitments pursuant to Article 6(2) with a view to removing these possible
           serious doubts. The commitments were subsequently amended on
           20 June 2018.
   (3)     Upon further investigation, the Commission then found that the Transaction
           would not raise serious doubts on this potential market as further explained in
           this Decision, and informed the Notifying Party accordingly. The Notifying
           Party withdrew the commitments on 6 July 2018. For this reason, neither are
           the commitments proposed by the Notifying Party assessed in this Decision,
           nor is the authorisation of the Transaction conditional upon compliance with
           the proposed commitments.
1.     THE PARTIES AND THE TRANSACTION
   (4)     TMA is mainly a mobile network operator ("MNO") which owns a 2G, 3G
           and 4G network with nationwide coverage in Austria and offers inter alia
           mobile telecommunications services to private and business customers at
           retail level and to mobile virtual network operators ("MVNOs") at wholesale
           level. TMA also offers retail internet access services. TMA is ultimately
           controlled by DTAG.
   (5)     UPC owns and operates a hybrid fibre-coaxial cable network in parts of
           Austria, primarily in urban areas such as Vienna, Graz, Innsbruck and
           Klagenfurt. UPC offers cable TV, fixed internet and fixed
           telecommunications services to private and business customers over its cable
           network. In addition, UPC offers fixed internet and fixed telecommunications
           services on the basis of wholesale DSL products outside of the footprint of its
           own cable network. UPC also offers voice, internet and data services to
           business customers and wholesale customers. UPC has minor activities in the
           area of retail mobile telecommunications services as an MVNO, on the basis
           of a wholesale agreement with Hutchison 3G Austria ("H3A").
   (6)     On 22 December 2017, a Sale and Purchase Agreement was concluded
           between Liberty Global Europe Holdco 2 BV, an indirect wholly-owned
           subsidiary of LG, as the seller and TMA-H as the purchaser, pursuant to
           which TMA-H would acquire the entire issued share capital of UPC. As a
           result, TMA-H will acquire sole control of UPC within the meaning of
           Article 3(1)(b) of the Merger Regulation.
   (7)     The Transaction constitutes a concentration within the meaning of
           Article 3(1)(b) of the Merger Regulation.
2.     EU DIMENSION
   (8)     The undertakings concerned have a combined aggregate world-wide turnover
           of more than EUR 5 000 million4. Each of them has an EU-wide turnover in
           excess of EUR 250 million, but the Parties do not achieve more than two-
4  Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission
   Consolidated Jurisdictional Notice (OJ C95, 16.4.2008, p. 1).
                                                      2
 ---pagebreak---             thirds of their respective aggregate EU-wide turnover within one and the same
            Member State. The notified operation therefore has an EU dimension.
3.       RELEVANT MARKETS
     (9)    In Austria, the Parties' activities mainly overlap in the areas of: (i) retail
            internet access services; (ii) retail mobile telecommunications services; and
            (iii) wholesale leased lines.
     (10)   Besides there are minor horizontal overlaps between the Parties' activities in:
            (i) retail internet hosting services in the EEA; (ii) wholesale internet
            connectivity services (worldwide), and (iii) global telecommunications
            services on retail level (worldwide).
     (11)   In addition, TMA and/or UPC are present upstream in: (i) wholesale access
            and call origination on mobile networks (TMA); (ii) wholesale mobile call
            termination services (TMA and UPC); (iii) wholesale fixed call termination
            services (TMA and UPC); (iv) wholesale international roaming services
            (TMA); (v) and in wholesale leased lines (TMA and UPC). Those services are
            vertically linked to (i) retail mobile telecommunications services, (ii) retail
            fixed telephony services, (iii) retail home internet access services (including
            both fixed and mobile technologies), (iv) wholesale end-to-end calls, (v) retail
            business connectivity services; (vi) wholesale broadband access, and
            (vii) global telecommunications services at wholesale level. Further details on
            the vertical relationships between the Parties are in the table under section 4.3
            and in paragraph (324).
    (12)    Finally, since UPC offers multiple-play packages in Austria and both Parties
            offer communications services that can be included in multiple-play offers, a
            potential multiple-play market is analysed as well.
3.1.     Internet access services
             3.1.1.   Retail internet access services
    (13)    Retail internet access services consist of the provision of                     a
            telecommunications link enabling end customers to access the internet.
       3.1.1.1.   Product market definition
                 (a) The Notifying Party's views
    (14)    The Notifying Party submits that the product market for retail fixed internet
            services is separate from mobile internet (data) services which are part of the
            overall retail market for mobile telecommunications services in Austria. The
            Austrian market environment does not exhibit characteristics which would
            justify a deviation from the Commission's definition of the relevant product
                                                  3
 ---pagebreak---             market in previous cases.5 The Notifying Party refers to the following main
            reasons for this conclusion:
            i) The bandwidth, performance, quality and actual speed of mobile networks
                 in Austria are supposedly inferior to those of fixed networks, in particular
                 those of UPC's high-speed HFC cable network. This would be
                 demonstrated by a network throughput analysis carried out by TMA which
                 shows that the average download user throughput of TMA's customers of
                 unlimited data only tariffs (probably used together with routers ("cubes"))
                 is only approximately […] Mbps. This is low compared to fixed networks
                 in Austria. Considering this limited capacity of mobile broadband
                 connections, TMA's mobile data-only product would face a high return
                 rate of approximately […]% during the first two to four weeks after
                 purchasing the product.
            ii) Customers of fixed internet connections and mobile customers show very
                 different usage patterns in Austria. The average monthly data usage of
                 fixed customers is substantially higher than the usage of mobile
                 customers.
            iii) In Austria, fixed internet services are mostly purchased in bundles with
                 other services (e.g., fixed telephony services or retail TV services)
                 whereas mobile internet (data) services are not. From a demand side
                 perspective, mobile internet (data) services could not substitute those
                 product bundles.
            iv) The volume of sales and prices of fixed internet services on the one hand
                 and those of mobile internet (data) services on the other hand in Austria
                 develop independently of each other.
            v) Fixed internet services and mobile internet (data) services are typically
                 used as complementary products in Austria.
            vi) Mobile data-only products offered in combination with a router are niche
                 products. Due to the enormous increase in data consumption over the last
                 years, [confidential information about the implications of the increase in
                 data consumption for mobile data-only products].
  (15)      The Notifying Party submits that these arguments apply both to services
            offered to residential customers and to services offered to business customers.
            In any event, the Notifying Party submits that the precise definition of the
            relevant product market can be left open in the present case.
  (16)      Finally, according to the Notifying Party, no distinctions should be made
            within mobile internet (data) services as mobile internet (data) services are all
            mobile data enabled SIM cards that can be used with a multitude of various
5 Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria,
  recital 57; Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch
  JV, recital 38; Commission decision of 4 February 2016 in case M.7637 – Liberty Global/BASE
  Belgium, recitals 59 and 61; Commission decision of 19 May 2005 in case M.7421 – Orange/Jazztel,
  recitals 50-53; Commission decision of 29 June 2009 in case M.5532 – Carphone Warehouse/Tiscali
  UK, recital 20.
                                                   4
 ---pagebreak---             mobile devices (hardware) such as routers (cubes), dongles, tablets or
            smartphones. An MNO has no control over the actual use of a SIM card by a
            customer. According to the Notifying Party, distinguishing mobile internet
            (data) services on the basis of the hardware product with which the mobile
            internet (data) services (i.e., the SIM card) have been sold would, therefore,
            be meaningless.
                (b) The Commission's assessment
  (17)      The Commission notes that in previous cases, it has distinguished between
            fixed and mobile internet access services (both for residential and business
            customers) as (i) mobile internet access services often do not offer the same
            product functionalities as fixed services, specifically with respect to network
            quality (speed, bandwidth, security of the connection); and (ii) mobile and
            fixed data services are mainly aimed at different customer needs, i.e. to access
            the internet whilst on the move for mobile data services. In particular, the
            Commission found that in Spain fixed and mobile internet access services
            were not substitutable for a number of reasons, such as different uses (mobile
            broadband permits mobility but also access to mobile applications), different
            capacity and pricing models (mobile broadband unlike fixed broadband was
            almost always capped at a certain amount of data transferred and was also
            invoiced per amount of data traffic) as well as different speeds (only 4G/LTE
            mobile technology could provide comparable speeds to fixed broadband). In
            addition, customers demanded both mobile and fixed broadband which
            demonstrated the complementary character of the two services. Finally, it was
            considered that mobile internet access could in some cases substitute fixed
            internet access services but not the other way around.6
  (18)      The issue of substitution between fixed and mobile internet access services
            was analysed specifically for Austria in another case, where the Commission
            found that there was only limited substitutability for mobile data services by
            fixed internet access services.7 However, the question in that case was
            whether fixed internet access services were a substitute for mobile data
            services in general or for mobile internet access services specifically.
  (19)      In the present case the question is the reverse, namely whether mobile internet
            access services for fixed connections can be a substitute for fixed internet
            access, i.e. whether mobile internet access services can be used for accessing
            the internet at home, in the same way as fixed connections are used. The
            mentioned decision relating to Austria did not assess the latter question, as it
            was not relevant for the case at issue. However, that decision made express
            reference to an ordinance of the national Austrian Regulatory Authority for
            Broadcasting and Telecommunications ("RTR")8 from 2003, which found that
6 Commission decision of 19 May 2005 in case M.7421 – Orange/Jazztel, recitals 50-53.
7 Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria,
  recitals 54-57.
8 Formally, the Telekom-Control-Commission (TKK) is responsible for regulating the Austrian
  telecommunications market and the RTR provides operational support inter alia to TKK in the
  fulfilment of TKK's duties. For the purpose of this decision, the term RTR refers also to the TKK.
                                                       5
 ---pagebreak---              for residential customers mobile internet access was a substitute for fixed line
             internet services.9
   (20)      Notably the RTR found in its ordinance that there existed a high degree of
             demand substitution between fixed internet products and fixed-mobile
             substitution ("FMS") products10 (such as cubes) for residential customers, and
             defined a residential "home broadband" market that included both fixed and
             FMS products.
   (21)      This market definition was recognised in 2009 by the Commission in the
             periodic review of market definitions in the telecommunications sector for the
             purposes of ex-ante regulation.11 In its position the Commission noted that
             "fixed and mobile retail broadband services are normally not belonging to the
             same market. However, on the basis of the following circumstances closely
             related to the specificity of the Austrian market, the Commission accepts the
             inclusion of mobile and broadband connections into the retail residential
             market for the purposes of the present notification […] according to the
             evidence submitted by RTR, product characteristic differences as detailed
             above do not currently have a considerable impact on demand-side
             substitutability in Austria, as they are not preventing residential customers
             from using applications needing secure connections, such as online banking.
             Moreover, RTR also provides evidence that the data transfer limits imposed
             by mobile operators would not prevent subscribers from using advanced
             multimedia services, such as streaming media or downloading large files, as
             even low price packages currently offered already include rather high
             volumes, and attractive pre- and post-paid tariffs exist. Finally, the
             particularly high HSDPA network coverage in Austria should also be taken
             into account in this respect. In light of the above information regarding the
             similar use and pricing of fixed and mobile broadband products in Austria,
             the Commission considers that, despite the different product characteristics,
             the information provided by RTR adequately supports the conclusion that, on
             the basis of specific national circumstances relating to demand-side
             substitutability in the Austrian market, mobile broadband connections can be
             considered as an adequate substitute to fixed broadband connections within
             the current review period. Thus, mobile broadband connections can be
             included in the residential customers' retail broadband access market. For
             those reasons the Commission considers that RTR has provided sufficient
             evidence supporting its conclusion that fixed and mobile broadband
             connections can be considered as substitutes in the residential customers'
             retail broadband access market in Austria".
   (22)      The analysis of the RTR in its ordinance is confirmed in more recent
             documents. In an expert opinion from February 2016 (the "2016 Opinion"),
9  Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria,
   recital 54.
10 FMS products are mobile products that are conceived and promoted to substitute fixed products.
   Currently hybrid products are emerging, i.e. broadband services offered on the basis of a hybrid router
   where the data transfer takes place both over a fixed connection (usually DSL) and a mobile
   connection. To be noted that not all mobile data-only products are FMS products, since some of them
   are conceived and used for connectivity on the move.
11 Commission decision C(2009) 7720 of 7 December 2009 in case AT/2009/0970, Wholesale broadband
   access (WBA) in Austria.
                                                      6
 ---pagebreak---              RTR found evidence that fixed and mobile internet access services are likely
             to be part of the same retail market for residential users but not for business
             users. This evidence was mainly based on survey data from January 2015 and
             data from the operators up to end 2014. The 2016 Opinion observed that with
             the introduction of 4G/LTE, the number of mobile broadband lines increased,
             as mobile operators were aggressively marketing FMS products for the use at
             home with unlimited data allowance.
   (23)      Also, according to recent RTR documents, data from network/speed tests
             showed that mobile broadband on average performed better than fixed
             broadband (although bandwidths decreased somewhat in the last year as the
             networks were getting closer to capacity limits).12
   (24)      The Notifying Party claims that the Commission cannot rely on the 2016
             Opinion, because it is based on data of a survey conducted in 2015. According
             to the Notifying Party, RTR found indications in its opinion that the
             competitive pressure resulting from mobile broadband services was
             decreasing.
   (25)      In this respect, the RTR has confirmed this market definition in a decision on
             the local access market of July 2017.13 This market definition has also been
             accepted by the Commission in relation to Austria.14
   (26)      As for the alleged indication found by the RTR of a decreasing competitive
             pressure exerted by mobile broadband products on fixed, the RTR found that
             mobile broadband connections declined in the years 2013 and 2014. However,
             with the introduction of 4G/LTE, the number of mobile broadband lines
             increased again, as mobile operators were aggressively marketing FMS
             products for the use at home with unlimited data allowance. Recently, the
             number of DSL lines even decreased (see Figure 1).
12 See         RTR         Telekom        Monitor       2.        Quartal       2017, p.    28
   (https://www.rtr.at/de/inf/TK Monitor Q2 2017/RTR Telekom Monitor Q2 2017.pdf);
13 Available on https://www rtr.at/de/tk/M 1 5 15, see in particular pp. 34-37.
14 Commission Decision C(2017) 4687 of 30 June 2017 in cases AT/2017/1987 and AT/2017/1988.
                                                     7
 ---pagebreak---      Figure 1: Development of number of access lines by technology (residential segment,
     mobile BB without prepaid) - RTR15
               1,600,000
               1,400,000
               1,200,000
               1,000,000
                 800,000
                 600,000
                 400,000
                 200,000
                        0   1. Qu. 2012
                            2. Qu. 2012
                            3. Qu. 2012
                            4. Qu. 2012
                            1. Qu. 2013
                            2. Qu. 2013
                            3. Qu. 2013
                            4. Qu. 2013
                            1. Qu. 2014
                            2. Qu. 2014
                            3. Qu. 2014
                            4. Qu. 2014
                            1. Qu. 2015
                            2. Qu. 2015
                            3. Qu. 2015
                            4. Qu. 2015
                            1. Qu. 2016
                            2. Qu. 2016
                            3. Qu. 2016
                            4. Qu. 2016
                            1. Qu. 2017
                            2. Qu. 2017
                            3. Qu. 2017
                                       DSL        CATV         FTTH         mobile BB
     (27)    The substitution trend is confirmed in 2017 by the Commission in the 2017
             Europe's Digital Progress Report (EDPR) on Austria: "The area where
             Austria performs considerably lower is take-up, which in the case of fixed and
             fast broadband may be attributed to a considerable mobile substitution trend.
             The Austrian telecommunications market is characterised by price-driven
             competition and the prominent role of mobile services, on both voice and
             broadband markets".16
     (28)    The Notifying Party further maintains that in any case the results of the
             analysis in the 2016 Opinion cannot be relied on in the present merger control
             proceedings, as the purpose of the analysis was to assess whether A1, the
             incumbent telecommunications provider in Austria and which mainly offered
             DSL broadband services, held significant market power. As a consequence,
             DSL broadband services served as the starting point of RTR's market
             definition and hypothetical monopolist test. On the contrary, the Parties are
             mainly active in the provision of cable broadband services and mobile
             broadband services (and not DSL broadband services), respectively. In the
             present case, the starting point of the definition of relevant markets and of any
             hypothetical monopolist test would need to be the Parties' products.
     (29)    In this respect, the Commission notes that the market analysis carried out by
             the RTR involved explicitly DSL and cable and concluded that mobile
             internet access services were to be included in the relevant market. DSL
             broadband services are commonly included in the internet access services
15   RTR database
16   Available on https://ec.europa.eu/digital-single-market/en/news/europes-digital-progress-report-2017,
     page 4.
                                                         8
 ---pagebreak---            market and compete directly with other fixed access technologies such as
           cable and FTTX, although they can differ in terms of performance, quality
           and speed. In general, even though different services at the two opposite
           extremes of the spectrum may not be direct substitutes, they can belong to the
           same market as long as there is a chain of substitution between them. It can be
           added that the conclusions of the documents mentioned in paragraphs (18) to
           (27) do not make any distinctions on the basis of the fixed technologies.
   (30)    A market definition covering both fixed and mobile technologies is supported
           by the submissions of a number of Austrian telecom providers received by the
           Commission in the present case. Those providers point out that in Austria the
           mobile network is a viable alternative for residential customers to access the
           internet at home. According to them, internet access at home is often provided
           via mobile connections, e.g. through routers which are connected to the
           provider via mobile technology ("cubes"). Their performance is similar to the
           one of comparable fixed products; fixed and mobile internet tariffs are equally
           positioned in terms of pricing, data volumes and down-/ upload-speeds.
   (31)    One Austrian telecom provider (Ventocom) has also submitted an economic
           study, based on RTR data, which in its view confirms that:
           -    in Austria, differently than in other countries, mobile internet devices are
                used from a fixed (static) location;
           -    mobile internet access is predominantly used as standalone home access
                solution;
           -    fixed and mobile internet access tariffs are equally positioned in terms of
                prices, included data volumes and down-/ upload speeds;
           -    network tests suggest that mobile internet access is of at least similar
                quality as fixed one.
   (32)    The Notifying Party submits that the speed-test used by Ventocom is
           inappropriate to address the serious performance issues of mobile data
           services, as it provides monthly average speeds, not taking account of the time
           of the day and different tariffs, suppliers and products; it is hence entirely
           undifferentiated. According to the Notifying Party, the performance of mobile
           data services depends on a variety of factors and is particularly low during
           peak hours. The tool used in Ventocom's study does not address these points
           nor does it take account of congested cells at many locations. Therefore,
           according to the Notifying Party, the results of that study provide a distorted
           picture of the reality.
   (33)    In any case, the Commission notes that a number of the responses to the
           market investigation provide indications that a market for home internet
           access services including both fixed and mobile solutions can be considered.
           The majority of respondents17 have considered fixed internet access services
17 Throughout this decision, when the Commission refers to the (number of) respondents in relation to a
   given question of the market investigation this excludes all respondents that have not provided an
   answer to that question or replied "I do not know", unless stated otherwise. For example, "a majority
                                                      9
 ---pagebreak---             and FMS internet access services to a certain extent comparable in terms of
            product characteristics.18 It is to be noted that some respondents pointed out
            that the differences were mainly relevant for customers having specific needs
            (in particular for business customers). In general, respondents have stated that,
            from a technical perspective, quality, reliability and steadiness of dedicated,
            high-speed fixed internet services is still difficult to reach for FMS products.
            However, due to the good performance of mobile networks in recent years,
            customers with the need of access to standard internet services (as most
            residential customers) do not experience significant disadvantages in using a
            mobile technology where transmission capacity is shared. In any case, hybrid
            internet access solutions are gaining importance.
   (34)     In terms of price, the result is mixed, with some respondents considering the
            two categories of products comparable to each other, while some other
            respondents consider that FMS products can be cheaper than purely fixed
            ones.19
   (35)     The Commission notes that in general even if the different products in the
            spectrum are not perfectly similar in terms of price and quality, they may still
            be considered substitutes for many customers and that also different
            products/services which are not direct substitutes can belong to the same
            market as long as there is a chain of substitution between them.
   (36)     This market definition also appears to be supported, as regards residential
            customers, by the Parties' internal documents regarding the Transaction and
            recent developments in the Austrian telecommunications market. Some of
            these documents define a "BB@home" (broadband at home) market, where
            both mobile and fixed operators are active and compete directly. In internal
            documents, it is also pointed out that the Austrian market differs from other
            mature markets within the EU: in particular, the mobile networks in Austria
            are of very high quality, while the fixed networks have low penetration and
            quality.20 According to a document, these circumstances favoured the
            emergence of FMS products, such as cubes or hybrid solutions. A document
            dated January 2017 expressly refers to mobile broadband providers as a rising
            threat to fixed-line operators, pointing out that in Austria 16% of households
            only had mobile connections, compared to the 8% EU average. Several
            documents highlight the relevance of mobile 4G/LTE offers as home
            solutions, directly competing with fixed offers. Market shares of the main
            actors in this market are reported in some documents, where both fixed and
            mobile offers are included.
   (37)     In order to provide the Commission with further information on the possible
            home internet access services market, the Notifying Party conducted a
            specific customer survey in Austria in May 2018. This consumer survey was
   of respondents" means a majority of respondents having replied to a given question and not having
   ticked "I do not know".
18 Questionnaire Q2, reply to question B.A.6; Questionnaire Q3, reply to question B.A.4.
19 Questionnaire Q2, reply to question B.A.7; Questionnaire Q3, reply to question B.A.5.
20 The Commission notes that, partially in contradiction to the content of these internal documents,
   according to DG Connect's 2018 EDPR/DESI report, Austria ranked 11th for 4G Convergence, 9th for
   NGA coverage and 18th in ultrafast broadband coverage, above the EU average (see https://digital-
   agenda-data.eu/).
                                                     10
 ---pagebreak---            designed to reveal diversion ratios between the Parties, but also included
           questions about whether fixed and mobile internet access services are in the
           same relevant market. However, the Notifying Party has underlined that the
           survey has important limitations and that the results are distorted and biased.
           In particular, a substantial number of respondents submitted implausible
           second-preferred choices. The Notifying Party concludes that in light of these
           limitations, the Commission should interpret the results of the survey with
           great caution.
   (38)    The Commission considers that the evidentiary value of the survey is
           substantially undermined by a number of flaws (see paragraph (250) below).
           The results appear to be of limited use, primarily because, looking at the
           replies in detail, those can be interpreted in several different ways due to a
           significant number of respondents choosing counterintuitive answers that are
           difficult to reconcile. As a consequence, it is difficult to draw any meaningful
           conclusion on market definition or diversion ratios on the basis of the survey.
   (39)    In conclusion, the Commission considers that a series of elements, mentioned
           above, seems to indicate that in Austria a relevant product market for home
           internet access services, including both fixed and mobile technologies, could
           be defined as far as residential customers are concerned. In any case, the
           question of the inclusion of mobile internet access services in this home
           internet services market can be left open, as the assessment would not change
           irrespective of the definition of the market in this respect.
   (40)    Also the question as to whether all pre-paid and post-paid mobile data-only
           access services should be included in the relevant market, or only post-paid
           mobile data-only access services, or just services based on cubes (i.e. on
           devices specifically designed for home mobile connection), can be left open,
           as the assessment would not change irrespective of the definition of the
           market in this respect.
   (41)    Finally, the Commission notes that market participants seem to agree that the
           specific needs of business customers in terms of stability, performance,
           quality and speed of the connections are better satisfied by (high quality) fixed
           connections and that FMS products do not exert a sufficient competitive
           constraint for this customer group. The elements gathered also indicate that,
           with respect to business customers, the degree of substitutability between
           fixed and mobile internet access services appears to be rather low.21 However,
           it can be left open whether internet access services for business customers are
           part of the same market as those for residential customers, as the assessment
           would not change irrespective of the definition of the market in this respect.
     3.1.1.2.    Geographic market definition
                (a) The Notifying Party's views
   (42)    The Notifying Party considers that the retail market for the provision of
           internet access services is national in scope. The Notifying Party points out
21 See above, paragraphs (22) and (33) and Questionnaire Q1, replies to questions B.A.4., B.A.5.
   and B.A.6.
                                                 11
 ---pagebreak---            that the Commission has in the past found that the geographic scope of the
           retail market for fixed internet services is national, including in cases which
           concerned the acquisition of a provider of fixed internet services not active on
           a nationwide level.
   (43)    The Notifying Party submits that the arguments used in past Commission
           decisions would also be fully applicable to the geographic scope of a retail
           market for the supply of home internet services including fixed internet
           services and mobile internet services. In this respect, the Notifying Party
           points out that the providers of mobile internet connections (MNOs and
           MVNOs) compete at national level. Moreover, mobile telecommunications
           services providers would have no control over how and where its customers
           use a mobile data-only SIM card in Austria.
   (44)    The Notifying Party further submits that TMA offers its mobile and hybrid
           broadband services on the basis of a national pricing and marketing policy.
           Occasional regional campaigns are only aimed at [description of objective of
           occasional regional campaigns], but they are not based on the competitive
           conditions in the area concerned and prices and conditions that are promoted
           in such regional campaigns are available nationally throughout Austria.
           Similarly, UPC sets prices for fixed internet services at the national level and
           does not differentiate per region or location of customers, the only exception
           being occasional short-term localised promotion campaigns targeted at
           [description of UPC's sales strategy].
                (b) The Commission's assessment
   (45)    The majority of respondents to the market investigation in the present case
           submitted that the market for the provision of retail internet services is
           national in scope. Most respondents, in particular fixed operators, stated that
           there are no relevant price differences for internet access services across
           different regions in Austria.22 With specific regard to the internet services
           provided by mobile operators, although some of them pointed to price
           differences in some regions, all of them are active at national level and one
           respondent highlighted that MNOs operate nationwide high quality mobile
           networks and are subject to coverage obligations required under their
           licenses.23
   (46)    A1 submitted that decisions by the Belgian, Polish and Hungarian authorities
           support the view that the geographic market should be defined locally on the
           basis of the footprint of the network in question. In A1's view, a regional
           market definition is also supported by the technological differences between
           rural and urban areas, mainly served respectively by DSL networks and by
           cable networks. In addition, different players are active in the various regions,
           with alternative players holding a strong position in urban areas. Finally, there
           is regional price differentiation. A1 also submitted (i) an economic study
           pointing to a regional segmentation of the market, with particular reference to
           the urban area of Vienna, where UPC's presence is particularly relevant and
22 Questionnaire Q3, reply to question B.B.2.
23 Questionnaire Q2, reply to question B.B.1 and questionnaire Q5, reply to question 11.1.
                                                     12
 ---pagebreak---            (ii) a few examples of promotions addressed exclusively to customers in
           Vienna.
   (47)    The Commission considers that the market for the provision of internet access
           services is national in scope.
   (48)    First of all, the Commission notes that the RTR has expressly qualified as
           national the internet access service market in Austria and this definition has
           been accepted by the Commission.24
   (49)    Moreover, in line with previous Commission decisions related to the market
           for the provision of fixed internet access services and with the result of the
           market investigation in the present case, the Commission considers that
           although operators of cable networks have sometimes a presence limited to a
           certain part of the national territory, they compete with nationwide providers
           of other fixed internet services which offer their services on the basis of a
           national strategy across the national territory.25
   (50)    In the present case, it has to be added that mobile operators normally offer
           their services at national level and that mobile connections – including FMS
           products – can usually be used in the whole territory of Austria. The
           penetration of FMS products does not appear to be substantially different in
           areas covered by cable networks (such as the UPC one) compared to other
           areas.
   (51)    In particular, with respect to the argument that operators such as UPC provide
           telecommunications services via a cable network only in certain areas, the
           Commission notes that UPC interacts within its footprint with providers of
           fixed internet services such as A1 and mobile operators such as TMA that
           operate nationally. Moreover, UPC offers internet access services to
           residential customers also outside of its HFC footprint mainly based on A1’s
           regulated wholesale access. Hence, UPC ultimately competes on the basis of
           nation-wide dynamics.
   (52)    The Commission also did not find material geographic price discrimination.
           In particular, the Parties appear to charge largely uniform prices among
           different locations. TMA does not engage in regional or local pricing. Where
           TMA runs occasional marketing campaigns that target certain regions, these
           do never involve any regional/local pricing or conditions26. UPC sets prices
           for fixed internet services at the national level and does not differentiate per
           region or location of customers. UPC harmonises prices and quality to ensure
           a consistent product offering throughout its footprint.27
   (53)    Most fixed (cable) operators have also confirmed that pricing is generally
           uniform in Austria and all mobile operators (including MVNO) are active at
           nationwide level. This element indicates that the market should be defined to
24 Commission decision C(2009)7720 of 7 December 2009 in case AT/2009/0970.
25 Commission decision of 2 July 2014 in Case M.7231 - Vodafone/Ono, recitals 19-22.
26 Reply of the Notifying Party to RFI 8 of 26 June 2018.
27 [Description of UPC's sales policy and strategy].
                                                      13
 ---pagebreak---              be nationwide. Occasional local promotions cannot call into question this
             conclusion.
   (54)      As for the different number and size of competitors in densely populated areas
             compared to rural areas, the Commission considers that the availability of
             competitors as a supply source is more relevant for market definition purposes
             than the extent of their current sales presence. Accordingly, the Commission
             has consistently defined the market for retail internet access services to be
             national in scope.28 Moreover, the two main technologies (DSL vs. cable)
             available in the different areas (rural vs. urban) are included in the same
             product market(s) because they compete directly (see above paragraph (29))
             and the Commission does not see how, conversely, they could justify the
             definition of different geographic markets.
   (55)      Therefore, the Commission concludes that the retail market for the provision
             of internet access services is national in scope.
      3.1.1.3.     Affected market
   (56)      In the market for retail home internet access services including both fixed and
             mobile connections in Austria the Parties have a combined market share of
             [20-30]% (UPC [10-20]% and TMA [10-20]%), according to data provided
             by the Notifying Party.29 The market in question is horizontally affected. 30
   (57)      Should the market be defined as the retail market for fixed internet access
             services (excluding mobile connections) in 2017 UPC had a market share of
             [20-30]% in terms of revenues and of [20-30]% in terms of subscribers
             (residential and business). TMA was not active in 2017 in the fixed internet
             sector and only in January 2018 launched a hybrid broadband product for
             residential customers on the basis of its 4G/LTE mobile network in
             combination with a DSL component based on wholesale access provided by
             A1. Should this offer be considered as part of the retail fixed internet access
             market, TMA's market share would be marginal, in any case inferior to
28 Commission decision of 20 September 2013 in Case M.6990 - Vodafone/Kable Deutschland,
   recital 197.
29 The market shares are based on data including fixed internet services and all mobile data-only services
   – pre paid and post paid – in Austria. The Notifying Party has also provided data (i) on a market
   including fixed internet services and only Mobile Cubes – post paid – in Austria, and (ii) on a market
   including fixed internet services and mobile data-only services – post paid – in Austria. The market
   shares of the Parties and of the competitors would not substantially change in the three different
   scenarios and therefore the question on which exact mobile data services have to be included in the
   market can be left open (see above paragraph (40)).
30 Where this Decision makes reference to "affected markets", it refers to instances where: for horizontal
   overlaps, both Parties are engaged in business activities in the same relevant market and where the
   concentration will lead to a combined market share of 20% or more; for vertical overlaps, where one
   or more of the Parties are engaged in business activities in a relevant market, which is upstream or
   downstream of a relevant market in which any other party to the concentration is engaged, and any of
   their individual or combined market shares at either level is 30% or more, regardless of whether there
   is or is not any existing supplier/customer relationship between the Parties. See section 6.3. of Annex I
   (Form CO relating to the notification of a concentration pursuant to regulation (EC) No 139/2004) of
   Commission Implementing Regulation (EU) No 1269/2013 of 5 December 2013 amending
   Commission Regulation (EC) No 802/2004 implementing Council Regulation (EC) No 139/2004 on
   the control of concentrations between undertakings. Official Journal OJ L 336, 14.12.2013, p. 1-36.
                                                        14
 ---pagebreak---              [0-5]% (limited to residential customers). In any case, this market would be
             horizontally affected.
   (58)      In addition, the market for retail internet access services in Austria is
             vertically affected also insofar as there is a vertical link to the wholesale
             leased lines market if defined on the level of communes. In 24 communes
             where TMA is active and the Parties combined market share is equal or larger
             than 30%.
             3.1.2.     Retail internet hosting services
   (59)      Internet hosting service providers operate Internet servers and offer
             organisations and individuals to serve content to the Internet via these servers.
             By using internet hosting services, organisations outsource their internal IT
             applications and infrastructure.
      3.1.2.1.    Product market definition
   (60)      In the KPNQWEST / EBONE / GTS decision, the Commission considered four
             market segments within the general web-hosting sector, based on the range of
             different services and products offered: (a) the local (limited to the area where
             the web-hosting centre is located) supply of basic co-location services such as
             connectivity, power, and the facilities; (b) the national supply of shared and
             dedicated hosting consisting of hosting a customer's web-site on the web
             host's servers and providing the necessary support applications; (c) the
             national, possibly cross-border regional, supply of managed services to
             outsource complex enterprise applications and support infrastructure,
             including "front-end" and "back-office" applications hosted on the providers'
             platforms (so-called ASP), and (d) the national supply of content delivery
             services (CDS) such as Streaming Content Delivery Services and Static
             Content Delivery Products.31 However, the Commission did not conclude on
             the exact market definition.
   (61)      The Commission agrees with the Notifying Party that, for the purpose of the
             present decision, there is no need to take a definitive view on the precise
             product market definition, as the Transaction does not raise serious doubts as
             to its compatibility with the internal market under any possible market
             definition.
      3.1.2.2.    Geographic market definition
   (62)      The Notifying Party submits that for the purposes of this Transaction, the
             retail market for internet hosting services is wider than national in scope,
             although the precise market definition can be left open. In previous decisions,
             the Commission did not conclude on the exact definition of the geographic
             market for retail internet hosting services, whether it is national, EEA-wide or
             worldwide.32 As the Transaction does not raise serious doubts as to its
             compatibility with the internal market under any geographic market
31 Commission decisions of 20 September 2013 in case M.6990 – Vodafone/Kable Deutschland, recital
   201; and of 16 January 2002 in case M.2648 Kpnqwest / Ebone / GTS, recitals 19 and 20.
32 Commission decisions of 20 September 2013 in case M.6990 – Vodafone/Kable Deutschland,
   recital 205; and of 16 January 2002 in case M.2648 Kpnqwest / Ebone / GTS, recital 23.
                                                      15
 ---pagebreak---             definition, it is not necessary to conclude on the precise definition for the
            purpose of the current decision.
      3.1.2.3.    Affected markets
   (63)     The retail market for internet hosting services is horizontally not affected. The
            Transaction only leads to a potential minor horizontal overlap (if any) on the
            retail market for internet hosting services, whether in Austria or in the EEA.
            Both Parties have only minor activities on this market. According to the
            Notifying Party's estimates UPC achieved revenues of approximately
            EUR […] in Austria33 from retail internet hosting services in 2017 which
            would amount to a market share of only approximately [0-5]% in Austria and
            to less than [0-5]% in the EEA. DTAG sold its subsidiary Strato, which used
            to be DTAG's dedicated subsidiary for internet hosting activities, in the first
            half of 2017. DTAG's remaining activities in the wider area of internet hosting
            services are very limited,34 and consequently, also the overlap between UPC's
            and DTAG's activities in the area of internet hosting services.
   (64)     The retail market for internet hosting services is vertically not affected either.
            There is a potential vertical link between the Parties' minor activities on the
            retail market for internet hosting services in the EEA and the Parties' activities
            on the upstream worldwide wholesale market for internet connectivity
            services which, however, does not constitute an affected market due to the
            Parties' negligible market shares on the worldwide wholesale market for
            internet connectivity services (TMA: approx. [0-5]% UPC: below [0-5]%).
            3.1.3.     Retail business connectivity services
   (65)     The retail market for business connectivity includes fixed telecommunications
            services purchased by large businesses, enterprises and public sector
            customers in order to provide data connectivity between multiple sites.
      3.1.3.1.    Product market definition
   (66)     The Notifying Party considers that retail business connectivity services
            constitute a separate product market. In its decisional practice, the
            Commission35 considered potential subdivisions into: (i) broadband access for
            large business customers;36 (ii) leased lines;37 and (iii) VPN services.38 The
            Notifying Party does not take a view with regard to these sub-segmentations
            of the market. It considers that, in any event, the exact definition of the
33 [Confidential information on UPC's revenues].
34 DTAG offers a website builder as well as e-commerce solutions enabling customers to set up their
   own web shops. Its subsidiary T-Systems offers various cloud solutions such as IT-infrastructure
   solutions (IaaS/PaaS) and cloud software (SaaS) for SMEs. UPC does not offer services similar to the
   services of T-Systems.
35 Commission decisions of 14 April 2014 in case M.7109 – Deutsche Telekom / GTS recital 26; and of
   29 January 2010 in case M.5730 – Telefónica/Hansenet Telekommunikation, recital 6 and subsequent.
36 Retail broadband access to business customers with significant needs which require higher
   performance in terms of security, bandwidth and functionality.
37 Leased lines are part-circuits that allow communication providers to connect their own networks to
   end user sites for the supply of business connectivity (Commission decision of 3 July 2012 in case
   M.6584 – Vodafone/Cable & Wireless, recital 28 and subsequent).
38 An encryption technology enabling to secure shared access as if it were a dedicated one.
                                                     16
 ---pagebreak---             product market can be left open in this case as the Transaction does not raise
            any competitive concern under any plausible market definition.
   (67)     In previous decisions, the Commission noted that the requirements and
            purchase processes of larger business customers with respect to the
            combinations of fixed or fixed-mobile services for business connectivity are
            different than those of SMEs and SOHOs, but left the market definition
            open.39
   (68)     In any event, for the purposes of the present decision the exact product market
            definition for the retail provision of business connectivity services can be left
            open as the Transaction does not raise serious doubts as to its compatibility
            with the internal market under any alternative product market definition.
      3.1.3.2.    Geographic market definition
   (69)     In its decisional practice, the Commission has found that the retail market for
            business connectivity was national in scope.40 The Notifying Party agrees that
            the geographic scope of the retail market for business connectivity services is
            national and corresponds to the territory of Austria.
   (70)     The Commission considers that in the present case there is no reason to depart
            from the geographic market definition adopted in its past decisional practice.
      3.1.3.3.    Affected markets
   (71)     The Transaction does not lead to a horizontal overlap on the retail market for
            business connectivity services in Austria: Only UPC has some activities on
            this market whereas TMA is not active on this fixed telecommunications
            market.
   (72)     However, the retail market for business connectivity services is vertically
            affected with regard to the Parties' activities on the upstream wholesale
            market for leased lines if defined locally, at the level of communes. Based on
            the data submitted by the Austrian regulator RTR, there are 24 communes41
            where, based the overall leased lines market but also on the various
            technological sub-segmentations thereof, the Parties' combined market shares
            in the wholesale upstream market, in terms of number of terminating
            segments, are equal or above 30%.
            3.1.4.     Wholesale broadband access
   (73)     Wholesale broadband access includes different types of access to fixed
            connections that allow internet service providers to provide services to end
39 Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV,
   recital 126.
40 Commission decisions of 14 April 2014 in case M.7109 – Deutsche Telekom / GTS recital 30 and of
   3 July 2012 in case M.6584 – Vodafone/Cable & Wireless, recital 10 and of 29 January 2010 in case
   M.5730 - Telefónica/Hansenet Telekommunikation, recital 28.
41 Please see footnote 62 below.
                                                  17
 ---pagebreak---              consumers. It comprises physical access at a fixed location, such as LLU42;
             non-physical or virtual network access, such as bitstream access, at a fixed
             location; and resale of a fixed provider's internet access services.43
      3.1.4.1.     Product market definition
   (74)      The Notifying Party does not take a view on the exact definition of the market
             for wholesale broadband access.
   (75)      In previous decisions44, the Commission defined a separate market for
             wholesale broadband access and left open the question of whether it should be
             sub-divided per type of access (LLU, bitstream or resale of the incumbent's
             offering).
   (76)      For the purposes of this Decision, the Commission considers that the question
             of the exact scope of the wholesale market for broadband access with respect
             to its possible segmentations (standalone access to DSL, standalone access to
             cable, access to cable for TV and internet together) can be left open, as the
             Transaction does not raise serious doubts as to its compatibility with the
             internal market under any product market definition.
      3.1.4.2.     Geographic market definition
   (77)      The Notifying Party does not take a view on the exact geographic definition
             of the wholesale market for broadband access.
   (78)      In Carphone Warehouse/Tiscali UK, while there were indications supporting
             a national scope of the market, the Commission ultimately left open the exact
             geographic market definition.45
   (79)      For the purposes of this Decision, the Commission considers that the question
             of whether the geographic scope of the wholesale broadband access is
             national (that is to say Austria) or limited to the footprint of UPC's cable
             network can be left open, as Transaction does not raise serious doubts as to its
             compatibility with the internal market under any geographic market
             definition.
      3.1.4.3.     Affected markets
   (80)      The market for wholesale broadband access is horizontally not affected. Only
             UPC is active on this market. Moreover, the market for wholesale broadband
             access is not vertically affected with respect to the vertical link with the
42 LLU (local loop unbundling): unbundled (shared) access to metallic loops of the local access network
   in a number of local telecommunications exchanges (in particular in urban areas), as this is the most
   cost-efficient way for alternative operators to provide differentiated retail broadband services.
43 Even assuming that at the retail level, the internet access service market includes both mobile and
   fixed technologies, at wholesale level the relevant markets are considered as separate for the purpose
   of the present decision, in line with previous Commission decisions.
44 Commission decision of 20 September 2013 in Case M.6990 - Vodafone/Kabel Deutschland,
   recital 161; Commission decision of 29 June 2009 in Case M.5532 - Carphone Warehouse/Tiscali UK,
   recitals 28- 34.
45 Commission decision of 29 June 2009 in Case M.5532 - Carphone Warehouse/Tiscali UK,
   recitals 48-53.
                                                         18
 ---pagebreak---             downstream market for internet access services since UPC's market share in
            the upstream market for wholesale broadband access is below 30% and the
            combined market share of the merged entity in the downstream market for
            internet access services would be similarly below 30%.
   (81)     Some operators need wholesale leased lines as an input for their network
            based on which wholesale broadband access is provided. The market for
            wholesale broadband access could hence be vertically affected insofar as the
            Parties' combined market shares on the wholesale leased lines market if
            defined on the level of communes, in 24 communes46 are equal or larger
            than 30%.
            3.1.5.    Wholesale leased lines
   (82)     Wholesale leased lines are part-circuits that allow telecommunications
            providers to connect their own networks to end user sites for the supply of
            business connectivity services. In addition, wholesale leased lines are an input
            for the provision of telecommunications services.
      3.1.5.1.    Product market definition
                 (a) The Notifying Party's views
   (83)     The Notifying Party submits that that the relevant market definition may be
            left open, as the Transaction will not give rise to any competition concerns
            under any possible segmentation of the wholesale market for leased lines.
   (84)     The RTR segments the wholesale leased lines between the element that can be
            considered to be customer access or backhaul (terminating segments) and that
            which can be considered part of the core network (trunk segments).47 In its
            recommendation on market definitions in the electronic communications
            sector, the Commission considers a separate market for terminating segments
            for leased lines48.
                 (b) The Commission's assessment
   (85)     In previous decisions, the Commission considered that the market for
            wholesale leased lines could be further segmented between trunk and
            terminating segments but ultimately left the market definition open.49 The
46 See footnote 62 below.
47 TKK decision of 28 July 2014, M 1.5/2012-135. Wholesale trunk segments of leased lines are leased
   lines between the 28 trunk cities in which A1 installed the points of interconnection of its telephony
   network. These are the following 28 cities: Wien, Graz, Linz, Salzburg, Innsbruck, Klagenfurt,
   Villach, Wels, Sankt Pölten, Dornbirn, Steyr, Wiener Neustadt, Feldkirch, Baden, Amstetten, Mödling,
   Spittal an der Drau, Bruck an der Mur, Telfs, Lienz, Vöcklabruck, Ried im Innkreis, Eisenstadt,
   Korneuburg, Wörgl, Hollabrunn, Judenburg, Bruck an der Leitha.
48 No. 6 in Annex to Recommendation of 17 December 2007 on relevant product and service markets
   within the electronic communications sector susceptible to ex ante regulation in accordance with
   Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory
   framework for electronic communications networks and services, Official Journal of the European
   Union L 344/65.
49 Commission decision of 3 July 2012 in case M.6584 - Vodafone/Cable & Wireless, recital 30;
   Commission decision of 4 February 2016 in case M.7637 - Liberty Global/BASE Belgium, recital 146;
   Commission decision of 14 April 2014 in case M.7109 - Deutsche Telecom/GTS, recital 70.
                                                     19
 ---pagebreak---            market investigation carried out for the assessment of the Transaction was not
           conclusive as to whether the market for wholesale leased lines should be
           further segmented between trunk and terminating segments.
   (86)    In the past the Commission has also considered a further segmentation of the
           wholesale leased lines market into terminating leased lines with bandwidth
           above and below 2 Mbps respectively but ultimately left the exact product
           market definition open.50 Respondents to the market investigation indicated
           that terminating segments of leased lines with bandwidth below 2 Mbps may
           not be substitutable with terminating segments of leased lines with bandwidth
           above 2 Mbps in Austria because bandwidth below 2 Mbps would be legacy
           services and not of interest anymore.
   (87)    The Commission has not yet considered a segmentation of the wholesale
           leased lines market into terminating leased lines with bandwidth above
           10 Mbps versus terminating leased lines with bandwidth below 10 Mbps.
           Respondents to the market investigation indicated that terminating leased
           lines with bandwidth below 10 Mbps and terminating leased lines with
           bandwidth above 10 Mbps may not be substitutable since bandwidth above
           10 Mbps is not available everywhere in Austria.
   (88)    In past decisions, the Commission has considered a further segmentation of
           the wholesale leased lines market into passive (dark fibre) and active
           infrastructure (traditional managed leased lines, Ethernet services with
           guaranteed bandwidth) but finally left the exact product market definition
           open.51 Responses to the market investigation were not conclusive on the
           question whether passive infrastructure (dark fibre) and active infrastructure
           (leased lines with traditional interfaces, Ethernet services with guaranteed
           bandwidth) are substitutable for each other.52 UPC primarily offers Ethernet
           services and currently supplies only [0-5] dark fibre connections at wholesale
           level. TMA supplies wholesale trunk segments and wholesale terminating
           segments of leased lines on the basis of Ethernet services and currently only
           supplies [5-10] dark fibre connections at wholesale level.
   (89)    The Commission has not yet considered whether the wholesale leased lines
           market should be further divided into leased lines with traditional interfaces
           and Ethernet services with guaranteed bandwidth. The market investigation
           was not conclusive as to whether leased lines with traditional interfaces and
           Ethernet services with guaranteed bandwidth are substitutable. There were
           however indications that traditional interfaces are outdated. [UPC's sales
           policy regarding leased lines with traditional interfaces].
   (90)    The Commission considers that in the present case the exact definition of the
           product market can be left open as the Transaction does not raise serious
           doubts as to its compatibility with the internal market under any plausible
           market definition.
50 Commission decision of 14 April 2014 in case M.7109 – Deutsche Telekom/GTS, recital 70.
51 Commission decision of 14 April 2014 in case M.7109 – Deutsche Telekom/GTS, recital 70.
52 Questionnaire Q6, reply to question B.A.1.4. and B.A.1.4.1.
                                                      20
 ---pagebreak---      3.1.5.2.    Geographic market definition
                (a) The Notifying Party's views
   (91)    The Notifying Party considers that the geographic scope of the wholesale
           market for leased lines is national and corresponds to the territory of Austria
           irrespective of the precise definition of the product market.
   (92)    The Notifying Party submits that the definition of narrower geographic
           markets would not reflect the actual market realities since negotiations
           between providers of wholesale leased lines (including Ethernet services and
           dark fibre) and wholesale customers often take place on a project basis and
           concern a larger number of customer sites across the whole of Austria or at
           least across a large number of regions in Austria. In addition, prices and
           conditions of contracts agreed on a project basis depend on the number of
           customer sites and lines included in the project (and not on the theoretical
           competitive conditions at the level of single communes).
                (b) The Commission's assessment
   (93)    In previous decisions, the Commission considered that the market for
           wholesale leased lines irrespective of its precise product market definition is
           nationwide in scope.53
   (94)    With regard to terminating segments of wholesale leased lines and its
           potential sub-segments the RTR distinguishes in principle two broad sub-
           markets within Austria by grouping together on the one hand communes in
           Austria where A1 was found to hold significant market power and on the
           other hand communes where the market was found to be competitive with no
           suppliers having single or joint significant market power.54 The market
           investigation suggests that regional differences in competitive conditions may
           exist in Austria.55 Some respondents indicated that competitive conditions
           (including pricing) are better in urban areas like Vienna where there are more
           competitors present than in rural areas.56
   (95)    For terminating segments of leased lines and its potential sub-segments the
           Commission considers that in the present case the exact definition of the
           geographic market can be left open as the Transaction does not raise serious
           doubts as to its compatibility with the internal market even under the
           narrowest market definition that is on the level of single communes.
   (96)    As regards wholesale trunk segments of leased lines, (i.e. leased lines between
           the 28 trunk cities in which A1 installed the points of interconnection of its
53 Commission decision of 3 July 2012 in case M.6584 - Vodafone/Cable & Wireless, recital 31;
   Commission decision of 4 February 2016 in case M.7637 - Liberty Global/BASE Belgium, recital 148;
   Commission decision of 14 April 2014 in case M.7109 - Deutsche Telecom/GTS, recital 74.
54 RTR decision of 28 July 2014, M 1.5/2012-135; TKK Draft Decision of 16 April 2018, M 1.8/15-61.
55 Questionnaire Q6, reply to question B.B.1; Questionnaire to MNOs reply to question 36, 36.1, 37,
   37.1.
56 Questionnaire Q6, reply to question B.B.1.1.
                                                    21
 ---pagebreak---            telephony network)57 the Commission recalls that in previous cases the market
           for wholesale leased lines irrespective of its precise product market definition
           was found by the Commission to be national as described in paragraph (93)
           above.
   (97)    Past decisions of the RTR also suggest that the wholesale trunk market is
           national. In particular, in its latest regulatory review of this market (dating
           back in 2006, before the market was deregulated), the RTR found this market
           to be national in scope, which was not objected to by the Commission.58
   (98)    The market investigation carried out in the present case did not provide any
           indication in relation to wholesale trunk leased lines that would clearly point
           to a sub-national geographical dimension.
   (99)    The Commission, hence, considers that in the present case the definition of
           the geographic market for trunk segments of leased lines and its potential sub-
           segments is national in scope.
     3.1.5.3.    Affected market
   (100) Both Parties have activities in the area of wholesale leased lines. UPC
           achieved revenues of approximately EUR […] in 2017 from wholesale leased
           lines in Austria. It achieved approximately […] from wholesale trunk
           segments and approximately EUR […] from wholesale terminating segments
           of leased lines (including leased lines with traditional interfaces and Ethernet
           services with guaranteed bandwidth) in 2017. UPC has negligible activities
           regarding dark fibre; it currently supplies [0-5] dark fibre connections at
           wholesale level.59
   (101) TMA, which provides wholesale leased lines services on the basis of the
           backbone infrastructure of its mobile network, generated revenues of
           approximately EUR […] with wholesale leased lines services in Austria
           in 2017. According to TMA's estimates, approximately [60-80]% of its
           wholesale leased lines revenues originated from the lease of wholesale trunk
           segments and the rest [30-40]% from the lease of wholesale terminating
           segments (including leased lines with traditional interfaces and Ethernet
           services with guaranteed bandwidth).60
   (102) At the national level, the wholesale leased lines market and its potential
           product segments are not horizontally affected. In the overall wholesale leased
           lines market the Parties have a combined market share in terms of revenues of
           [0-5]% in Austria (UPC with [0-5]% and TMA with [0-5]%). As regards
           wholesale trunk segments the Parties have a combined share of [10-20]%
           (UPC with [0-5]% and TMA with [10-20]% in terms of revenues) in Austria.
           Regarding wholesale terminating segment the Parties have a combined share
57 These are the following 28 cities: Wien, Graz, Linz, Salzburg, Innsbruck, Klagenfurt, Villach, Wels,
   Sankt Pölten, Dornbirn, Steyr, Wiener Neustadt, Feldkirch, Baden, Amstetten, Mödling, Spittal an der
   Drau, Bruck an der Mur, Telfs, Lienz, Vöcklabruck, Ried im Innkreis, Eisenstadt, Korneuburg, Wörgl,
   Hollabrunn, Judenburg, Bruck an der Leitha.
58 See Commission decision of 28.8.2006 in Case AT/2006/0467.
59 Form CO, paragraph 417.
60 Form CO, paragraph 418.
                                                     22
 ---pagebreak---             of [0-5]% (UPC with [0-5]% and TMA with [0-5]% in terms of revenues) in
            Austria. In relation to terminating leased lines with bandwidth above 2 Mbps
            the Parties have a combined market share of [0-5]% (UPC: [0-5]%;
            TMA: [0-5]% in terms of revenues). In relation to terminating leased lines
            with bandwidth equal and below 2 Mbps, the Parties have a combined market
            shares of [0-5]% (UPC: [0-5]%; TMA: [0-5]% in terms of revenues). As
            regards terminating leased lines with bandwidth above 10 Mbps the Parties
            have a combined market share of [0-5]% (UPC: [0-5]%; TMA: [0-5]% in
            terms of revenues). In relation to terminating leased lines with bandwidth
            equal and below 10 Mbps the Parties have a combined market share of [0-5]%
            (UPC: [0-5]%; TMA: [0-5]% in terms of revenues). As regards passive
            infrastructure (dark fibre) the Parties have a combined market share of [0-5]%
            (UPC: [0-5]%; TMA: [0-5]% in terms of revenues). Regarding active
            infrastructure (traditional managed leased lines and Ethernet services with
            guaranteed bandwidth) the Parties have a combined market share of [0-5]%
            (UPC: [0-5]%; TMA: [0-5]% in terms of revenues).
   (103) At the commune level, based on data submitted by the RTR on the number of
            terminating segments leased per technology in each commune in 2015, and
            data submitted by the Parties on the terminating segments per technology they
            currently (2017Q4) lease, a single potentially horizontally affected market
            exists in the sub-segment of Ethernet services with guaranteed bandwidth in a
            single commune61 representing less than 0.1% of the Austrian population
            where each of the Parties leases […] of the […] Ethernet based leased lines in
            total (thus [20-30]%; TMA: [10-20]% and UPC:[10-20]%) of total Ethernet
            lines. When considering the sub-segment of Ethernet services with
            guaranteed bandwidth with bandwidth above 10Mbit/s) in this commune the
            combined market share increases to [40-50]% (TMA: [20-30]% and
            UPC: [20-30]%).
   (104) According to the Notifying Party, the Parties' activities on the wholesale
            market for leased lines are vertically related (as a necessary input to
            telecommunications service providers that do not own their own fixed
            network infrastructure or only own a fixed network that covers specific
            geographic locations) to (i) the Parties' activities on the downstream retail
            market for retail mobile telecommunications services, (ii) TMA's activities on
            the downstream wholesale market for access and call origination on mobile
            networks, (iii) UPC's activities on the downstream retail market for fixed
            telephony services, (iv) UPC's activities on the downstream retail market for
            business connectivity services, (v) DTAG's activities on the downstream
            worldwide wholesale market for global telecommunications services, and
            (vi) the Parties' activities on the downstream worldwide retail market for
            global telecommunications services. The Commission further notes that to the
61 That is the Commune of […] (TMA: [10-20]%; UPC: [10-20]% in the sub-segment of Ethernet
   services with guaranteed bandwidth); (TMA: [20-30]%; UPC: [20-30]% in the sub-segment of
   Ethernet services with guaranteed bandwidth with bandwidth above 10Mbit/s). No recent market data
   at the commune level was available from the RTR distinguishing leased lines with a bandwidth of less
   than or equal to 2 Mbit/s and those with a bandwidth of more than 2 Mbit/s. However, given that TMA
   does not have any leased line with a bandwidth of less than or equal to 2 Mbit/s and because
   terminating segments with a guaranteed bandwidth of less than or equal to 2 Mbit/s account for only
   roughly 10% of the terminating segments in Austria, the results would not significantly change when
   considering such a split.
                                                      23
 ---pagebreak---              extent that the retail internet access services market includes both mobile and
             fixed offerings it follows from point (i) that a vertical relationship exists also
             between the wholesale market for leased lines and the Parties' activities in the
             downstream retail internet access services market. Finally, a vertical
             relationship exists between the wholesale market for leased lines and UPC's
             activities in the wholesale broadband access services market for which leased
             lines can also be an input.
   (105) Based on these vertical relationships, the market for wholesale leased lines is
             vertically affected both at the national level as well as the level of communes.
   (106) At the national level, there is no plausible segmentation of the wholesale
             leased lines market where the Parties have a market share exceeding 30% (see
             paragraph (102)). However, this is still a vertically affected market on account
             of the Parties' combined shares on the downstream wholesale mobile access
             and call originations services market, which are [70-80]% in terms of revenue,
             in Austria (TMA: approx. [70-80]%; UPC: [0-5]%).
   (107) At the commune level, and based on recent (2017Q4) data submitted by the
             Parties and the 2015 RTR data, there exist 24 communes62 where, based on
             the overall leased lines market and on sub-segmentations thereof based on
             technology and bandwidth speed, the Parties' combined market shares, in
             terms of number of terminating segments, are above 30%. The wholesale
             leased lines market is therefore vertically affected in these 24 communes with
             respect to the vertical relationship to all the downstream markets described in
             paragraph (104) for which access to leased lines is potentially necessary for
             the provision of telecommunication services.
             3.1.6.     Wholesale internet connectivity services
   (108) Internet connectivity services allow corporate customers to be present on the
             internet by providing access to the entire routing table of the global internet or
             to a subset of the same, in which case the customer will need to cover the
             totality of its needs by means of a multi-homing strategy. Connectivity to the
             internet can be achieved (i) by the purchasing of transit services, (ii) by means
             of peering with selected networks, or (iii) by means of a combination of the
             two. Entities which do not connect directly to the internet may also call upon
             hosting providers, who aggregate hosting needs and procure in turn internet
             connectivity for their customers.63 Whilst global coverage is a primary
             requirement, more specific performance criteria also enter into a customer's
62 Based on data of the RTR in combination with data provided by the Parties, in terms of numbers of
   leased lines the merged entity would hold a market share equal or larger than 30% (i) in a total of
   13 communes in the sub-segment of Ethernet services with guaranteed bandwidth: […]; (ii) in a total
   of 4 communes in the sub-segment of Ethernet services with guaranteed bandwidth with bandwidth
   below 10Mbit/s: […]; (iii) in a total of 13 communes in the sub-segment of Ethernet services with
   guaranteed bandwidth with bandwidth above 10Mbit/s: […]; (iv) in a total of 3 communes in the sub-
   segment of Dark Fibre: […]; and (iv) in a total of 11 communes in the overall leased lines market, not
   segmented per technology: […]. For the reasons explained in footnote 61, no analysis was made for a
   split of 2 Mbit/s because of the low number of terminating segments of the Parties in Austria the
   results would not materially differ.
63 Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV,
   recital 260; see also Commission decision of 14 April 2014 in case M.7109 - Deutsche Telecom/GTS,
   recital 19.
                                                       24
 ---pagebreak---             internet connectivity strategy such as latency, reliability, speed and
            minimization of traffic-related costs.
   (109) Transit is a service whereby a customer pays for access to all or a large part of
            the internet, with performance characteristics which may vary according to
            the destination of the traffic. Peering, on the other hand, whether settlement-
            free or paid, provides access to individual networks but no further onward
            connectivity. Providers of transit services will in their turn use a combination
            of peering relationships and paid commercial relationships with other transit
            providers in order to provide global internet coverage. A transit provider
            which does not purchase transit services from other providers because it is
            able to reach the entire internet merely by means of peering relationships is
            referred to as "Tier 1".
   (110) Operators of retail internet access networks, sometimes called "eyeball
            networks", procure internet connectivity in the same way as any other
            corporate customer, and may themselves also provide wholesale internet
            connectivity services. Certain internet access providers ("IAPs") offer transit
            services, whereas many offer direct connectivity to their own network and
            subscribers. To the extent that the IAP purchases transit services, these may
            also be used to reach its users. The end users of a given IAP can also be
            reached by means of relationships with those networks which peer with the
            IAP in question.
      3.1.6.1.    Product market definition
   (111) In previous Commission decisions, the Commission considered a market for
            wholesale internet connectivity services. In addition, the Commission
            considered a possible segmentation between peering and transit, but
            ultimately left the exact product market definition open.64 In MCI/Verizon the
            Commission identified a separate market for Tier 1 transit providers. 65
   (112) In line with the Notifying Party's view, in the present case, the exact definition
            of the product market can be left open as the Transaction does not raise
            serious doubts as to its compatibility with the internal market under any
            plausible market definition.
      3.1.6.2.    Geographic market definition
   (113) The Commission has in the past considered that markets for internet connectivity
            were global in scope but ultimately left the exact market definition open.66
   (114) The Notifying Party submits that the market for internet connectivity is
            worldwide in scope.67
64 Commission decisions of 7 October 2015 in Case M.3752 - MCI/Verizon; and of 14 April 2014 in case
   M.7109 – Deutsche Telekom / GTS, recital 21.
65 See Commission decision of 7 October 2015 in Case M.3752 - MCI/Verizon, recital 24.
66 See Commission decisions of 7 October 2015 in Case M.3752 - MCI/Verizon; and of 14 April 2014 in
   Case M.7109 – Deutsche Telekom / GTS, recital 24.
67 According to the Notifying Party, both the demand and the supply side for internet connectivity
   services are fundamentally global: Content provider and commercial internet service providers want to
                                                      25
 ---pagebreak---     (115) In the present case, the precise geographic market definition can be left open,
             since the Transaction does not raise serious doubts as to its compatibility with
             the internal market regardless of the market definition considered.
       3.1.6.3.     Affected markets
    (116) The market for wholesale internet connectivity services and its potential sub-
             markets are not horizontally affected. Both Parties have only minor activities
             on this market. DTAG achieved worldwide revenues of approximately
             EUR […] from wholesale internet connectivity services in 2017 which
             corresponds to an estimated market share of approximately [0-5]%. UPC has
             only very limited activities in the area of wholesale internet connectivity
             services. It achieved revenues of approximately EUR […] from wholesale
             internet connectivity services in 2017 which corresponds to an estimated
             market share of below [0-5]%. Based on the Parties' estimates the Parties'
             combined market share in each potential segment of worldwide wholesale
             internet connectivity services would be in any event below 20%.
3.2.     Mobile services
             3.2.1.      Retail mobile telecommunications services
     (117) Mobile telecommunications services to end customers include services for
             national and international voice calls68, SMS (including MMS and other
             messages), mobile internet data services and retail international roaming
             services.
       3.2.1.1.     Product market definition
    (118) The Notifying Party submits that there is a single retail market for mobile
             telecommunications services and that "over-the-top" ("OTT") services should
             be considered as part of the retail market for mobile telecommunications
             services. The Notifying Party also considers that it is not appropriate to
             distinguish between residential and business customers, notably because of a
             high level of supply-side substitutability between the services provided to
             business and private customers.
    (119) The Notifying Party also submits that it is not appropriate to further segment
             the retail mobile telecommunications services market on the basis either of
             post-paid and pre-paid customers, or of network technology. A company
             offering only pre-paid or post-paid services could start offering the other type
             of services without incurring significant additional cost, as the network used
             for both services is the same. Moreover, all MNOs active in Austria could
             offer 4G services in parallel with 2G and 3G services at no extra cost.
    reach as many end customers (eyeballs) as they can. On the other hand, telecommunications operators
    such as DTAG need connectivity to all IP addresses in the public domain in order to satisfy their end
    customers' demand. This requires enabling any-to-any connections across the Internet that virtually all
    network providers may offer anywhere. Thus, numerous global carriers such as AT&T, Verizon, NTT,
    Cogent, Level 3, Telefónica and DTAG provide global internet connectivity services in various
    locations (e.g. internet exchanges) all over the world.
68  The term international voice calls is used for calls that are made by a domestic user when in its home
    country, but that terminate at destinations which are abroad such as if the receiving number is a foreign
    one.
                                                         26
 ---pagebreak---    (120) The Commission considers that, in line with its previous practice,69 the
             product market for retail mobile telecommunications includes mobile services
             such as voice, SMS/MMS, data and international roaming services.
   (121) The Commission has also considered whether the product market can be
             further segmented between residential and business customers. The market
             investigation in the present case is not conclusive in this regard.70
   (122) As for the inclusion of OTT services in the relevant market, the majority of
             respondents consider that OTT services are not part of the market for the
             provision of mobile telecommunications services.71
   (123) For the purpose of the present decision, the exact product market definition in
             relation to the provision of retail mobile telecommunications services can be
             left open as the Transaction does not raise serious doubts as to its
             compatibility with the internal market under any possible market definition.
      3.2.1.2.    Geographic market definition
   (124) The Notifying Party considers that the market should be considered national
             in scope in line with previous Commission's decisions.
   (125) The Commission has consistently found that the markets for retail mobile
             services provided to end consumers are national in scope.72
   (126) The majority of respondents to the market investigation in the present case
             indicated that the market for the provision of retail mobile
             telecommunications services is national in scope.73 Licenses are granted on a
             nation-wide basis and the competitive conditions existing in each Member
             State are still different.
   (127) The Commission considers the retail market for mobile telecommunications
             services to be national in scope.
      3.2.1.3.    Affected markets
   (128) The retail market for mobile telecommunications services in Austria and its
             potential segments for private and for business customers are horizontally
             affected. In the overall retail market for mobile telecommunications sector
             (excluding OTT services), the Parties have a combined share of [20-30]% in
             Austria (UPC with [0-5]% and TMA with [20-30]% in terms of subscribers).
             On the potential segment for residential customers the Parties have a
             combined share of [20-30]% (UPC with [0-5]% and TMA with [20-30]% in
69 For example Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G
   Austria/Orange Austria; Commission decision of 11 May 2016, in case M.7612 - Hutchison 3G UK /
   Telefónica, Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch
   JV.
70 Questionnaire Q2, reply to question C.A.2.
71 Questionnaire Q2, reply to question C.A.4.
72 Commission decisions of 26 April 2006 in case COMP/M.3916 – T-Mobile Austria/Tele.ring,
   recital 19; Commission decision of 20 September 2013 in case COMP/M.6990 – Vodafone/Kabel
   Deutschland, recitals 218-219.
73 Questionnaire Q2, reply to question C.B.1.
                                                   27
 ---pagebreak---             terms of subscribers) and on the potential segment for business customers the
            Parties have a combined share of [20-30]% (UPC with [0-5]% and TMA with
            [20-30]% in terms of revenues) in Austria.74
   (129) The retail market for mobile telecommunications services in Austria and its
            potential segments for private and for business customers are vertically
            affected insofar as they are related to the upstream wholesale market for
            mobile access and call origination on which TMA has a market share of
            approximately [70-80]% in terms of subscribers and [80-90]% in terms of
            revenues. In addition, the retail market for mobile telecommunications
            services in Austria and its potential sub-segments for private and for business
            customers are also (technically) vertically affected due to a vertical link with
            (i) the upstream wholesale markets for international roaming services in other
            Member States in which DTAG offers international roaming services
            (provided that DTAG has a market share of more than 30% on such national
            wholesale market for international roaming services), and (ii) the upstream
            markets for call termination services on mobile and fixed networks on which
            TMA, UPC and DTAG (outside Austria) are active. Finally, the Parties'
            activities on the retail market for mobile telecommunications services in
            Austria are vertically affected insofar as there is a vertical link to the Parties'
            activities on the wholesale market for leased lines to the extent that this
            market is defined locally and the combined market shares of the Parties are
            equal or more than 30% in the respective commune75.
            3.2.2.    Wholesale access and call origination services on mobile networks
   (130) MNOs, such as TMA, provide wholesale access and call origination services,
            which enable operators without their own mobile network, MVNOs, to
            provide retail mobile services to end customers. There is a wide variety of
            MVNOs, ranging from MVNOs that have a fully operational proprietary core
            network and that purchase access to the radio access network of MNOs on the
            one end, to pure re-sellers of a MNO services on the other end.
      3.2.2.1.    Product market definition
   (131) The Notifying Party submits that there is an overall wholesale market for
            access and call origination on mobile networks, without any further
            segmentation by type of service (i.e. access and call origination) or by type of
            MVNO (i.e. full MVNOs, light MVNOs or branded resellers). In any case, the
            Notifying Party submits that the exact product market definition in this case
            can be left open.
   (132) The Commission has previously defined a single wholesale market including
            both access and call origination on mobile networks without segmenting the
            market by type of services on mobile networks, since MNOs generally supply
74 The market data include also mobile data-only services, which may be also included in the possible
   market for home internet access service. The issue of whether those services should be included in the
   mobile telecommunications market does not have a material impact on the assessment, considering
   that with any market definition UPC's market share would be very limited.
75 See footnote 62 above.
                                                      28
 ---pagebreak---              these services jointly to MVNOs and both services are essential to MVNOs.76
             The Commission sees no reason to depart from this approach in the present
             case.
   (133) The Commission has also considered that branded resellers should not be
             regarded as buyers of wholesale access to a network as they merely resell SIM
             cards and services of an MNO under a different brand.77 For the purpose of
             the present decision, the question whether branded resellers should be
             included as buyers of wholesale access to a network can be left open as the
             Transaction does not raise serious doubts as to its compatibility with the
             internal market under any possible market definition.
      3.2.2.2.    Geographic market definition
   (134) In line with previous Commission decisions, the Notifying Party considers
             that the relevant geographic scope of the market for wholesale access and call
             origination on mobile networks is national, limited to the territory of
             Austria.78
   (135) The Commission considers that the relevant geographic market is national.
      3.2.2.3.    Affected markets
   (136) The wholesale market for access and call origination services on mobile
             networks is not horizontally affected since only TMA is active on this market.
             However, since TMA's market share on the wholesale market for access and
             call origination services on mobile networks is approximately [70-80]% in
             terms of subscribers and approximately [80-90]% in terms of revenues and
             UPC is active on the downstream retail mobile market as MVNO, this market
             is vertically affected.
             3.2.3.    Wholesale mobile call termination services
   (137) When someone calls a mobile phone connected to a different network that call
             is terminated on the network of the receiving mobile phone. In order for a
             retail mobile service provider to be able to provide calls to a different
             network, it must purchase wholesale terminations services on these other
             networks. This is done through interconnection agreements between the
             various network operators.
      3.2.3.1.    Product market definition
   (138) The Notifying Party submits that each individual mobile network constitutes a
             separate market for call termination because the operator transmitting the call
             can reach the intended recipient only through the operator of the network to
             which the recipient is connected. There is thus no substitute for call
             termination on each individual network.
76 Commission decision of 1 September 2016 in case M.7758 – Hutchison 3G Italy/Wind/ JV,
   recitals 170-175.
77 Commission decision of 1 September 2016 in case M.7758 – Hutchison 3G Italy/Wind/ JV, recital 174.
78 Commission decisions of 11 May 2016 in case M.7612 – Hutchison 3G UK/Telefónica UK and of 12
   December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria.
                                                   29
 ---pagebreak---    (139) The Notifying Party submits that also full MVNOs (such as UPC) provide
             wholesale call termination services given that full MVNOs own certain parts
             of the mobile core network.79
   (140) The Commission considers that there is no substitute for call termination on
             each individual network since the operator transmitting the outgoing call can
             reach the intended recipient only through the operator of the network to which
             the recipient is connected.
   (141) The Commission concludes, in line with previous decisions, that termination
             on each individual mobile network constitutes a separate product market.80 As
             for the question whether full MVNOs also provide wholesale call termination
             services, for the purpose of the present decision it can be left open as the
             Transaction does not raise serious doubts as to its compatibility with the
             internal market under any possible market definition.
      3.2.3.2.    Geographic market definition
   (142) In line with previous Commission decisions, the Notifying Party submits that
             the market for mobile call termination services should be considered national
             in scope.
   (143) The Commission concludes, in line with previous decisions81, that the market
             for mobile call termination services is national in scope.
      3.2.3.3.    Affected markets
   (144) The wholesale market for mobile call termination services is horizontally not
             affected since each network constitutes a separate relevant market. However,
             since each of the Parties has a 100% market share on the wholesale market for
             mobile call termination services on its own mobile networks and each of the
             Parties is active in the downstream retail markets (mobile and fixed
             telecommunications services), the wholesale markets for mobile call
             termination services where the Parties are active, in Austria and in other
             Member States (for TMA/DTAG)82, are vertically affected.
             3.2.4.   Wholesale market for international roaming
   (145) For a provider of retail mobile services to be able to provide its end customers
             with telecommunication services outside their home countries, it enters into
79 Commission decision of 4 February 2016 in case M.7637 – Liberty Global/BASE Belgium. The
   Notifying Party also mentions that the Austrian Telekom-Control Kommission ("TKK") found in a
   decision issued in 2015 that UPC, through its subsidiary UPC Telekabel Wien GmbH, provides call
   termination services on its mobile core network. The TKK identified a separate relevant market for
   wholesale call termination services on UPC's mobile core network and imposed various regulatory
   obligations regarding price and quality of the service on UPC Telekabel Wien GmbH (TKK Decision
   of 15 June 2015, M 1/14-50, as amended by TKK Decision of 21 December 2015, M 1.1/15-51).
80 Commission decision of 1 September 2016 in case M.7758, Hutchison 3G Italy / Wind / JV,
   recital 192.
81 Commission decision of 1 September 2016 in case M.7758, Hutchison 3G Italy / Wind / JV,
   recital 196.
82 Notably Croatia, the Czech Republic, Germany, Greece, Hungary, the Netherlands, Poland, Romania
   and Slovakia.
                                                       30
 ---pagebreak---              wholesale roaming agreements with providers of wholesale international
             roaming on other national markets. Roaming consists of both terminating calls
             and originating calls.
   (146) Retail mobile service providers sometimes have preferred roaming partners in
             certain countries. This means that the preferred partners' network will be used
             in the first instance when it has coverage and the mobile user has not
             manually chosen a different network. A home network will normally have
             multiple agreements with operators in a particular county in order to provide
             optimal coverage.
      3.2.4.1.    Product market definition
   (147) In line with previous Commission decisions, the Notifying Party submits that
             there is a relevant product market for wholesale international roaming
             services.
   (148) Wholesale international roaming services are regulated.83 Mobile network
             operators must meet all reasonable requests for wholesale roaming access
             under a reference offer and wholesale charges for the making of regulated
             roaming services (voice, message and data roaming) are capped.
   (149) The Commission concludes, in line with previous decisions, that the market
             for international roaming comprising both terminating calls and originating
             calls constitutes a separate product market. 84
      3.2.4.2.    Geographic market definition
   (150) In line with previous Commission decisions, the Notifying Party submits that
             the relevant geographic scope of the market for the supply of wholesale
             international roaming services is national.
   (151) In previous decisions, the Commission found that the wholesale market for
             international roaming is national in scope, given that wholesale international
             agreements can be concluded only with companies which have an operating
             licence in the relevant country and the licences to provide mobile services are
             restricted to a national territory.85
   (152) The Commission concludes that the markets for international roaming are
             national.
83 Regulation (EU) No 531/2012 of the European Parliament and of the Council of 13 June 2012 on
   roaming on public mobile communications network within the Union (OJ 2012 L 172/10), last
   amended by Regulation (EU) 2017/920 of the European Parliament and of the Council of
   17 May 2017 (OJ 2017 L 147/1).
84 Commission decision of 1 September 2016 in case M.7758, Hutchison 3G Italy / Wind / JV,
   recitals 182-184.
85 Commission decision of 28 May 2014 in case M. 6992 – H3G/Telefónica Ireland, recital 151;
   Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria,
   recital 78; Commission decision of 1 March 2010 in case M.5650 – T-Mobile/Orange, recital 35;
   Commission decision of 20 August 2007 in case M.4748 – T-Mobile/Orange Netherlands, recital 27;
   Commission decision of 26 April 2006 in case M.3916 – T-Mobile Austria/Tele.ring, recital 28;
   Commission decision of 20 September 2013 in case M. 6990 – Vodafone/Kabel Deutschland,
   recital 252.
                                                   31
 ---pagebreak---        3.2.4.3.   Affected markets
    (153) The wholesale market for international roaming is horizontally not affected
            since UPC is not active in this market. However, since DTAG is active in the
            wholesale market for international roaming in Member States other than
            Austria86 and UPC is active in the downstream retail market for the provision
            of mobile telecommunications services in Austria, the wholesale markets for
            international roaming in other Member States where DTAG is active and has
            a market share of more than 30%, are vertically affected.
3.3.    Fixed telephony and related services
             3.3.1.    Retail market for the supply of fixed telephony services
     (154) On the market for retail supply of fixed telephony services, operators provide
            fixed voice services to end-customers. In line with previous Commission
            decisions, fixed voice services include the provision of connection services or
            access at a fixed location or address to the public telephone network for the
            purpose of making and receiving calls and related services.87
       3.3.1.1.   Product market definition
    (155) The Notifying Party submits that there is an overall retail fixed telephony
            services market, which includes managed VoIP services, in line with recent
            Commission decisions.
    (156) In previous decisions, the Commission considered that a distinction between
            local / national and international calls as well as between residential and
            business customers may not be relevant.88 The Commission did not take a
            definitive view with regard to these possible further segmentations of the
            retail fixed voice services market. The Commission concluded however that
            traditional fixed voice services and managed VoIP services are
            interchangeable within a single market for the retail supply of fixed voice
            services.89
    (157) For the purpose of the present decision, the exact product market definition
            can be left open as the Transaction does not raise serious doubts as to its
            compatibility with the internal market under any possible market definition.
       3.3.1.2.   Geographic market definition
    (158) The Notifying Party considers the market to be national in scope, based on the
            Commission's precedents.
    (159) The Commission considers the market for the supply of fixed telephony
            service to be national in scope.
86  Notably Croatia, the Czech Republic, Germany, Greece, Hungary, the Netherlands, Poland, Romania
    and Slovakia.
87  Commission decision in case M.6584 – Vodafone/Cable&Wireless, recital 11.
88  Commission decision in case M.5532 – Carphone Warehouse/Tiscali UK, recital 37.
89  Commission decision in case M.6990 – Vodafone/Kabel Deutschland, recital 130-131.
                                                   32
 ---pagebreak---       3.3.1.3.     Affected markets
   (160) The market for retail supply of fixed telephony services is horizontally not
             affected since only UPC is active on this market, with a market share of
             [10-20]% in revenue and [10-20]% in subscribers.90 However, since TMA has
             a 100% market share on the upstream wholesale market for mobile call
             termination services on its own mobile network in Austria and DTAG has a
             100% market share on the upstream wholesale markets for mobile and fixed
             call termination services in other Member States, the market for retail supply
             of fixed telephony services in Austria is vertically affected. In addition, the
             market for retail supply of fixed telephony services in Austria is vertically
             affected also insofar as there is a vertical link to the wholesale leased lines
             market if defined on the level of communes, in 24 communes where TMA is
             active and the Parties combined market share is equal or larger than 30%.91
             3.3.2.    Wholesale market for fixed call termination services
   (161) Call termination is the service provided by a network operator on the supply
             side to other network operators on the demand side, whereby a call originating
             in a demand side operator's network is delivered to a user in the supply side
             operator's network. This service is required by every originating operator, as it
             is necessary for its customers to be able to communicate with the customers of
             other networks. Call termination is therefore a wholesale service that is resold
             or used as an input for the provision of downstream retail telephony services.
      3.3.2.1.     Product market definition
   (162) In line with previous Commission decisions, the Notifying Party submits that
             the relevant product market is the wholesale market for call termination on
             each individual fixed network.
   (163) The Commission considers that there is no substitute for call termination on
             each individual network since the operator transmitting the outgoing call can
             reach the intended recipient only through the operator of the network to which
             the recipient is connected.
   (164) The Commission considers that, as regards wholesale call termination
             services, termination on each individual fixed network constitutes a separate
             product market.
90 TMA offers a product referred to as "All in Communication Mobile" ("AIC Mobile") to business
   customers. This product is marketed as "mobile fixed network" or "fixed to take away" but is provided
   via TMA's mobile network. The AIC Mobile service requires a router with an integrated SIM card
   which technically serves as a fixed termination point and to which a geographic number can be
   allocated. The router can be connected to a telephone. In particular, the AIC Mobile service enables
   business customers to receive calls on their mobile device also when they receive calls to their fixed
   (geographic) number. The Notifying Party submits that the AIC Mobile service does not qualify as
   fixed telephony service as it is provided via TMA's mobile network. In any case, the hypothetic market
   share of TMA would be below [0-5]%.
91 See footnote 62 above.
                                                       33
 ---pagebreak---       3.3.2.2.     Geographic market definition
   (165) In line with previous Commission decisions, the Notifying Party considers the
             relevant geographic market for call termination services on fixed networks to
             be national in scope. This is primarily due to regulatory barriers as the
             geographic scope of licenses is in principle limited to areas which do not
             extend beyond the borders of a Member State.
   (166) In previous decisions, the Commission considered the geographic market to
             be national in scope.92
   (167) The Commission concludes that the wholesale market for fixed call
             termination services is national in scope.
      3.3.2.3. Affected markets
   (168) The wholesale market for fixed call termination services is horizontally not
             affected since each network constitutes a separate relevant market. However,
             since UPC has a 100% market share on the wholesale market for fixed call
             termination services on its own fixed network in Austria and TMA is active in
             the downstream retail mobile market, the wholesale market for fixed call
             termination services in Austria is vertically affected.
             3.3.3.   Wholesale market for end-to-end calls
   (169) Fixed network operators package origination and termination services and
             provide communication providers without their own networks with a package
             which they can use to offer retail fixed voice services to consumers without
             the need to invest in network infrastructure.
      3.3.3.1.     Product market definition
   (170) In previous decisions, the Commission considered the existence of a separate
             wholesale market for end-to-end calls, which is separate from the wholesale
             markets for call origination, transit and termination, but left the exact market
             definition open.93
   (171) The Notifying Party submits that the precise product market definition can be
             left open as the Transaction does not give rise to competition concerns under
             any alternative market definition.
   (172) In the present case, the exact definition of the product market can be left open,
             notably whether the wholesale market for end-to-end calls is a separate
             market from call origination and call termination and transit, as the
             Transaction does not raise serious doubts as to its compatibility with the
             internal market under any possible market definition.
92 Commission decision of 20 September 2013 in case M. 6990 – Vodafone/Kabel Deutschland,
   recital 121.
93 Commission decision of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless, recital 20.
                                                   34
 ---pagebreak---      3.3.3.2.    Geographic market definition
   (173) In line with previous decisional practice of the Commission, the Notifying
            Party considers that the geographic scope of the wholesale market for end-to-
            end calls is national.94
   (174) The Commission considers for the purpose of the present decision that the
            geographic scope of the wholesale market for end-to-end calls services is
            national.
     3.3.3.3.    Affected markets
   (175) The wholesale market for end-to-end calls in Austria is horizontally not
            affected since only UPC is active in this market. However, since TMA and
            DTAG have a 100% market share on the upstream wholesale markets for
            fixed and mobile call termination services on their respective networks in
            Austria and in other Member States where DTAG is active, the wholesale
            market for end-to-end calls in Austria is vertically affected.
            3.3.4.    Global telecommunications services
   (176) Global telecommunications services (GTS) are telecommunications services
            linking a number of different customer locations, generally in at least two
            different continents and across a larger number of different countries. They
            are generally purchased by multinational companies with presence in many
            countries and a number of continents. The services provided are enhanced
            services to provide customers with package solutions including virtual private
            networks ("VPN") for both voice and data services and advanced
            functionalities.95
   (177) Global telecommunications services are supplied at retail level and wholesale
            level. In the latter case, they can also be referred to as "international carrier
            services". Wholesale global telecommunications services comprise (i) the
            lease of transmission capacity and (ii) the provision of related services to third
            party telecommunications traffic carriers and service providers and are an
            input for retail global telecommunications services.
     3.3.4.1.    Product market definition
   (178) The Notifying Party submits that the exact market definition may be left open,
            as the Transaction does not raise any competitive concern under any plausible
            market definition due to the Parties' negligible activities on that market.
   (179) In Vodafone/Cable&Wireless,96 the Commission considered a possible
            distinction between retail GTS and international carrier services but ultimately
            left the exact product market definition open. While the Commission
            considered a possible distinction between the lease of transmission capacity
94 Commission decision of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless, recital 21.
95 Commission decisions of 28 June 2000 in case M.1741 – Verizon / MCI, recital 70; and of
   14 April 2014 in case M.7109 – Deutsche Telekom / GTS, recital 10.
96 Commission Decision of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless, recital 33.
                                                   35
 ---pagebreak---           and the provision of services to third-party carriers, it ultimately left open the
          exact product market definition. 97
   (180) In the present case, the exact definition of the product market can be left open,
          as the Transaction does not raise serious doubts as to its compatibility with the
          internal market under any plausible market definition.
     3.3.4.2.  Geographic market definition
   (181) The Notifying Party submits that the exact definition of the geographic market
          can be left open, as the Transaction does not raise any competitive concern
          under any plausible market definition.
   (182) In past decisions, the Commission has considered both the wholesale and
          retail global telecommunications services markets to be worldwide in scope.98
          The Commission considered that from a demand-side perspective, retail
          global telecommunications services customers are mainly internationally
          active multinational companies. It also considered that most suppliers have an
          international portfolio of customers and are in a position of rendering global
          telecommunications services on a worldwide basis.99
   (183) While the Commission's past decisional practice indicates that global
          telecommunication services are worldwide in scope, in the present case, the
          exact definition of the geographic market can be left open, as the Transaction
          does not raise serious doubts as to its compatibility with the internal market
          under any plausible market definition.
     3.3.4.3.  Affected market
   (184) The global telecommunications services market is horizontally not affected,
          either at wholesale or at retail level. However, the global telecommunications
          services market – either on wholesale or on retail level – is vertically affected
          insofar as there is a vertical link to the Parties' activities on the upstream
          wholesale market for leased lines if defined on the level of communes.
          Wholesale global telecommunication services
   (185) There is no horizontal overlap between the Parties on wholesale global
          telecommunications services. UPC is not active in the area of wholesale
          global telecommunications services. DTAG provides wholesale global
          telecommunications services across national borders on a global scale to other
          international carriers and the Notifying Party estimates based on the Deutsche
          Telekom / GTS decision that DTAG has a market share of approximately
          [0-5]% worldwide and around [5-10]% on a hypothetical EEA-wide market.
   (186) The global telecommunications services market on wholesale level is
          vertically affected insofar as there is a vertical link to the Parties' activities on
          the upstream wholesale market for leased lines if defined on the level of
97 Commission Decision of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless, recital 33.
98 Commission Decision of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless, recital 34.
99 Commission Decision of 3 July 2012 in case M.6584 – Vodafone/Cable & Wireless, recital 19 et seq.
                                                   36
 ---pagebreak---               communes, in 24 communes where the Parties' combined market share is
              equal or larger than 30%.100
              Retail global telecommunication services
     (187) The retail market for global telecommunications services is horizontally not
              affected. Both parties have only minor activities in this market. In Deutsche
              Telekom/GTS, the Commission noted that in 2012 the combined market share
              of DTAG and GTS on the retail market for global telecommunications
              services was approximately [0-5]% worldwide and approximately [5-10]% on
              a hypothetical EEA-wide market. UPC occasionally offers, to a very limited
              extent, Austrian customers which also have locations abroad
              telecommunications services linking their Austrian and foreign locations.
              UPC can only offer such services [confidential information on how UPC
              offers its services]. In 2017, UPC achieved revenues of approximately
              EUR […] from this type of services which would translate into a market share
              of below [0-5]%
     (188) The retail market for global telecommunications services is vertically affected
              only in so far as there is a vertical link to the Parties' activities on the upstream
              wholesale market for leased lines if defined at the level of communes, in
              24 communes where the Parties' combined market share are equal or larger
              than 30%.101
3.4.     Multiple-play bundles
     (189) The term "multiple-play" relates to offers comprising two or more of the
              following services provided to retail consumers: mobile telecommunications
              services, fixed telephony, fixed internet access and TV services. Multiple-play
              comprising two, three or four of these services is referred to as double play,
              triple play and quadruple play respectively.102
              3.4.1.    Product market definition
     (190) The Commission has analysed potential multiple-play markets in earlier cases,
              in light of some specific features and conditions of the national market
              involved.103 The Notifying Party submits that those conditions are not
              fulfilled in Austria (inter alia pointing to a study that shows that only 2% of
              all consumers of fixed broadband services have a fixed-mobile bundle) and
              that in any event it would not be necessary for the Commission to make an
              ultimate determination, since the Transaction would not raise concerns even
              based on this market definition.
100 See footnote 62 above.
101 See footnote 62 above.
102 Multiple play comprising any combination of two or more of fixed services without a mobile
    component is referred to as "fixed multiple play". Multiple play comprising one or more of these fixed
    services in combination with a mobile component (including either voice or data, or both together) is
    referred to as "fixed-mobile multiple play". Fixed-mobile multiple play may involve a single mobile
    subscription (SIM card) or more than one mobile subscription combined with the fixed subscription.
103 Commission decisions of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV,
    recitals 77- 108, and of 19 May 2005 in case M.7421 – Orange/Jazztel, recitals 72-86.
                                                        37
 ---pagebreak---     (191) The results of the market investigation seem to confirm the limited relevance
             of bundled offers in Austria, especially fixed-mobile bundles. The majority of
             respondents have stated that the ability to also provide fixed
             telecommunication services (fixed internet services, fixed telephony) is
             currently not essential in order for mobile providers to compete effectively on
             the mobile market in Austria.104 The response is less clear with regard to TV
             services, which according to some respondents are relevant in order to
             differentiate the mobile offers and to reduce the churn rate. 105
    (192) In any event, for the purpose of the present decision, the question whether the
             different types of multiple play constitute separate relevant markets from each
             of the markets of their components can be left open, as the Transaction does
             not raise serious doubts as to its compatibility with the internal market under
             either product market definition.
              3.4.2.    Geographic market definition
    (193) The Notifying Party submits that the geographic scope of any potential retail
             market for multiple-play services is national and corresponds to the territory
             of Austria, since the components of the multiple-play bundles are offered
             individually at national level and the bundling of the services would not
             change the geographic scope of the components.
    (194) In previous decisions, the Commission considered that the geographic scope
             of any possible retail market for multiple-play could be national since the
             components of the multiple play offers are offered individually at national
             level and the bundling of the services would not change the geographic scope
             of the components. It nevertheless ultimately left the question of the exact
             geographic delineation of the possible multiple-play market open.106 In
             Liberty Global/Ziggo and in Vodafone/Liberty Global/Dutch JV, the
             Commission considered the geographic scope of the possible market for
             multiple-play products to be national.107
    (195) For the purpose of the present decision, the exact geographic market
             definition can be left open as the Transaction does not raise serious doubts as
             to its compatibility with the internal market under any possible market
             definition.
              3.4.3.    Affected markets
    (196) TMA is not active in the provision of multiple-play offers that include retail
             fixed services.108
104 Questionnaire Q2, reply to question C.C.1.
105 Questionnaire Q2, reply to question C.C.2.
106 Commission decision of 19 May 2005 in case M.7421 – Orange/Jazztel, recitals 87-90.
107 Commission decisions of 10 October 2014 in Case M.7000 - Liberty Global/Ziggo, recitals 152-153
    and of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV, recitals 110-112.
108 TMA offers existing customers of a mobile subscription a discount on their additional (second, third,
    etc.) mobile subscriptions with TMA. This means that a customer of a combined mobile voice-and-
    data subscription can purchase another subscription for mobile-data only services, at a discounted
    price. Should the retail market for internet access services include both fixed and mobile connections,
    this discounted offer could be considered a "double play" offer, mobile-(mobile) internet. In any case,
                                                         38
 ---pagebreak---     (197) UPC offers fixed dual and triple play services in Austria. Its main bundled
             product offerings are (i) dual play services including fixed internet and fixed
             telephony, and (ii) triple play services including fixed internet, TV and fixed
             telephony. In addition, it offers (iii) dual play services including fixed internet
             and TV, and (iv) dual play services including TV and fixed telephony.
             According to the Parties' estimates, UPC would have a market share of
             [10-20]% as regards dual play offers including fixed Internet and TV,
             [10-20]% as regards dual play offers including fixed internet and fixed
             telephony, and [50-60]% regarding fixed triple play offers (Internet, telephony
             and TV).
    (198) UPC has also a marginal number of fixed/mobile customers. Notably from
             October 2015 to November 2017, UPC offered existing customers of its fixed
             telecommunications services a discount on its mobile products. Then in
             November 2017, UPC launched a new product offering on the basis of which
             it offers new customers a discount on a mobile subscription if they purchase
             UPC's fixed telephony, fixed internet and cable TV services at the same time.
             On the basis of these two offers, at present the number of UPC fixed/mobile
             customers is extremely limited.
    (199) Since TMA essentially does not offer fixed/fixed or fixed/mobile bundles, this
             potential market is not horizontally affected. However, both Parties are active
             in at least some of the product components of multiple-play bundles and UPC
             has a market share of more than 30% in the possible market of fixed triple
             play offers. The Commission will therefore assess whether the Transaction
             may have a significant competitive impact in the potential multiple-play
             market in Austria through conglomerate effects.109
4.       COMPETITIVE ASSESSMENT
    (200) The Transaction gives rise to the following horizontally affected markets for
             (i) home retail internet access services including both fixed and mobile
             technologies in Austria; for (ii) retail mobile telecommunications services in
             Austria and for (iii) the wholesale market for leased lines in one commune in
             Austria, if the relevant geographic market was defined at the commune level.
    (201) In addition, the Transaction gives rise to a number of vertically affected
             markets in Austria as set out in Table 1 in Section 4.3. below.
    (202) Finally, since both Parties offer communications services that can be included
             in multiple-play offers, the Commission will assess whether the Transaction
             could potentially give rise to conglomerate concerns.
    considering that UPC has a marginal number of fixed mobile bundles and in particular of fixed
    internet/mobile bundles, the question can be left open as the horizontal overlap would be irrelevant.
109 It could be argued that there is a vertical link between (i) wholesale leased lines (upstream) and
    multiple play bundles (downstream) as well as (ii) wholesale access and call origination services on
    mobile networks (upstream) and multiple play bundles (downstream). For the reasons set out in
    sections 3.1.5.3 and 3.2.2.3, the potential markets for multiple play bundles would then be vertically
    affected. However, the Transaction does not raise serious doubts as to its compatibility with the
    internal market with regard the potential markets for multiple play bundles, for essentially the same
    reasons as those provided in sections 4.3.1 and 4.3.2 respectively. Therefore, the potential market for
    multiple play bundles is not explicitly mentioned in section 4.3.
                                                         39
 ---pagebreak---      4.1.   Analytical framework
    (203) Under Article 2(2) and (3) of the Merger Regulation, the Commission must
            assess whether a proposed concentration would significantly impede effective
            competition in the internal market or in a substantial part of it, in particular
            through the creation or strengthening of a dominant position.
    (204) In this respect, a merger may entail horizontal and/or non-horizontal
            (i.e. vertical or conglomerate) effects. Horizontal effects are those deriving
            from a concentration where the undertakings concerned are actual or potential
            competitors of each other in one or more of the relevant markets concerned.
            Vertical effects are those deriving from a concentration where the
            undertakings concerned are active on different or multiple levels of the supply
            chain. Conglomerate effects are those deriving from a concentration where the
            undertakings concerned are in a relationship which is neither horizontal nor
            vertical. A concentration may involve all three types of effects. In such a case,
            the Commission will appraise horizontal and non-horizontal effects in
            accordance with the guidance set out in the relevant notices, that is to say the
            Horizontal Merger Guidelines110 and the Non-horizontal Merger
            Guidelines111.
            4.1.1.     Horizontal effects
    (205) The Horizontal Merger Guidelines describe horizontal non-coordinated
            effects as follows:
            “A merger may significantly impede effective competition in a market by
            removing important competitive constraints on one or more sellers who
            consequently have increased market power. The most direct effect of the
            merger will be the loss of competition between the merging firms. For
            example, if prior to the merger one of the merging firms had raised its price,
            it would have lost some sales to the other merging firm. The merger removes
            this particular constraint. Non-merging firms in the same market can also
            benefit from the reduction of competitive pressure that results from the
            merger, since the merging firms’ price increase may switch some demand to
            the rival firms, which, in turn, may find it profitable to increase their prices.
            The reduction in these competitive constraints could lead to significant price
            increases in the relevant market.”112
    (206) Therefore, a merger giving rise to such non-coordinated effects might
            significantly impede effective competition by creating or strengthening the
            dominant position of a single firm, one which, typically, would have an
            appreciably larger market share than the next competitor post-merger.
    (207) However, under the substantive test set out in Article 2(2) and (3) of the
            Merger Regulation, also mergers that do not lead to the creation or the
            strengthening of the dominant position of a single firm may create
110 Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C31, 5.2.2004, p. 5.
111 Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control
    of concentrations between undertakings ("Non-Horizontal Merger Guidelines"), OJ C 265, 18.10.2008.
112 Horizontal Merger Guidelines, paragraph 24.
                                                     40
 ---pagebreak---             competition concerns. Indeed, the Merger Regulation recognises that in
            oligopolistic markets, it is all the more necessary to maintain effective
            competition.113 This is in view of the significant consequences that mergers
            may have on such markets. For this reason, the Merger Regulation provides
            that "under certain circumstances, concentrations involving the elimination of
            important competitive constraints that the merging parties had exerted upon
            each other, as well as a reduction of competitive pressure on the remaining
            competitors, may, even in the absence of a likelihood of coordination between
            the members of the oligopoly, result in a significant impediment to effective
            competition".114
    (208) The Horizontal Merger Guidelines list a number of factors which may
            influence whether or not significant horizontal non-coordinated effects are
            likely to result from a merger, such as the large market shares of the merging
            firms, the fact that the merging firms are close competitors, the limited
            possibilities for customers to switch suppliers, or the fact that the merger
            would eliminate an important competitive force.115 That list of factors applies
            equally regardless of whether a merger would create or strengthen a dominant
            position, or would otherwise significantly impede effective competition due to
            non-coordinated effects. Furthermore, not all of these factors need to be
            present to make significant non-coordinated effects likely and it is not an
            exhaustive list.116 Finally, the Horizontal Merger Guidelines describe a
            number of factors, which could counteract the harmful effects of the merger
            on competition, including the likelihood of buyer power, entry and
            efficiencies.
    (209) A merger in a concentrated market may also significantly impede effective
            competition due to horizontal coordinated effects where, through the creation
            or the strengthening of a collective dominant position, it increases the
            likelihood that firms are able to coordinate their behaviour and raise prices,
            even without entering into an agreement or resorting to a concerted practice
            within the meaning of Article 101 TFEU. A merger may also make
            coordination easier, more stable or more effective for firms that were already
            coordinating before the merger, either by making the coordination more
            robust or by permitting firms to coordinate on even higher prices.117
    (210) To assess whether a merger gives rise to horizontal coordinated effects, the
            Commission should examine, first, whether it would be possible to reach
            terms of coordination and, second, whether the coordination would be likely
            to be sustainable.118
113 Merger Regulation, recital 25.
114 Merger Regulation, recital 25. Similar wording is also found in paragraph 25 of the Horizontal Merger
    Guidelines. See also Commission decision of 2 July 2014 in case M.7018 – Telefónica Deutschland/E-
    Plus, recital 113; Commission decision of 28 May 2014 in case M.6992 – Hutchison 3G
    UK/Telefónica Ireland, recital 179; Commission decision of 12 December 2012 in case M.6497 –
    Hutchison 3G Austria/Orange Austria, recital 88.
115 Horizontal Merger Guidelines, paragraphs 27 et seq.
116 Horizontal Merger Guidelines, paragraph 26.
117 Horizontal Merger Guidelines, paragraph 39.
118 Horizontal Merger Guidelines, paragraph 42.
                                                       41
 ---pagebreak---     (211) As regards the possibility of reaching terms of coordination, coordination is
            more likely to emerge in markets where it is relatively simple to reach a
            common understanding on the terms of coordination.119 Coordination may
            take various forms, including keeping prices above the competitive level, or
            dividing the market, for instance by customer characteristics or by allocating
            contracts in bidding markets.120
    (212) As regards the sustainability of coordination, three conditions are necessary
            for coordination to be sustainable.121 First, the coordinating firms must be able
            to monitor to a sufficient degree whether the terms of coordination are being
            adhered to.122 Second, discipline requires that there is a credible deterrent
            mechanism that can be activated if deviation is detected.123 Third, the
            reactions of outsiders, such as current and future competitors not participating
            in the coordination, as well as customers, should not be able to jeopardise the
            results expected from the coordination.124
    (213) Moreover, in examining the possibility and sustainability of coordination, the
            Commission should specifically consider the changes that the Transaction
            brings about.125 The reduction in the number of firms in a market may in itself
            be a factor that facilitates coordination.
            4.1.2.    Vertical effects
    (214) A merger is said to result in foreclosure where actual or potential rivals'
            access to supplies or markets is hampered or eliminated as a result of the
            merger, thereby reducing these companies' ability and/or incentive to
            compete.126 Such foreclosure may discourage entry or expansion of rivals or
            encourage their exit. Such foreclosure is regarded as anti-competitive where
            the merging companies — and, possibly, some of its competitors as well —
            are as a result able to profitably increase the price charged to consumers.127
    (215) Two forms of foreclosure can be distinguished. The first – which is of
            particular relevance for the present case – is where the merger is likely to raise
            the costs of downstream rivals by restricting their access to an important input
            (input foreclosure). The second is where the merger is likely to result in
            foreclosure of upstream rivals by restricting their access to a sufficiently large
            customer base (customer foreclosure).
    (216) Input foreclosure arises where, post-merger, the new entity would be likely to
            restrict access to the products or services that it would have otherwise
            supplied absent the merger, thereby raising its downstream rivals' costs by
            making it harder for them to obtain supplies of the input under similar prices
119 Horizontal Merger Guidelines, paragraph 41.
120 Horizontal Merger Guidelines, paragraph 40.
121 Horizontal Merger Guidelines, paragraph 42.
122 Horizontal Merger Guidelines, paragraph 42.
123 Horizontal Merger Guidelines, paragraph 42.
124 Horizontal Merger Guidelines, paragraph 42.
125 Horizontal Merger Guidelines, paragraph 42.
126 Non-horizontal Merger Guidelines, paragraph 29.
127 Non-horizontal Merger Guidelines, paragraph 29.
                                                    42
 ---pagebreak---             and conditions as absent the merger.128 This may lead the merged entity to
            profitably increase the price charged to consumers, resulting in a significant
            impediment to effective competition. As indicated above, for input
            foreclosure to lead to consumer harm, it is not necessary that the merged
            firm's rivals are forced to exit the market. The relevant benchmark is whether
            the increased input costs would lead to higher prices for consumers.129 Any
            efficiencies resulting from the merger may, however, lead the merged entity
            to reduce price, so that the overall likely impact on consumers is neutral or
            positive.130
     (217) In assessing the likelihood of an anticompetitive input foreclosure scenario,
            the Commission examines, first, whether the merged entity would have, post-
            merger, the ability to substantially foreclose access to inputs, second, whether
            it would have the incentive to do so, and third, whether a foreclosure strategy
            would have a significant detrimental effect on competition downstream.131 In
            practice, these factors are often examined together since they are closely
            intertwined.132
            4.1.3.    Conglomerate effects
     (218) In the majority of circumstances, conglomerate mergers do not lead to any
            competition problems but in certain specific cases there may be harm to
            competition.133 The main concern in the context of conglomerate effects is
            that of foreclosure. 134 Conglomerate mergers may allow the merged entity to
            combine products in related markets and this may confer on the merged entity
            the ability and incentive to leverage a strong market position from one market
            to another by means of tying or bundling, or other exclusionary practices. 135
    (219) In assessing the likelihood of conglomerate effects, the Commission
            examines, first, whether the merged firm would have the ability to foreclose
            its rivals, second, whether it would have the economic incentive to do so and,
            third, whether a foreclosure strategy would have a significant detrimental
            effect on competition, thus causing harm to consumers. In practice, these
            factors are often examined together as they are closely intertwined. 136
4.2.    Assessment of horizontal effects
     (220) Considering that TMA does not practically offer pure fixed internet access
            services, no significant horizontal overlap would arise if separate markets for
            fixed and mobile internet access services were to be defined. Therefore, the
            following assessment focuses on a possible market for retail internet access
            services for residential customers in Austria as defined above, including both
128 Non-Horizontal Merger Guidelines, paragraph 31.
129 Non-Horizontal Merger Guidelines, paragraph 31.
130 Non-Horizontal Merger Guidelines, paragraph 31.
131 Non-Horizontal Merger Guidelines, paragraph 32.
132 Non-Horizontal Merger Guidelines, paragraph 32.
133 Non-horizontal Merger Guidelines, paragraph 92.
134 Non-horizontal Merger Guidelines, paragraph 93.
135 Non-horizontal Merger Guidelines, paragraph 93.
136 Non-horizontal Merger Guidelines, paragraph 94.
                                                    43
 ---pagebreak---              fixed and mobile broadband connections,137 as this is the market configuration
             where the horizontal overlap would be largest.138
4.2.1. Retail internet access services
4.2.1.1. Horizontal non-coordinated effects
                  (a) The Notifying Party's views
    (221) The Notifying Party submits that the Transaction will not lead to competition
             concerns on the retail market for the provision of internet access services to
             residential customers in Austria.
    (222) First, the Notifying Party submits that even when considering a market for
             retail home internet access services including mobile and fixed products, the
             Parties' estimated combined shares would only slightly exceed [20-30]% in
             this market. The Parties' combined market shares would not be significant in
             UPC's footprint either, where they would have a combined market share of
             [30-40]%. The merged entity would be just the third largest player in Austria,
             in terms of market shares, behind A1 ([40-50]%) and H3A ([20-30]%). In
             UPC's footprint, A1 would have a [30-40]% market share and H3A [20-30]%.
    (223) Second, UPC's fixed broadband offering on the one hand and TMA's mobile
             data-only services would not be close substitutes, because of significant
             differences in technology, use, speed, quality of service, and mobility. UPC
             currently offers high and stable data download speeds of up to 300 Mbit/s
             which significantly exceeds the performance, quality and actual speed which
             TMA can offer via its mobile network.
    (224) According to the Notifying Party, this conclusion is confirmed by the survey
             conducted by TMA (see paragraph (37)), in accordance to which (i) the
             diversion ratio from TMA to UPC would be significantly lower than the
             diversion ratios from TMA to the other MNOs (A1 and H3A), and (ii) the
             diversion ratio from UPC to TMA would be significantly lower than the
             diversion ratio from UPC to A1 (that is also a fixed internet access provider).
    (225) The Notifying Party has also submitted a paper which examines competitive
             actions (such as launches of new products, improvements of existing offers,
             price promotions, etc.) of each of the Parties. According to the Notifying
             Party, the analysis shows that TMA’s actions that resulted in significant gross
             adds increases did not have any visible impact on UPC’s sales, confirming
             that TMA cannot be qualified as a close competitor of UPC.
137 Unless otherwise specified in the text, the analysis is based on a market for retail internet access
    services including all mobile data-only connections. In any case, the outcome of the assessment would
    not change irrespective of the market definition (mobile data-only services pre-paid and post-paid;
    mobile data-only services post-paid; mobile cubes post-paid) as the market shares are similar.
138 The competition assessment is limited to residential customers, considering that business customers
    are probably not included in this market. In any case the Parties' market shares in the market for
    business customers including fixed and mobile internet connections are lower than the ones in the
    residential segment: TMA [10-20]% and UPC [0-5]% (considering only cubes TMA [5-10]% and UPC
    [5-10]%). Hence, the Parties' combined market shares would be even more limited in a potential
    overall market including internet access services to both residential and business customers or in a
    potential separate market for internet access services to business customers.
                                                         44
 ---pagebreak--- (226) Third, most of UPC's residential customers of internet services purchase these
      services in a bundle with either UPC's TV services or UPC's fixed telephony
      VoIP services. Only approximately [10-20]% of UPC's fixed internet
      customers have purchased UPC's fixed internet services on a stand-alone
      basis. Therefore, TMA's stand-alone mobile data-only services could not exert
      a competitive constraint on UPC's cable broadband services.
(227) The Notifying Party submitted the replies to a questionnaire that is routinely
      sent to fixed internet customers who cancel their contract with UPC, asking
      why they had decided to terminate their contract. According to this analysis,
      only [0-5]% of UPC customers ending their fixed internet subscription
      explained that they had decided to terminate their contract because they
      wanted to sign up to mobile internet service instead.
(228) According to the Notifying Party, the two major players in the Austrian
      telecommunications sector (A1 and H3A), as well as other competitors will
      continue to constrain the merged entity on this retail market. This would be
      the case also because these competitors offer very close substitutes to the
      products of UPC and TMA. On the contrary, the degree of substitutability
      between the internet services offered by the merging parties would be
      negligible.
(229) The Notifying Party further submits that new market participants can easily
      enter the home internet access services market on the basis of A1 regulated
      wholesale virtual unbundled local access ("VULA") offer in the fixed segment
      or on the basis of a wholesale access agreement with any MNO in the mobile
      segment.
(230) According to the Notifying Party, potential entry and expansion on the basis
      of the H3A Retail-Minus Offer and the A1 regulated VULA offer will impose
      a significant competitive constraint on the merged entity despite being based
      on a "retail-minus" wholesale access offer, because any alleged merger-
      induced increase of the retail prices of A1 and H3A would be small, and any
      effect on their wholesale access prices as a consequence of the “retail-minus”
      mechanism would also be small.
(231) In particular, the Notifying Party submits that H3A's retail-minus offer for
      mobile broadband services would enable MVNO market entry at large scale:
      MVNOs could viably offer home mobile broadband services on the basis of
      the existing H3A retail-minus offer which forms part of H3A's commitments
      to the Commission in the Hutchison 3G Austria/Orange Austria case
      (M.6497). The Notifying Party has submitted an analysis showing that H3A
      would still have available capacity allowing for further mobile data-only
      services and has presented some evidence demonstrating that MVNOs hosted
      on H3A's network already offer home mobile broadband services and compete
      effectively in this market segment. The Notifying Party has submitted
      elements showing that MVNOs can actually compete in the home internet
      market using both the H3A Retail-Minus Offer and/or the unit-based pricing
      option, also offered by H3A on the basis of the commitments in case M.6497.
      In this last respect, the current unit-based MB rates offered by H3A, subject to
      RTR's monitoring, would enable an MVNO to offer very aggressive, even
      unlimited home broadband packages in the market, regardless of whether the
      H3A retail price increased or decreased.
                                             45
 ---pagebreak---     (232) With respect to the A1 regulated wholesale VULA offer, the Notifying Party
          submits that the RTR ensures that its conditions are margin-squeeze free by
          requiring the incumbent A1 to allow for a minimum retail margin, which
          increases with the bandwidths offered. The Notifying Party submitted data
          showing that the VULA wholesale costs leave a sufficient margin to a
          wholesale customer to compete with UPC's current standard retail prices for
          its cable broadband services, including in the segments for higher bandwidths
          (although the Notifying Party concedes that A1's fixed infrastructure is less
          performant than UPC's cable infrastructure). In any event, the relevance of the
          A1 wholesale offer would be confirmed by the fact that TMA launched a
          fixed/mobile (hybrid) broadband product on the basis of A1's offer and there
          would be no reason why other mobile operators should not be able to do the
          same and launch a hybrid broadband product. According to the Notifying
          Party, H3A is preparing a hybrid broadband product on the basis of the A1
          wholesale offer as well.
    (233) The Notifying Party further submits that in any case market entry/expansion is
          taking place and additional players are highly likely to enter soon. In
          particular, TMA had some advanced negotiations with [name of third party],
          and has ongoing discussions with [name of third party].
    (234) Finally, the Notifying Party submits that the Transaction will establish TMA
          as a fixed-mobile convergent operator which will be able to offer converged
          products and to challenge the incumbent A1, which will create more choice
          for consumers.139 According to the Notifying Party, the Transaction allows the
          merged entity to significantly invest into fixed infrastructure which is
          underdeveloped in Austria compared to other Member States. The Notifying
          Party further submits that the Transaction will also incentivize the incumbent
          A1 to invest more in fixed infrastructure in competition with the merged
          entity. A1 has so far not been willing to invest sufficiently due to its
          entrenched market power. The Notifying Party claims that the Transaction is,
          therefore, clearly pro-competitive.
               (b) The Commission's assessment
    (235) First of all, the Commission recalls the analysis carried out in previous
          paragraphs (17) to (41), where it is explained that, in the specific case of
          Austria, the relevant product market potentially includes both fixed and
          mobile retail access services for residential customers.
139 TMA submission on the Austrian broadband sector of 12.06.2018.
                                                    46
 ---pagebreak---                        (i) Market structure
    (236) In the possible market for retail internet access services for residential
             customers in Austria the Notifying Party has provided the following market
             shares for 2017:
        Table 1: 2017 market shares in retail internet access services for residential
                             customers in Austria (in terms of subscribers)
                                 Fixed            internet Fixed           internet  Fixed           internet
                                 services and mobile services and mobile             services and mobile
                                 broadband services cubes only                       broadband services
                                 (pre- and post-paid)                                (post-paid only)
      TMA                                [10-20]%                   [5-10]%                  [5-10]%
      UPC                                [10-20]%                  [10-20]%                 [10-20]%
      Combined                           [20-30]%                  [20-30]%                 [20-30]%
      A1                                 [40-50]%                  [40-50]%                 [40-50]%
      H3A                                [20-30]%                  [20-30]%                 [20-30]%
      Other Fixed                         [5-10]%                  [10-20]%                  [5-10]%
      operators
      Other mobile                         [0-5]%                    [0-5]%                   [0-5]%
      operators
      Source: Form CO, Tables 7C(2)(a), (b) and (c)
    (237) Following the Transaction, the market share of the merged entity will increase
             from [10-20]% to [20-30]% (considering all mobile data-only products), with
             an increment of approximately [10-20]%.
    (238) The market presence of the Parties is more significant in the area
             corresponding to UPC's footprint, where the Parties have a joint market share
             of more than [30-40]%. In particular in the city of Vienna, the Parties together
             have a market share of more than [30-40]%. Although the market
             investigation has shown the national dimension of the relevant market, the
             strong position held by UPC (and consequently by the merged entity) in its
             footprint and notably in the most densely populated areas of Austria is further
             assessed in paragraph (267) below.
                       (ii) Closeness of competition
    (239) The Commission has assessed in detail the Notifying Party's claim that there
             is only limited substitutability between the respective products of the Parties.
    (240) While it appears that there is some degree of substitutability between the
             Parties’ products,140 it should be noted that TMA and UPC use different
             technologies for their main internet access services: TMA relies mainly on
140 This is supported by the internal documents of the Parties. In some of these documents, as already
    reported in paragraph (33), the Parties mention "FMS" (fixed-mobile substitution) products, such as
    cubes or hybrid solutions, expressly aimed to "substitute" (i.e. compete with) pure fixed products for
    the provision of home internet access services to residential customers. Mobile broadband providers
    are qualified as a rising threat to fixed-line operators and several documents highlight the relevance of
    mobile 4G/LTE offers as home solutions, directly competing with fixed offers.
                                                           47
 ---pagebreak---              mobile technologies while UPC on fixed connections, largely based on its
             coaxial cable network.
    (241) The underlying technology has important implications on the user experience.
             UPC's HFC cable network offers particular high speeds of up to 300 Mbps on
             the basis of the DOCSIS 3.0 standard. Although DOCSIS uses a shared
             medium between several households, UPC guarantees to the customers of its
             300 Mbps offering that a minimum download speed of 135 Mbps is available
             to the customer during 95% of the day. UPC’s HFC cable network can also
             achieve much higher download speeds compared to other fixed internet access
             technologies, such as in XDSL.
    (242) In contrast, the actual speed of mobile broadband services is much more
             dependent on the number of concurrent users and their usage pattern in each
             cell. The actual speed of mobile internet (data) services may hence vary
             considerably and is generally substantially lower than the theoretically
             possible maximum speed. In this regard, TMA submits that its actual speed is
             often as low as [0-5] Mbps and that it does not provide speed guarantees to its
             mobile broadband customers similar to those offered by UPC.
    (243) These differences in terms of (guaranteed) download speed also translate into
             differences in usage patterns. Whereas the average monthly data download
             usage of TMA's customers of mobile broadband services was approximately
             [40-60] GB ([60-100] GB for cubes with fixed monthly payment) in
             December 2017, the average monthly downstream data usage of UPC's HFC
             internet customers was approximately [130-170] GB in Q1/2018. UPCs
             figures of data usage do however exclude the consumption of cable TV
             services and, therefore, underestimate the throughput differences between
             cable broadband connections and mobile internet connections.
    (244) The Commission also notes that only a limited percentage of UPC’s fixed
             internet customers have purchased fixed internet access services on a
             standalone basis,141 whilst TMA’s mobile data services are not available with
             retail TV or fixed telephony services. This also suggests that mobile
             broadband services may not be direct substitutes to those product bundles for
             a significant part of UPC’s customers.
    (245) These differences in terms of user experience suggest that the products of the
             Parties are differentiated. Moreover, all MNOs in Austria offer mobile
             broadband products and in particular mobile cubes. This provides a first
             indication that the degree of substitutability between the Parties’ main
             products may be limited, in particular compared to the degree of
             substitutability between the (rather similar) mobile broadband products of the
             three Austrian MNOs.142
141 According to data provided by the Notifying Party, only [0-20]% of UPC's current fixed internet
    customers have purchased UPC's fixed internet services on a stand-alone basis (Form CO,
    paragraph 735).
142 To be noted that this limited substitutability between mobile and cable connections is confirmed by
    A1, according to which although cubes should be in general considered substitutes to fixed broadband
    access, on the other hand they may not be with respect to to true high speed internet such as UPC's
    own network features.
                                                        48
 ---pagebreak---     (246) The Commission has further examined closeness of competition based on a
              survey prepared by the Parties. The Commission considers that generally
              customer surveys can be a useful tool for eliciting diversion ratios between
              competing products. In particular, surveys can be used to elicit user
              preferences and are hence suited to assess how differences in product
              characteristics translate into substitution patterns.
    (247) However, with respect to the survey carried out by TMA, the Commission
              first recalls that the Notifying Party submits that (i) the survey suffers from
              significant limitations and that only limited evidentiary weight can be given to
              its results, and (ii) if anything, the survey shows that UPC is not a close
              competitor of TMA and that TMA is not a close competitor of UPC (see
              paragraph (224)).
    (248) The reliability of any survey results depends inter alia on the survey design
              and on the selection of the participants to the survey. In the case at hand, in
              order to determine the degree of substitutability between the merging Parties'
              products the views of the Parties' subscribers are particularly important. By
              selecting the Parties' products, these customers expressed their preference for
              the Parties' products. Moreover, the survey should be focused on customers
              that are familiar with the various offerings currently in the market.143
    (249) The survey carried out by the Notifying Party was addressed to an online
              panel in co-operation with Marketmind, a marketing research company.144
              Such panels are usually designed to make up a representative sample of the
              underlying population, in this case Austrian households. However, reaching a
              sufficient number of respondents of the narrowly defined focus groups of
              interest, in this case inter alia recently acquired TMA subscribers of mobile
              cubes and UPC subscribers of fixed products, through the use of online panels
              is generally challenging since the probability of those specific individuals
              being members of such panels is low.
    (250) The Commission considers that the survey submitted by the Notifying Party
              suffers from a number of limitations. First, the online panels used for the
              survey fall in the category of so-called "non-probability panels", that is, the
              panellists are not recruited in a statistically controlled manner and, hence, are
              likely to be unrepresentative of the overall population.145 Second, the number
              of respondents with TMA cubes or UPC fixed pure internet products as their
              preferred choice was very low. Third, of these respondents, only few stated
              that they switched or screened the market in the last 12 months, indicating that
              many respondents were not familiar with the products on the market. Fourth,
              many respondents expressed choices that are at odds with the offers on the
              market, casting further doubt on the reliability of the survey results.
143 A practical way to achieve this is to carry out a targeted survey addressed to those customers of
    respective telecom operator that acquired (or modified) their subscription in the recent past, for
    example within the last 6 or 12 months, and presumably carried out a comparison of the various
    offerings available in the market at the time of the purchase.
144 Marketmind has developed a consumer online access panel together with its partner Talk Online Panel
    GmbH ("Talk"). For the purpose of the current survey, Talk's panel was supplemented through the use
    of several other providers.
145 Commission decision of 1 September 2016 in case M.7758, Hutchinson 3G Italy / Wind / JV,
    recitals 1498 and seq.
                                                          49
 ---pagebreak---     (251) In light of these shortcomings, the Commission considers that only limited
             evidentiary weight can be given to the results of the survey.146
    (252) As for the relevance of the UPC internal questionnaire allegedly showing that
             only [0-5]% of UPC customers terminating their contracts would sign up to a
             mobile internet service instead, the Commission notes that the results of such
             a questionnaire provide only a limited indication that the Parties may not be
             close competitors, if considered in combination with other elements in the file
             pointing to such conclusion.
    (253) Finally, the Commission takes note of the event study submitted by the
             Notifying Party, mentioned in paragraph (225). The study seeks to identify
             promotional events that had a significant (positive) impact on TMA’s and
             UPC's respective number of gross adds and asks whether these events had a
             measureable (negative) impact on the customer base of the other party. The
             Commission notes that such studies must be interpreted with caution since
             promotional events are only one of many factors that can affect relative
             changes in the demand of competing products. However, the Commission also
             considers that the results of the event study are consistent with the remaining
             qualitative evidence available suggesting that the Parties are not particularly
             close competitors in this market.
    (254) Therefore, while a certain degree of substitution between the different
             technologies offered respectively by TMA and UPC appears to exist, on the
             basis of the above considerations, the Commission concludes that TMA's and
             UPC's respective home internet access products do not closely compete.
                       (iii)Potential loss of competition
    (255) Certain respondents to the market investigation consider that the Transaction
             could have negative effects on the retail internet access services market
             (including mobile broadband services).147 Some respondents have pointed to
             possible price increases, due to the reduced competition and the increased
             market power of the merged entity.
    (256) In particular H3A pointed out that the reduction in the number of players will
             result in reduced competition on the relevant market that in turn will lead to
             consumer harm through potential price increases, reduction of choice and
             reduction in the levels of market innovation. H3A added that it will be […],
             because of [mobile network related issues]. According to H3A, the A1
             regulated wholesale VULA access to its fixed network would be economically
             unfavourable: on average, wholesale access prices see an advantage for low
             and a disadvantage for high bandwidths, which means that […]. According to
             H3A, the situation will be particularly problematic in Vienna, due to the
             significant position of UPC.
146 The Commission also notes that the Notifying Party's conclusion on the closeness of competition
    between the Parties depends on disregarding as irrational a significant number of choices that are at
    odds with the observed popularity of the relevant products. This opens up the results of the survey to
    multiple interpretations, only one of which is the one ascribed to the results by the Notifying Party.
147 Questionnaires Q2, reply to question F.1.2; Q3, reply to question D.1.2; Q4, reply to question 41.2 and
    Q5, reply to question 42.2.
                                                         50
 ---pagebreak---     (257) Similarly Ventocom stated that the Transaction would eliminate UPC as
            important competitive force in the retail market for home internet access
            services that is already characterized by high concentration and high entry
            barriers.
    (258) A1 pointed to the merged entity's strong position in the UPC footprint and in
            particular in Vienna, thanks to the performance of its cable network and […].
            A1 further submitted that the merged entity will have a dominant position in
            Vienna and in other areas of UPC's footprint. According to A1, UPC's actual
            behaviour points already today to a dominant position, as UPC has been able
            to implement annual price increases since 2013 without any relevant loss of
            customers, while overall broadband prices have generally decreased.
            Moreover, other competitors would not be able to upgrade their structure to a
            level that would be comparable to UPC's network.
    (259) The RTR considers that the Transaction may potentially have some positive
            effects for consumers as TMA may better compete with the market leader A1.
            In particular, by relying on UPC infrastructure, TMA will become more
            independent from (regulated) wholesale access services of A1. This might
            give to the merged entity more room for technical and/or product innovation
            and also more flexibility with regard to prices. However, the RTR also
            expressed concerns on the consequences of the Transaction in the retail
            internet access services market. In particular, considering the limited
            efficiencies and cost savings, the RTR submitted that the Transaction could
            lead to price increases. RTR's concern is linked to the high market
            concentration after the Transaction, as the three main operators would have a
            combined and stable market share close to [90-100]%.
    (260) The Austrian Competition Authority ("BWB") emphasised that the
            Transaction concerns a mobile network operator (with virtually no presence in
            fixed telecommunications markets) and a fixed telecommunications provider
            (with minimal presence in mobile telecommunications markets). The Parties'
            business activities are to a large degree complementary, with few horizontal
            overlaps and some potential (technical) vertical links. Therefore, according to
            the BWB, the Transaction is procompetitive as it will enable TMA to
            effectively compete with the incumbent A1 and with H3A.
    (261) First, the Commission notes that the combined market share of the Parties
            does not exceed 25%.148
    (262) Second, as explained in paragraphs (239) to (254) above, the two products,
            although part of the same product market, have a different positioning and are
            not closely competing. Therefore, the competitive constraint imposed by the
            Parties on each other is likely smaller than suggested by their market shares.
    (263) Third, following the Transaction, two strong alternative providers will remain
            active on the market and will continue to exercise significant competitive
            pressure on the merged entity. These providers include the incumbent
            operator, A1, with a [40-50]% market share. The other competitor, H3A, has a
148 Merger Regulation, recital 32, and Horizontal Merger Guidelines, paragraph 18.
                                                      51
 ---pagebreak---             market share ([20-30]%) comparable to the one of the merged entity. Other
            smaller competitors will remain active as well.
    (264) Despite the arguments submitted by H3A concerning its alleged difficulties to
            compete, the Commission considers that, H3A will remain a strong
            competitor in the potential market of retail market for internet access services
            to residential customers. Firstly, as regards H3A’s claim of […], the
            Commission considers that, a number of expected technological
            improvements should significantly expand the available mobile capacity in
            the foreseeable future.149 Moreover, further spectrum will be made available
            by the RTR in upcoming spectrum auctions. Secondly, as regards H3A’s
            claim that A1’s regulated wholesale offer would not be viable […], the
            Commission notes that based on this regulated wholesale offer TMA currently
            offers competitive hybrid internet access products. Given that H3A also owns
            a mobile infrastructure, it could also offer hybrid products at a competitive
            price. In addition, A1 has to allow for a minimum retail margin, which
            increases with the bandwidths offered150, therefore potentially allowing
            commercially viable offers also in the segments for higher bandwidths.
    (265) In this context, the RTR notified the wholesale regulation to the Commission
            and the Commission issued comments in 2017.151 In its comments, the
            Commission listed the VULA rates and commented inter alia on the economic
            replicability test applied by the RTR to determine these rates. However, the
            Commission did not voice any doubts that those rates would not be
            commercially viable for potential access seekers.
    (266) Moreover, the mere observation that outside of its cable footprint UPC
            provides internet access to its retail customers on the basis of the regulated
            wholesale access to A1’s fixed network suggests that the terms of this
            wholesale offer are viable.
    (267) As for the alleged serious negative effects stemming from a loss of
            competition in UPC's footprint, in Vienna in particular, the Commission notes
            that in all local areas that form part of the UPC footprint, the merged entity
            will continue to face strong competitive pressure from A1. Also H3A has a
            significant presence in those areas, with market shares around [20-30]%. In
            this respect, the Commission notes that TMA's market position and hence the
            overlap tends to be somewhat smaller in the UPC footprint (overlap [5-10]%)
            and in Vienna (overlap [5-10]%) compared to the Austrian territory as a
            whole. Moreover, at present H3A has a much stronger market presence than
            TMA in UPC's footprint (H3A [20-30]% vs. TMA [5-10]%) and in
            Vienna ([10-20]% vs. [5-10]%).
    (268) As for an economic submission by A1 according to which the merged entity's
            market shares, in terms of subscribers, in this market are significantly higher
            than those reported by the Parties, the Commission notes that during the
            market investigation it scrutinised all reported market share data by carrying
149 Commission decision of 11 May 2016, in case M.7612 - Hutchison 3G UK / Telefónica, Annex C.
150 See TKK Decision M 1.5/15-115 of 24 July 2017, page 16.
151 See Commission Decision C(2017) 4687 of 30.6.2017 pursuant to Article 7(3) of Directive
    2002/21/EC concerning Case AT/2017/1987 and Case AT/2017/1988.
                                                    52
 ---pagebreak---             out a market reconstruction exercise addressed to the four main market
            participants (A1, H3A, TMA and UPC) as well as requesting data from the
            RTR. Despite minimal inconsistencies linked to different definitions of active
            and residential subscribers, the Commission was able to conclude that the
            market shares reported in the Form CO are representative of the various
            participants' market position and suitable for basing the Commission's
            competitive assessment on.
    (269) [In particular, the figures reported by the Parties are quite close to the national
            level market share data provided to the Commission by RTR]. Concerning
            the cities of Vienna, Graz, Innsbruck and Klagenfurt, for which the RTR
            could not provide data, the market shares reported by A1 are driven,
            [description of assumption], a fact that is not supported by the Commission's
            investigation and market reconstruction.152
    (270) As for A1's allegation that UPC would already enjoy a dominant position in
            Vienna, as shown by the price increases in recent years, the Commission notes
            that A1 has not provided any element to support this thesis, but only a short
            article in a local web-magazine pointing to some not quantified and not
            circumstantiated price increases in 2017. This element alone, confronted with
            the market analysis and the market reconstruction carried out by the
            Commission, cannot justify a conclusion of a dominant position by UPC in a
            part of the relevant geographic market. The alleged price increase also appears
            not to be limited to Vienna, and as such the allegation of […] is similarly
            unsubstantiated. Moreover, even if UPC gained […], this would not be
            merger-specific and already reflected in UPCs market shares.
    (271) In light of the above, the Commission considers that the Transaction is not
            likely to result in a significant loss of competition.
                     (iv) Potential entry
    (272) As regards potential entry, H3A submits that the A1 regulated wholesale
            access to DSL does not allow for a suitable entry in the home internet access
            services market, because the terms of this access are economically
            unfavourable. On average, wholesale access prices see an advantage for low
            and a disadvantage for high bandwidths, which means that an operator cannot
            compete with either A1 or the merged entity in the provision of fixed
            broadband access services to households.
    (273) The RTR submits that alternative operators can offer fixed services in the
            entire area of Austria based on physical unbundling, bitstream services, and in
            particular virtual unbundling (with local and regional handover), since access
            to A1’s nationwide network is regulated. RTR considers this regulated access
            as sufficient to lower the entry barriers in the fixed segment.
    (274) The RTR submits that MVNO access is currently offered by all three MNOs
            and a number of new MVNOs (MVNEs and service providers) have entered
            the market in the last years. Therefore, the entry barriers in the mobile
            segment can currently also be considered to be low. However, according to
152 Reply of 23.05.2018 to RFI 1 to H3A.
                                                    53
 ---pagebreak---             the RTR, there is considerable uncertainty as to whether this will also be the
            case in the medium to long run, because several developments have weakened
            or may weaken further the competitive position of MVNOs relative to MNOs
            in the future. In particular, the RTR submits that:
             -      the increasing data volumes, in particular in the residential segment, can
                    make it difficult for MVNOs to compete (in particular for flat rate
                    offers) as they have to pay a per-unit price at the wholesale level;
             -      it is uncertain if or when MVNOs will get access to new technologies,
                    in particular to 5G, to wholesale offers for IoT, etc.;
             -      The commitments from the Hutchison/Orange merger will expire in a
                    few years. This will weaken the bargaining position of MVNOs versus
                    MNOs.
    (275) In this respect, the Commission notes that the material relevance of the
            regulated wholesale DSL offers is demonstrated by the fact that in 2017,
            about [10-20]% of UPC's customers were still served by the DSL connection,
            mainly outside of the UPC footprint, although the figure is declining.
            Moreover, A1's DSL wholesale offer is at the basis of TMA's new offer of
            hybrid broadband products, which in April 2018 accounted for roughly
            [10-20]% of TMA’s gross adds of home broadband products.
    (276) Furthermore, A1 wholesale DSL offer appears relevant for the provision of
            hybrid broadband products, where DSL is mainly used for network-offload
            and as a consequence low bandwidths are requested. Hybrid offers are
            relevant for the present analysis also because they alleviate potential capacity
            constraints related to purely mobile offers, as the mobile network capacity
            needed by the hybrid broadband product is only approximately 30 to 50% of
            the capacity used by a mobile cube.
    (277) The Commission further notes that according to the Notifying Party, if A1
            wants to terminate the standard wholesale offer contract and increase
            wholesale charges, the wholesale customer can object to the termination and
            the change of wholesale conditions in which case the existing standard
            wholesale offer remains valid. A1 would then be required to initiate a
            procedure with TKK and it is ultimately for TKK to decide if the price
            changes proposed by A1 may be implemented or not. This mechanism
            reduces the risk of wholesale price increases.
    (278) With specific regard to the H3A commitment in case M.6497, to offer
            wholesale access on a retail-minus basis implies that the wholesale price
            could increase if the retail prices of H3A were to increase as a consequence of
            the Transaction. On the other hand, the Commission found that […] based on
            the commitments.153
    (279) In light of the above considerations, the Commission is of the view that, on
            the basis of the evidence in the file, barriers to entry in the home internet
153 Reply of 25.06.2018 to RFI 2 to H3A.
                                                  54
 ---pagebreak---            access services market are sufficiently low as to constrain to some extent the
           behaviour of the merged entity in Austria.
               (c) Conclusion on horizontal non-coordinated effects
    (280) Based on all the above, the Commission concludes that the Transaction does
           not raise serious doubts as to its compatibility with the internal market by way
           of horizontal non-coordinated effects, in the market for retail internet access
           services for residential customers in Austria.
4.2.1.2. Horizontal coordinated effects
               (a) The Notifying Party's views
    (281)   The Notifying Party submits that the Transaction will not give rise to
           coordinated effects on a hypothetical retail market for internet services
           including fixed internet services and mobile internet (data) services
           irrespective of the geographic scope of this hypothetical market. Coordinated
           effects can, in particular, be excluded for the following reasons:
           -   Substantial asymmetries between firms in terms of technology and cost
               structure: the differences in terms of technology and cost structure
               between the firms active on this market (A1, H3A and TMA/UPC) make
               it impossible for them to reach any terms of coordination and would
               undermine any hypothetical coordination;
           -   Lack of transparency due to differentiated services and tariffs: the market
               is characterized (i) by differentiated services and tariffs, and (ii) by
               standalone and bundled offers. This extreme heterogeneity implies that the
               market lacks the degree of transparency which would be necessary to
               reach terms of coordination and to monitor deviations from any
               hypothetical coordination;
           -   Substantial growth in demand: this current relevant growth in demand
               prevents any coordination, irrespective of the geographic scope of the
               market;
           -   Market presence of various fixed and mobile operators: In addition to A1,
               H3A and TMA/UPC, various fixed and mobile operators are active on the
               home internet access services market, with a combined market share of
               approximately [10-20]%;
           -   Highly asymmetric market positions: A1 would be the clear market leader
               with an estimated share of about [40-50]%. H3A and TMA/UPC are
               significantly weaker with estimated shares at around only [20-30]%. Such
               a high asymmetry suggests that it would be impossible to reach terms of
               tacit coordination between firms. H3A and TMA/UPC have strong
               incentives to fiercely compete with A1 and to challenge A1's incumbent
               position.
    (282) The Notifying Party submits that coordinated effects are also excluded if one
           assumed that the geographic scope of a hypothetical retail market for internet
           services were the UPC's footprint or local (city level), for the same reasons
           mentioned above.
                                                 55
 ---pagebreak---                   (b) The Commission's assessment
    (283) As set out in the case law154 and the Horizontal Merger Guidelines,155 to find
              coordinated effects evidence is needed that the horizontal merger changes the
              nature of competition in such a way that firms that previously were not
              coordinating their behaviour are now significantly more likely to coordinate
              and raise prices or otherwise harm effective competition. A merger may also
              make coordination easier, more stable or more effective for firms which were
              coordinating prior to the merger.156
    (284) The following aspects are particularly relevant for the assessment of whether
              coordination is likely to emerge:157 (i) the ability to reach terms of
              coordination; (ii) the ability to monitor deviations from the terms of
              coordination; (iii) the existence of a credible deterrent mechanism if deviation
              is detected; and (iv) the reaction of outsiders such as current and future
              competitors not participating in the coordination, as well as customers.
    (285) The Commission notes that the RTR and some of the Parties' competitors
              pointed to the risk of coordinated effects.
    (286) H3A submits that the Transaction will be conducive to coordinated effects
              between TMA/UPC and A1, which would be collectively dominant. One key
              effect of the Transaction will be to remove the current asymmetry between
              TMA (so far only mobile) and A1 (mobile/fixed): post-merger, the merged
              entity will control the only significant fixed line network in Austria other than
              that of A1. As a result, the merged entity will have aligned interests with
              respect to its market strategy concerning the mobile market and fixed/mobile
              offerings. The merged entity will no longer pursue a mobile-only strategy but
              will, like A1, consider what market conduct is most profitable for its
              combined mobile and fixed line activities. The merged entity and A1 will be
              incentivised to act in coordination. H3A claims that in light of uncompetitive
              regulated wholesale offers for fixed access and because of capacity limitations
              in its mobile network, […]. H3A adds that pricing has a high degree of
              transparency, as it is a main marketing tool. Finally, according to H3A there is
              a history of structural and contractual links already established between A1
              and TMA,
    (287) Ventocom submits that the Transaction will increase the risks of coordinated
              effects, as it will result in a reduction of market participants in an already
              concentrated market, the removal of a strong competitive force, the increase
              in symmetry between the remaining players. The market is transparent,
              product differentiation in particular between MNOs is limited, and the MNOs
154 Case C-413/06 P, Bertelsmann AG and Sony Corporation of America v Independent Music Publishers
    and Labels Association (Impala) [2008] ECRI-4951, and in particular paragraphs 122-123 regarding
    the conditions for tacit coordination; Case T-342/99, Airtours v Commission [2002] ECR II-2585, and
    in particular paragraphs 58 and 82 regarding the fact that “[i]f there is no significant change in the
    level of competition obtaining previously, the merger should be approved because it does not restrict
    competition”.
155 Horizontal Merger Guidelines, paragraphs 22, 39 et seq.
156 Horizontal Merger Guidelines, paragraph 22(b).
157 Horizontal Merger Guidelines, paragraph 41.
                                                       56
 ---pagebreak---             already cooperate in wholesale/roaming agreements. Significant price
            increases are to be expected due to further concentration in the market.
    (288) The feedback of the market investigation suggests that the market for home
            internet services in Austria has a certain degree of transparency. The prices
            and the product offerings are publicly available, for instance from the MNOs'
            websites and from retail shops.
    (289) As a preliminary remark, on the basis of the market investigation and of the
            analysis of the internal documents the Commission has not found any element
            pointing to coordination already ongoing between the main market players –
            or some of them in the market for retail internet access services for residential
            customers in Austria. This might suggest that the market conditions are
            currently not likely to be conducive to coordination.
    (290) In this context, the retail market for home internet services in Austria appears
            to be characterised by a rather high degree of transparency as regards prices
            and product offerings of the MNOs, the MVNOs and of the fixed operators.
            Nevertheless, this is apparently not sufficient for coordination to arise, as also
            a number of further factors need to be met.
    (291) The Commission considers that also post-Transaction the risk of coordination
            remains limited. The Commission has analysed in particular two potential
            scenarios of coordination. First, A1, the merged entity and H3A could
            hypothetically coordinate. Second, A1 and the merged entity could
            coordinate, with H3A remaining outside of the hypothetical coordination.
                     (i) Hypothetical coordination of A1, the merged entity and H3A
    (292) The Commission considers that there is a limited risk that A1, the merged
            entity and H3A would coordinate post Transaction, mainly because it appears
            unlikely for them to reach terms of coordination.
    (293) In this regard, the Commission notes that although the Transaction will reduce
            the current asymmetry between TMA (so far mainly mobile) and A1
            (mobile/fixed), the offers of the three main operators will remain relatively
            differentiated: A1's offer is mainly based on DSL, TMA/UPC on cable
            networks and mobile, and H3A mainly on mobile. The technical differences
            also translate into differences in terms of user experience (see e.g.
            paragraphs (241) to (245)). Coordination is generally more difficult in market
            with differentiated products.158 The asymmetry is also relevant on a
            geographic perspective, with TMA/UPC's presence more prominent in UPC's
            footprint and the other two operators generally active in the whole national
            territory with similar technologies/cost structures. Moreover, the market
            shares of the three main operators will not be similar, considering that A1 will
            hold a market share roughly double of that of the merged entity and H3A.
    (294) The Commission considers that changes in demand and supply are an element
            to be taken into consideration in the assessment of any possible coordinated
            effects. In particular, there has been a significant growth in demand of mobile
158 Horizontal Merger Guidelines, paragraph 45.
                                                  57
 ---pagebreak---             cubes, which is the main product for mobile home connections: from 2015
            to 2017, the number of subscribers of TMA and A1 cubes increased by about
            […]% and the respective market shares more than doubled. The recent
            introduction of hybrid offers and the future launch of the 5G mobile network
            will probably introduce further instability in the market. Therefore, demand
            conditions do not look sufficiently stable to make coordination likely. 159
    (295) Whereas it is true that the Transaction would change the market structure by
            reducing the number of operators and by causing a higher degree of
            concentration, the three MNOs would remain differentiated and demand
            unstable, implying a limited risk of coordination.
    (296) There is also no evidence to suggest that the Transaction would significantly
            alter the existing degree of transparency on the Austrian telecommunications
            markets, and therefore the Commission considers that any possible impact of
            the Transaction on transparency will not materially change the existing ability
            of firms to monitor deviations.
                    (ii) Hypothetical coordination of A1 and the merged entity
    (297) The Commission also considers that there is a limited risk that A1 and the
            merged entity could reach terms of coordination and sustain such coordination
            over time, mainly because this would be undermined by outsiders of the
            coordination, in particular by H3A.
    (298) First, although A1 and the merged entity will become more symmetric (both
            will be fixed/mobile operators), there remain significant differences: A1 will
            maintain a market share nearly twice as large as the one of the merged entity
            and the respective offers will remain relatively differentiated: A1's offer is
            mainly based on DSL, while the merged entity's offer will be mainly based on
            cable networks and mobile.
    (299) Moreover, although A1 and TMA cooperate with respect to certain activities
            such as mobile infrastructure rollout and operation, this does not in itself
            imply that coordination on the distinct market for retail internet access
            services would be facilitated.
    (300) Second, the issue of changes in demand and supply as set out in
            paragraph (294) is equally relevant for reaching terms of coordination in this
            scenario.
    (301) Third, contrary to H3A's claims, the Commission considers that H3A would
            have both the ability and the incentive to undermine any coordination on the
            part of the merged entity and A1, as it will be able to compete with
            mobile/hybrid offers and it is also expanding in fixed offers, following the
            recent acquisition of a fixed operator with the explicit intention to offer a
            complete set of telecommunications services and to compete with the
            incumbent operator (see below paragraph (389)).
159 Horizontal Merger Guidelines, paragraph 45.
                                                 58
 ---pagebreak---                 (c) Conclusion on horizontal coordinated effects
    (302) The Commission concludes that the Transaction does not raise serious doubts
            as to its compatibility with the internal market in relation to horizontal
            coordinated effects on the market for retail internet access services for
            residential customers.
4.2.2. Retail mobile telecommunications services
    (303) Both Parties provide mobile telecommunications services to end customers in
            Austria. In the overall retail market for mobile telecommunications services,
            the Parties have a combined share of [20-30]% in Austria (UPC with [0-5]%
            and TMA with [20-30]% in terms of subscribers). On the potential segment
            for private customers the Parties have a combined share of [20-30]% (UPC
            with [0-5]% and TMA with [20-30]% in terms of subscribers) and on the
            potential segment for business customers the Parties have a combined share of
            [20-30]% (UPC with [0-5]% and TMA with [20-30]% in terms of revenues)
            in Austria.
4.2.2.1. The Notifying Party's views
    (304) The Notifying Party submits that the Transaction will not lead to competition
            concerns on the retail market(s) for mobile telecommunications services in
            Austria.
    (305) First, the Notifying Party submits that the Transaction involves only a minor
            horizontal overlap between an MNO and a very small MVNO. UPC's market
            share has remained very limited since its market entry in December 2014. The
            increment resulting from the Transaction is negligible.
    (306) Second, UPC is not an important competitive force on the Austrian retail
            market for mobile telecommunications services. UPC's retail mobile activities
            are limited also when compared to other MVNOs one of which has an
            estimated market share of approximately [5-10]%.
    (307) Third, the Austrian mobile market is characterized by extremely low barriers
            to entry and, consequently, an ongoing wave of MVNO entry over the past
            three years. These MVNOs entered the retail mobile market on the basis of
            H3A's reference offer, offered as a commitment in connection with the merger
            control clearance in the Hutchison 3G Austria/Orange Austria160 case, and
            also with A1 and TMA.
    (308) Austrian mobile customers can currently choose between almost 40 mobile
            brands on the Austrian retail mobile market (this includes brands of MNOs
            and MVNOs). Approximately 25 MVNO brands (including branded resellers)
            are present on the Austrian market most of which have entered the market
            over the past few years. Further market players are expected to enter the
            market in the course of 2018.
160 Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria.
                                                   59
 ---pagebreak---     (309) Coordinated effects can be excluded, as UPC is a negligible player on the
            market and its elimination has no impact on the hypothetical ability or
            incentives of the remaining market participants to engage in coordination.
4.2.2.2. The Commission's assessment
    (310) Based on the results of the market investigation, the Commission has not
            identified specific competition concerns arising from the Transaction in
            relation to the retail market for the supply of mobile telecommunications to
            end customers in Austria on a standalone basis, as regards either horizontal
            non-coordinated or horizontal coordinated effects. Few respondents have
            expressed some concerns with respect to the retail mobile market, making
            reference to fixed-mobile convergence and the possibility to offer
            fixed/mobile bundles.161 This issue is analysed below in paragraphs (372)
            to (394), in the section 4.4 on conglomerate effects.
    (311) A1 voiced the concern that the Transaction would lead to the elimination of
            the remedy taker in case M.6497 and one of the few full-MVNO active on the
            market.
    (312) The Commission notes, first, that UPC acts as an MVNO and its presence on
            the market is extremely limited (less than [0-5]% market share by revenues).
            The increment brought about by the Transaction is not higher than [0-5]% (in
            terms of subscribers) in the overall market and in any market segment. The
            Transaction will therefore have a very marginal impact on TMA's position in
            the market. The combined market share of the Parties remains below 30% on
            all possible market segments regardless of whether it is measured by
            subscribers or revenue, with the exception of the private customer post-paid
            segment, where it is [30-40]%. However, in this segment the merged entity
            will remain the third operator, after A1 ([30-40]%) and H3A ([30-40]%).
    (313) Second, after the Transaction, the merged entity will continue to face
            competition from the two remaining MNOs in Austria, namely A1 ([30-40]%
            market share by subscribers) and H3A ([20-30]% by subscribers) as well as
            from other MVNOs such as HoT, which has a market share of [5-10]% in
            terms of subscribers.
    (314) As for the fact that UPC was the remedy taker in case M.6497, the
            Commission notes that following the adoption of that decision other MVNOs
            also started operating in the Austrian market, both on the basis of the
            commitments offered by H3A and on other MNOs' networks. In particular the
            reference offer provided by H3A as part of its commitments is open to all
            MVNOs, not just to UPC. Currently, MVNOs represent about [5-10]% of the
            Austrian market, in terms of subscribers.
4.2.2.3. Conclusion
    (315) In the light of the above, and in particular given the small increment brought
            about by the Transaction, as well as the presence of relevant competitors on
            this market, the Commission concludes that the Transaction does not raise
161 Questionnaire Q2, reply to question F.1.4.1 and Questionnaire Q5, reply to question 42.4.1.
                                                      60
 ---pagebreak---              serious doubts as to its compatibility with the internal market in relation to
             horizontal effects on the retail market for mobile telecommunications services
             and its possible segments in Austria.
4.2.3. Wholesale leased lines
4.2.3.1. The Notifying Party's views
    (316) The Notifying Party submits that the Transaction will not lead to competition
             concerns on the wholesale leased lines market irrespective of the precise
             definition of the relevant product and geographic market.
4.2.3.2. The Commission's assessment
    (317) If the relevant geographic market was considered nationwide, that is to say
             limited to the territory of Austria, the market for wholesale leased lines and its
             potential sub-segments would not be horizontally affected, since the Parties'
             combined market shares are far below 20% (see section 3.1.5.3 above). The
             Commission agrees with the Notifying Party's view that the Parties' are small
             players in the wholesale leased lines market if defined nationwide, that there
             are sufficient alternative suppliers (e.g. energy utilities companies) in this
             market, thereof the incumbent A1 who is subject to access and price
             regulation in large parts of Austria.
    (318) If the relevant geographic market was local (limited to individual communes),
             and if at a product level a distinction between different technologies was made
             (distinguishing also between services with a guaranteed bandwidth above or
             below 10 Mbit/s), the Transaction would give rise to one horizontally affected
             market, namely, the potential market for the provision of Ethernet services of
             guaranteed bandwidth with bandwidth above 10 Mbit/sin the commune of
             […] (representing less than 0.01% of the Austrian population). Based on data
             submitted by the RTR and the Parties, in this potential market the combined
             market share of the merged entity would be [40-50]% (TMA: [20-30]%.
             UPC: [20-30]%).
    (319) The Commission notes that (i) despite this commune being an affected market
             the merged entity's combined market shares would not exceed 40% in this
             narrowest possible sub-segment of Ethernet services of guaranteed bandwidth
             with bandwidth above 10Mbit/s; (ii) post Transaction in this commune there
             will still exist four alternative suppliers of leased lines including the
             incumbent A1; (iv) Ethernet services with guaranteed bandwidth of less than
             or equal 10 Mbit/s would be available; (iv) Ethernet services of guaranteed
             bandwidth are not the only leased lines available in this commune but two
             traditional interface lines and one dark fibre line are also available162; and
             (v) during the market investigation none of the respondents raised any
             concerns with regard to this specific potential market.
    (320) The findings would not materially change if a distinction at 2 Mbit/s were
             considered, given that TMA does not have any leased line with a bandwidth
             of less than or equal to 2 Mbit/s and because the share of the merged entity in
162 In the overall wholesale leased lines product market in the commune of […], which includes all
    possible sub-segments the merged entity would hold a market share of approximately only [10-20]%.
                                                     61
 ---pagebreak---             […] (in terms of the number of terminating segments) amounts to [20-30]%
            (TMA: [10-20]%. UPC: [10-20]%) if no distinction concerning the minimum
            guaranteed bandwidth is made. In the latter case, the share also remains
            below 25%, providing a first indication that a concentration is not able to
            impede effective competition.163
    (321) Finally, except for two respondents to the market investigation that were
            generally pointing to the fact that a further concentration in the market for
            wholesale leased lines would not be beneficial to competition since prices
            may increase, the majority of respondents was neutral or positive towards the
            Transaction and its effects on their company. Only one respondent feared
            price increases while two other respondents indicated that the transaction
            would not have a material impact or would even lead to price decreases.164
4.2.3.3. Conclusion
    (322) In light of the analysis above the Commission concludes that the Transaction
            does not raise serious doubts as to its compatibility with the internal market in
            relation to horizontal effects either on a possible nationwide market for
            wholesale leased lines and its potential sub-segments, or on potential markets
            for wholesale leased lines at the level of the single communes and their
            potential sub-segments.
163 Merger Regulation, recital 32, and Horizontal Merger Guidelines, paragraph 18.
164 Questionnaire Q6, Section C. Impact of the Transactions
                                                      62
 ---pagebreak--- 4.3.     Assessment of vertical effects
    (323) The Transaction also gives rise to a number of vertically affected markets, as
              can be seen from the following table.165
                      Upstream market                                    Downstream market
                                                             Retail supply of mobile
                                                             telecommunication services in
                                                             Austria
                                                             TMA: [20-30]% (subscribers)
         Wholesale access and call origination UPC: [0-5]% (subscribers)
         services on mobile network
         TMA: [70-80]% (revenues)
                                                             Retail supply of internet access
         UPC: not active                                     services in Austria
                                                             including both fixed and mobile connections in
                                                             Austria:
                                                             TMA: [10-20]%
                                                             UPC: [10-20]%
                                                             Including fixed but excluding          mobile
                                                             connections:
                                                             TMA: <[0-5]%
                                                             UPC: [20-30]% (subscribers)
165 As explained in paragraph (80) above, the vertical relationship between the market for wholesale
    broadband access and the market for retail internet access does not give rise to vertically affected
    markets. Nevertheless, the Commission notes that A1 submitted that the merged entity could foreclose
    its competitors on high speed internet access and pointed out that UPC is not under any regulated
    access obligations. However, the Commission notes that already pre-Transaction, UPC does not
    provide wholesale access to its HFC network (but only to its LLU-DSL network), and that there are no
    indications that UPC would start providing access to its HFC network absent the Transaction. As a
    result, in this context no merger-specific effects can arise and the Transaction does not raise serious
    doubts as to its compatibility with the internal market in this respect.
                                                         63
 ---pagebreak---              Upstream market                                 Downstream market
Wholesale leased lines                             Retail supply of mobile
                                                   telecommunication services
If market is defined on the level of
communes                                           TMA: [20-30]% (subscribers)
Please see footnote 62 above for the communes      UPC: [0-5]% (subscribers)
where the merged entity would hold a market
share equal or larger than 30%.
                                                   Retail home internet access services
                                                   market
If market is defined nationwide:
                                                   including both fixed and mobile connections in
In the overall wholesale leased lines market       Austria:
TMA: [0-5]% (revenues)                             TMA: [10-20]%
UPC: [0-5]% (revenues)                             UPC: [10-20]%
In the potential segment for wholesale trunk
segments                                           including fixed but excluding          mobile
TMA: [10-20]% (revenues)                           connections:
UPC: [0-5]% (revenues)                             TMA: <[0-5]%
                                                   UPC: [20-30]% (subscribers)
In the potential segment          for   wholesale
terminating segments:
                                                   Retail business connectivity market
TMA: [0-5]% (revenues)
UPC: [0-5]% (revenues)                             TMA: not active
In the potential segment for terminating leased    UPC: [0-5]% (on the overall Austrian retail
lines with bandwidth above 2 Mbps:                 market for business connectivity services);
TMA: [0-5]% (revenues)                             below 20% (in potential segments)
UPC: [0-5]% (revenues)
                                                   Retail fixed telephony services
In the potential segment for terminating leased
lines with bandwidth equal and below 2 Mbps:       TMA: not active
TMA: [0-5]% (revenues)
UPC: [0-5]% (revenues)                             UPC: [10-20]%
In the potential segment for terminating leased    Wholesale broadband access services
lines with bandwidth above 10 Mbps
                                                   market
TMA: [0-5]% (revenues)
UPC: [0-5]% (revenues)
                                                   TMA: not active
In the potential segment for terminating leased
lines with bandwidth equal and below 10            UPC: <[0-5]%
Mbps:
UPC: [0-5]% (revenues)                             Wholesale access and call origination
TMA: [0-5]% (revenues)                             services on mobile network
In the potential segment            for   passive  TMA:[70-80]% (revenues)
infrastructure (dark fibre):
UPC: [0-5]% (revenues)                             UPC: not active
TMA: [0-5]% (revenues)
In the potential segment of active infrastructure
(traditional managed leased lines and Ethernet
services with guaranteed bandwidth):
UPC: [0-5]% (revenues)
TMA: [0-5]% (revenues)
                                                64
 ---pagebreak--- (324) In addition to the links displayed in the table above, the Transaction gives rise
      to a number of further vertically affected markets:
      (I) the upstream wholesale markets for international roaming services in
      Member States (other than Austria) in which DTAG offers such services and
      the downstream retail market for mobile telecommunications services in
      Austria (where UPC is active);
      (II) the upstream wholesale markets for call termination services respectively
      on TMA's mobile network in Austria and on DTAG's mobile networks
      (outside Austria), and both (i) the downstream retail market for mobile
      telecommunications services in Austria (where UPC is active) and (ii) the
      downstream retail market for fixed telecommunications services in Austria
      (where UPC is active);
      (III) the upstream wholesale market for call termination services on UPC's
      mobile network and (i) the downstream retail market for mobile
      telecommunications services in Austria (where TMA is active), (ii) the
      downstream retail markets for mobile telecommunications services in
      Member States where DTAG is active, and (iii) the downstream retail markets
      for fixed telecommunications services in Member States where DTAG is
      active;
      (IV) the upstream wholesale markets for call termination services respectively
      on TMA's fixed network in Austria and on DTAG's fixed networks (outside
      Austria), and both (i) the downstream retail market for mobile
      telecommunications services in Austria (where UPC is active) and (ii) the
      downstream retail market for fixed telecommunications services in Austria
      (where UPC is active);
      (V) the upstream wholesale market for call termination services on UPC's
      fixed network and (i) the downstream retail market for mobile
      telecommunications services in Austria (where TMA is active), (ii) the
      downstream retail markets for mobile telecommunications services in
      Member States where DTAG is active, and (iii) the downstream retail markets
      for fixed telecommunications services in Member States where DTAG is
      active;
      (VI) the downstream wholesale market for end-to-end calls in Austria (where
      UPC is active) and (i) the upstream wholesale markets for call termination
      services respectively on TMA's mobile network in Austria and on DTAG's
      mobile networks (outside Austria), and (ii) the upstream wholesale markets
      for call termination services respectively on TMA's fixed network in Austria
      and on DTAG's fixed networks (outside Austria).
(325) The Notifying Party submits that the markets mentioned in the previous
      paragraph are only technically vertically affected, implying that the
      Transaction cannot raise any competition concerns. The mentioned wholesale
      markets are regulated under the EU telecommunications rules, in order to
      prevent any foreclosure or anticompetitive discrimination. According to the
      Notifying Party, the Commission has already recognised this as a relevant
                                           65
 ---pagebreak---               factor in several past decisions. Furthermore, some of the vertical links are
              due to the international activities of DTAG that would not be materially
              impacted by the Transaction.
    (326) The Commission notes that no complaint has been received regarding the
              vertical relationships indicated in previous paragraph (324). Given the low
              increment brought by the Transaction in the downstream markets, as well as
              the fact that the upstream markets are extensively regulated,166 the
              Commission considers that the Transaction does not raise serious doubts as to
              its compatibility with the internal market as regards the vertical relationships
              mentioned in paragraph (324) .
4.3.1. Wholesale access and call origination services on mobile networks
    (327) In Austria there are three MNOs, which are currently providing wholesale
              access and call origination services on mobile networks (TMA, A1 and H3A).
              On the market for wholesale access and call origination services only TMA,
              and not UPC, is active (with a market share of [70-80]% in terms of
              subscribers and [80-90]% in terms of revenues).
4.3.1.1. The Notifying Party's views
    (328) The Notifying Party submits that the Transaction will not lead to any input or
              customer foreclosure concerns since:
            i.     the structure of the Austrian market for wholesale access and call
                   origination on mobile networks would not be affected by the Transaction
                   as it will not reduce the number of MNOs that provide wholesale access to
                   MVNOs in Austria;
           ii.     market shares in the wholesale market for access and call origination on
                   mobile networks would not be informative, as they can be subject to large
                   variations, should a large wholesale customer switch its host MNO.
                   TMA's current relevant position on the Austrian market for wholesale
                   access and call origination on mobile networks merely results from the
                   fact that TMA hosts HoT, the by far largest Austrian MVNO;
          iii.     TMA would not have the ability to foreclose MVNOs from wholesale
                   access and call origination on mobile networks in Austria because any
                   MVNO could obtain wholesale access to H3A's and A1's mobile
166 Commission decision of 1 September 2016 in case M.7758, Hutchinson 3G Italy / Wind / JV,
    recitals 218 to 226. With respect to the market for international roaming services, see Regulation (EU)
    No 531/2012 of the European Parliament and of the Council of 13 June 2012 on roaming on public
    mobile communications network within the Union (OJ 2012 L 172/10), last amended by Regulation
    (EU) 2017/920 of the European Parliament and of the Council of 17 May 2017 (OJ 2017
    L 147/1).With respect to the wholesale market for call termination on mobile networks in Austria, see:
    with regard to TMA's mobile network, RTR Decision of 30 September 2013, M 1.10/12-100, as
    amended by RTR Decision of 21 December 2015, M 1.1/15-47; in respect of UPC's mobile core
    network, see RTR Decision of 15 June 2015, M 1/14-50, as amended by RTR Decision of
    21 December 2015, M 1.1/15-51. With respect to the wholesale market for call termination on fixed
    networks in Austria, see: with regard to UPC's fixed network, see RTR Decision of
    30 September 2013, M 1.8/2012-176, as amended by RTR Decision of 21 December 2015, M 1.2/15-
    70; in respect of TMA's hypothetical fixed network, see RTR Decision of 30 September 2013,
    M 1.8/2012-174, as amended by RTR Decision of 21 December 2015, M 1.2/15-68.
                                                         66
 ---pagebreak---                    networks. Furthermore, H3A would even be legally obliged, on the basis
                   of the commitment which H3A had offered in the Hutchison 3G
                   Austria/Orange Austria case167, to grant wholesale access to H3A's mobile
                   network;
          iv.      TMA would not have any incentive to foreclose MVNOs from wholesale
                   access and call origination on mobile networks in Austria, as wholesale
                   revenues achieved with MVNOs – in particular with HoT – account for an
                   important share of TMA's revenues. Moreover, the MVNOs hosted on
                   TMA's mobile network would overwhelmingly target customer groups
                   and segments which [confidential information about customer groups and
                   segments targeted by TMA].
4.3.1.2. The Commission's assessment
             a. Vertical link between wholesale market for access and call origination
                   services on mobile network and retail supply of mobile
                   telecommunications services
    (329) The Commission considers that pre-Transaction, TMA's ability to foreclose
             MVNOs is limited despite its very high market share in the wholesale market
             for access and call origination services. As pointed out by the Notifying Party,
             there are two further potential hosts for MVNOs, namely A1 and H3A.
             Moreover, until 2022 H3A is legally obliged to grant wholesale access to
             H3A's mobile network at fixed rates (which are adapted to the prevailing
             market conditions), on the basis of the commitment which H3A had offered in
             the Hutchison 3G Austria/Orange Austria case.168 Moreover, internal
             documents submitted by the Notifying Party suggest that MVNOs raise the
             possibility of switching to H3A. Moreover, these documents suggest that the
             wholesale terms offered by TMA are internally discussed with reference to
             wholesale terms offered by H3A.
    (330) The Commission notes that UPC is active in the retail market of the supply of
             mobile telecommunications services through an MVNO agreement with H3A
             and therefore owns no mobile infrastructure. The merged entity's ability to
             engage in input foreclosure will therefore not differ compared to that of TMA
             prior to the Transaction.
    (331) Second, the Commission notes that there are no indications that TMA has
             engaged in any foreclosure strategy so far, which seems to indicate that before
             the merger it lacked the ability and/or the incentive in that respect.
             Nevertheless, the Commission has assessed whether, following the
             Transaction, the merged entity will have an (increased) incentive to engage in
             input foreclosure towards MVNOs including those currently hosted on TMA's
             mobile network.169 By engaging in input foreclosure either partially (by
             increasing the wholesale access and call origination service prices or offering
             worse quality of service), or fully (by no longer offering wholesale access and
167 Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria.
168 Commission decision of 12 December 2012 in case M.6497 – Hutchison 3G Austria/Orange Austria.
169 TMA currently hosts a total of 9 MVNOs (corresponding to 10 mobile brands), of which HoT is by far
    the largest (see Table 7A(3), page 175 of the Form CO).
                                                       67
 ---pagebreak---              call origination services), the merged entity could trigger subscribers of the
             MVNOs hosted on TMA's mobile network to switch to other providers. Pre-
             merger, TMA can be expected to have an incentive to engage in such a
             strategy if the increased retail profit from MVNO subscribers switching to
             TMA more than compensates for the foregone TMA wholesale profit on the
             MVNO subscribers switching away. This trade-off depends crucially on what
             percentage of the various MVNO subscribers would choose TMA as their
             alternative provider and how TMA's wholesale profit margin relates to its
             retail profit margin. Based on the observation that TMA does not currently
             engage in such a strategy it can be considered that the potential retail profits
             on recaptured subscribers pre-Transaction would not exceed the foregone
             profits on the corresponding wholesale access towards the MVNOs.170
    (332) The Commission notes that, first, UPC is not active on the wholesale market
             for access and call origination services on mobile networks in Austria and
             therefore no merger-specific change to TMA's wholesale profit margins
             towards MVNOs is to be expected due to horizontal effects. Second, as
             concluded in Section 4.2.1, the Transaction is not expected to lead to higher
             prices, and therefore higher margins, in the retail mobile telecommunication
             services as a result of horizontal effects either. Therefore, the only potential
             difference in incentives to engage in input foreclosure for the merged entity
             compared to TMA pre-Transaction relates to the fact that the merged entity
             would recapture not only MVNO subscribers switching to TMA but also
             those that would potentially switch to UPC. Given the marginal presence of
             UPC in the retail market for mobile telecommunication services in Austria
             ([0-5]%171) the Commission concludes that the merged entity's incentive to
             engage in input foreclosure would not be appreciably higher compared to that
             of TMA pre-merger.172 Therefore, the Commission considers that the merged
             entity will have no incentive to engage in input foreclosure.
    (333) The views of the respondents to the market investigation are mixed with
             respect to the expected impact of the Transaction on the business of
             MVNOs.173 The majority of respondents believe that there will be no material
             change of price and/or other conditions of competition in the wholesale access
             and call origination market in Austria as a result of the Transaction. However,
             the market investigation revealed mixed views as to whether the Transaction
             will have an impact on the incentives of the merged entity to provide
             wholesale access. Similarly, there are mixed views as to whether the incentive
             of A1 and H3A to grant wholesale access to their respective networks will
170 As an illustrative example, the market share of HoT, the largest MVNO hosted on TMA's network, in
    the retail market for mobile telecommunication services in Austria is currently [5-10]% whereas
    TMA's is [20-30]% (Form CO, Table 7A(4)(a), page 178). Assuming that all providers in this market
    are equally close competitors to each other and any subscribers switching would be distributed to
    competing providers proportionally to their respective market shares, TMA would only recapture
    approximately [20-30]% of all HoT subscribers switching away. This means that TMA's retail margin
    would need to be roughly [3 to 5] times larger than its wholesale margin for input foreclosure to be
    profitable, which does not appear to be the case.
171 See above paragraph (128).
172 Whereas TMA could be expected to recapture approximately [20-30]% of HoT switchers, the merged
    entity could be expected to recapture approximately [20-30]% of those, and the wholesale margin of
    the merged entity would need to be approximately [3 to 5 times] the size of the retail margin for input
    foreclosure to be profitable, a marginal difference compared to TMA's stand-alone incentives.
173 Questionnaire Q2, reply to question F.1.5.
                                                         68
 ---pagebreak---              change.174 Finally, a majority of respondents consider that the Transaction
             will have a negative impact on the ability of existing MVNOs to continue
             operating in Austria175 However, the Commission notes that the provided
             justifications do not suggest that this would be caused by anti-competitive
             foreclosure as three respondents consider that competition at the retail level
             will become fiercer. The Commission therefore considers that results of the
             market investigation, although not entirely consistent, seems to suggest that
             anti-competitive foreclosure on the wholesale market for access and call
             origination services is unlikely, considering that the few concerns expressed
             are either unsubstantiated or not merger-specific.
    (334) In light of the analysis above, the Commission concludes the Transaction does
             not raise serious doubts as to its compatibility with the internal market with
             respect to the vertical relationship between the market for wholesale access
             and call origination on mobile network and the market for retail supply of
             mobile telecommunications services.
             b. Vertical link between wholesale market for access and call origination
                 services on mobile networks and retail internet access services
    (335) Wholesale access and call origination services are also an input for the
             provision of retail (mobile) internet access services by MVNOs that do not
             have an own mobile infrastructure. During the Commission's market
             investigation one respondent (Ventocom) raised the concern that following
             the Transaction, the merged entity would be likely to foreclose MVNOs from
             access to TMA's mobile infrastructure, with a view to protecting its position
             on the market for retail internet access services.176 Further feedback from the
             market investigation also relevant for this assessment is set out in
             paragraph (333) above.
    (336) In terms of ability, the Commission notes that the merged entity's ability to
             foreclose MVNOs from wholesale access on mobile networks is limited as
             these could be either hosted by H3A or by A1 (see above). In this respect the
             Commission recalls the finding that entry in the retail internet access services
             market is relatively easy (see Section 4.2.1). In particular, MVNOs have the
             ability to switch to H3A which is under an obligation to provide non-
             discriminatory access to its mobile network under the commitments in
             case M.6497.
    (337) In terms of incentive, the key question is whether, following the Transaction,
             the merged entity will have an (increased) incentive to engage in input
             foreclosure towards the MVNOs in view of its increased market position in
             the downstream market due to the addition of UPC's retail internet access
             services customers.
174 Questionnaire Q2, reply to question F.3.1 and F.3.2
175 Questionnaire Q2, reply to question F.4 and F.4.1.
176 Ventocom also submitted that the Transaction would enable the merged entity to offer multiple play
    bundles which would create an incentive to foreclose Ventocom. The Commission’s assessment
    contained in paragraphs (335) to (340) applies equally to multiple play bundles. In particular, the
    Commission notes that TMA’s mobile data services are not available with retail TV or fixed telephony
    services (paragraph (244)) suggesting that mobile broadband services may not be direct substitutes to
    those product bundles.
                                                        69
 ---pagebreak---     (338) In this respect the Commission notes that in its assessment of potential
            horizontal non-coordinated effects in the retail internet access services market
            (see Section 4.2.1) it reached the conclusion that TMA and UPC are relatively
            distant competitors within this market. This was mainly based on an
            assessment of the closeness of competition between TMA's mobile cubes and
            UPC's fixed broadband offering. However, more than [70-90]% of internet
            service subscribers of those MVNOs hosted by TMA use mobile data-only
            products other than mobile cubes that, if anything, are even more distant
            substitutes to UPC's fixed broadband offering than mobile cubes. Based on
            these findings, the Commission considers that if TMA were to foreclose
            access to its mobile network to the MVNOs hosted on it, the percentage of
            potential switchers that would divert to UPC's internet access services on its
            fixed network would be very small. The Commission therefore concludes on
            this point that the Transaction would not have an appreciable effect on the
            incentives of the merged entity, compared to those of TMA, to engage in
            input foreclosure of its mobile network for the downstream provision of retail
            internet access services by host MVNOs.
    (339) In relation to the potential impact of foreclosing MVNOs on the retail market
            for internet access services, the Commission notes that currently the
            competitive position of MVNOs in the retail market of internet access
            services is very limited. When focusing on residential customers, according to
            data provided by the Notifying Party the total market share of all MVNOs was
            merely [0-5]% in 2017 (the market share of MVNOs is [0-5%] for business
            customers). It follows that the impact of potential input foreclosure on this
            market would not be significant.
    (340) In light of the analysis above, the Commission concludes that the Transaction
            does not raise serious doubts as to its compatibility with the internal market
            with respect to the vertical relationship between the market for wholesale
            access and call origination on mobile networks and the market of retail supply
            of internet access services.
4.3.2. Wholesale leased lines
    (341) The wholesale leased lines market lies upstream from several downstream
            markets, as explained in paragraph (104). Since the upstream product of
            wholesale leased lines is basically the same irrespective of the downstream
            market in which it is used, the analysis that follows holds true mutatis
            mutandis for all these vertical links.
4.3.2.1. The Notifying Party's view
    (342) The Notifying Party submits that the Transaction will not lead to any input
            foreclosure with respect to wholesale leased lines.
            If the wholesale market for leased lines is defined nationwide
    (343) First, according to the Notifying Party the merged entity will remain a
            negligible supplier of wholesale leased lines in Austria post-merger. The
            Parties' combined shares are low both in the overall Austrian market for
            wholesale leased lines (approximately [0-5]%) as well as in all plausible sub-
            segments thereof (see 3.1.5.3 above) and, hence, it is excluded that the
                                                  70
 ---pagebreak---            merged entity would have the ability to foreclose customers, including other
           MNOs, from access to wholesale leased lines.
    (344) Second, according to the Notifying Party there are an important number of
           suppliers of wholesale leased lines such as A1 and energy utility companies
           from which customers, including MNOs, can obtain access to wholesale
           leased lines.
    (345) Third, according to the Notifying Party A1 is subject to access and price
           regulation with regard to the supply of wholesale terminating segments of
           leased lines (including dark fibre) in large parts of Austria with the exception
           of those product and geographic segments where the TKK found the existence
           of a sufficient degree of competition and the absence of significant market
           power by any supplier.
           If the wholesale market for leased lines is defined on the level of communes
    (346) According to the Notifying Party vertical input foreclosure concerns would
           also not arise if one considered hypothetical local markets for wholesale
           terminating segments of leased lines at the level of communes.
    (347) First, according to the Notifying Party, amongst the communes in which UPC
           is currently supplying wholesale terminating segments of leased lines and/or
           has negotiated about wholesale leased lines with [name of third party]
           since 2014, there are no communes where UPC is the single supplier of
           wholesale terminating segments of leased lines or where A1 and UPC would
           be the only two suppliers. Based on UPC's estimates, in approximately
           [30-40%]% of these communes there are two competitors in addition to UPC,
           in approximately [20-30%]% there are three additional competitors, in
           approximately [20-30%]% there are four additional competitors, and in
           approximately [20-30%]% there are five or more additional competitors.
    (348) Second, in most of the communes in which UPC is currently supplying
           wholesale terminating segments of leased lines177 and/or has negotiated about
           access to wholesale terminating segments of leased lines with [name of third
           party] since 2014, A1 is subject to access and price regulation with regard to
           wholesale terminating segments of leased lines (including leased lines with
           traditional interfaces, Ethernet services with guaranteed bandwidth and dark
           fibre). Approximately 70% of these communes are not included in the list of
           359 communes of the TKK 2014 decision178 and approximately 64% of these
           communes are not included in the list of 355 communes of the TKK 2018
           Draft Decision179. Consequently, alternative offers are available to any
           potential access seeker.
    (349) Third, the merged entity also does not have any incentive to foreclose
           customers, including other MNOs, from access to wholesale terminating
           segments of leased lines. According to the Notifying Party TMA currently
           supplies wholesale leased lines and dark fibre to [name of third party] on the
177 Meaning that, at least one of the two ends of the leased line is found in such a commune.
178 TKK decision of 28 July 2014, M 1.5/2012-135.
179 TKK draft Decision of 16 April 2018, M 1.8/15-61.
                                                         71
 ---pagebreak---             basis of commercial conditions regardless of the fact that TMA and [name of
            third party] are competitors on the retail market for mobile
            telecommunications services and the Transaction does not alter TMA's
            incentives to supply wholesale leased lines and dark fibre to [name of third
            party] under commercial conditions.
    (350) Finally, the Notifying Party submits that [name of third party] is in any event
            not dependent on access to UPC's wholesale leased lines services for [purpose
            of wholesale access to leased lines] purposes. In the scope of the negotiations
            between UPC and [name of third party] which took place between April 2014
            and August 2017 UPC submitted offers for 221 sites to [name of third party]
            at attractive commercial conditions, however, [name of third party] only
            ordered Ethernet services for two sites for testing purposes and for two
            additional sites. In August 2017, after [event in time], [name of third party]
            informed UPC that [name of third party] does not intend to order wholesale
            leased lines services for additional sites from UPC anymore.
4.3.2.2. The Commission's assessment
    (351) During the market investigation, some respondents argued that the
            Transaction could raise competition concerns in relation to the upstream
            market for wholesale leased lines services (and all plausible sub-segments of
            this product market) and (i) the downstream market of retail mobile
            telecommunications services and (ii) the downstream market of the retail
            internet access services market (but not with regard to other relevant
            downstream markets as described in paragraph (341)).
    (352) One H3A raised concerns that leased lines and dark fibre services are
            indispensable for mobile transmission purposes and that through the
            Transaction TMA will acquire one important provider of such services, UPC,
            and will thus gain a significant competitive edge. According to H3A it will
            see its choice of infrastructure suppliers significantly reduced as the merged
            entity, unlike UPC pre-merger,180 will no longer have an interest in offering
            commercially attractive services […]. The same would apply to A1 which is
            already vertically integrated in areas where it is not regulated. This would
            have a negative impact on […] in the retail telecommunications market as
            well as in the retail internet access market (“spill-over effects”).
    (353) The Commission has carefully assessed this complaint and the competitive
            conditions in this sector.
    (354) First, with respect to the prospect of the Transaction having an appreciable
            effect on the merged entity's ability to foreclose downstream competitors from
            the upstream input of wholesale leased lines the Commission notes that the
            Parties' commercial activities in this wholesale leased lines market are
            currently extremely limited with insignificant markets shares at the national
            level. With regard to the trunk segment the Commission notes that the
180 According to that MNO low-priced leased line (etherlink) prices offered to date by UPC exerted
    competitive pressure in contract negotiations with other suppliers of fixed line access. This has led to
    prices with other vendors materially lower than A1’s regulated prices. Hence, the de facto
    disappearance of UPC as a potential vendor for that MNO will damage H3A’s position for access to
    indispensable infrastructure.
                                                       72
 ---pagebreak---             combined market shares of the Parties is low ([10-20]%) and the increment of
            [0-5]% very low and that there are at least ten other competitors present,
            among these the incumbent and market leader A1, as well as Tele2(H3A).181
            At the commune level, based on a comparison of data submitted by RTR and
            the Parties there exist only 24 communes182 where the merged entity would
            hold significant market shares (>30% market share in terms of number of
            lines) in potential sub-segments of wholesale terminating segments of leased
            lines. However, those communes represent less than 3% of the Austrian
            population.
    (355) The Commission also notes that in many of those communes, A1 also has a
            strong presence and could provide access to its wholesale terminating
            segments of leased lines. Specifically, in 18 out of these 24 communes TKK
            found, in the 2014 Decision183, that A1 had significant market power within
            the meaning of electronic communications regulation in the wholesale leased
            lines market. Consequently, in those communes A1 is subject to access and
            price regulation with regard to wholesale terminating segments of leased lines
            (including leased lines with traditional interfaces, Ethernet services with
            guaranteed bandwidth and dark fibre) which have at least one end in these
            communes, bringing the percentage of the Austrian population living in a
            commune where foreclosure might be a hypothetical possibility down to less
            than 0.04%.
    (356) In the remaining 6 communes, TKK found that there is sufficient competition
            so that wholesale regulation would not be necessary. This in turn suggests that
            the Parties' ability to foreclose is likely limited, even after the Transaction.
    (357) Furthermore, the Transaction is unlikely to have an appreciable effect on the
            merged entity's ability to foreclose downstream competitors for similar
            reasons to those for which the Transaction would not lead to anti-competitive
            horizontal effects on the market for wholesale leased lines (see Section 4.3.2).
    (358) Second, with respect to the prospect of the Transaction having an appreciable
            effect on the merged entity's incentive to foreclose downstream competitors
            from the upstream input of wholesale leased lines the Commission notes that
            such an incentive would be limited. Indeed, on national as well as on
            commune level there are other competitors present to which customers could
            easily switch to. These include the incumbent A1, who is subject to access
            and price regulation with regard to wholesale terminating segments of leased
            lines (including leased lines with traditional interfaces, Ethernet services with
            guaranteed bandwidth and dark fibre) in large parts of Austria and in the
            majority of the communes listed in paragraphs (354) and (355) above.
    (359) Third, even if the merged entity were assumed to have an incentive to engage
            in input foreclosure the Commission considers that the likely impact on
            effective competition in the relevant downstream markets would be
181 Based on data of RTR submission of 3 July 2018.
182 This assumes a segmentation of the guaranteed bandwidth at 10 Mbit/s. See Footnote 62. The results
    would be similar and hence the same reasoning would apply if a segmentation of the guaranteed
    bandwidth at 2 Mbit/s were applied.
183 TKK Decision of 28 July 2014, M 1.5/2012-125, sections 2.1.1. and 2.1.2.
                                                    73
 ---pagebreak---              insignificant. All the relevant markets that are downstream to the wholesale
             leased lines market are national in scope. Hence, the Commission considers
             that any foreclosure strategy affecting at most a tiny share of the Austrian
             population would be incapable of leading to an appreciable increase of the
             costs of downstream products and hence there would be no upwards pricing
             pressure on their sales prices.
     (360) Fourth, during its market investigation the Commission found no evidence
             undermining any of the points put forward by the Parties in paragraphs (342)
             until (350) above, which the Commission considers valid and relevant.
     (361) Fifth, the fact that according to the Notifying Party [name of third party] only
             procures Ethernet services for [0-5] sites and has informed UPC that it does
             not intend to order wholesale leased lines services for additional sites from
             UPC anymore demonstrates that [name of third party] is not dependent on
             wholesale access to leased lines from UPC in order to be able to provide its
             retail telecommunications and retail internet access services in Austria.184 This
             limits any potential impact from a possible foreclosure strategy of the merged
             entity. In addition, [name of third party] appears to rely in many instances on
             microwave connections for mobile backhauling purposes. The possibility to
             rely on microwave technology instead of fixed infrastructure in the form of
             leased lines further limits any potential impact from hypothetical foreclosure.
     (362) Finally, other respondents to the market investigation than [name of third
             party] did not raise specific vertical foreclosure concerns.185 No respondent to
             the market investigation (except for [name of third party]) indicated that post
             transaction (i) MNOs will not have wholesale access to UPC's leased lines at
             similar conditions as those today or (ii) that A1's access conditions will
             deteriorate post Transaction.186 In contrast, two respondents indicated that
             (i) MNOs will not have wholesale access to UPC's leased lines at similar
             conditions as those today and (ii) two respondents indicated that A1's access
             conditions will either remain more or less the same or will even improve.187
4.3.2.3. Conclusion
     (363) In light of the analysis above, the Commission concludes that the Transaction
             does not raise serious doubts as to its compatibility with the internal market
             with respect to the vertical relationship between the market for wholesale
             access to leased lines and the relevant downstream markets mentioned in
             paragraph (341) above.
4.4.     Assessment of conglomerate effects: Multiple-play bundles
     (364) TMA's services in the market(s) for retail mobile telecommunications services
             and UPC's services in the markets for fixed telecommunications services are
184 According to the Notifying Party's information even though UPC and [confidential information about
    the customer relationship between UPC and the third party].
185 Two respondents to the market investigation were generally pointing to the fact that a further
    concentration in the market for wholesale leased lines would not be beneficial to competition since
    prices may increase, Questionnaire Q6, Section C. Impact of the Transactions.
186 Replies to Questionnaire Q6, Section B. .C.2, B.C.3.
187 Replies to Questionnaire Q6, Section B. .C.2, B.C.3.
                                                       74
 ---pagebreak---             complementary or at least closely related. Accordingly, the Commission has
            examined whether the Transaction would give rise to conglomerate effects by
            foreclosing competitors in the retail market for mobile telecommunications
            services, the retail market for fixed telephony services, the retail market for
            internet access services, the retail market for fixed telephony services and/or a
            potential market for multiple-play bundles with mobile and fixed components.
    (365) According to the Commission's Guidelines on the assessment of Non-
            horizontal Merger Guidelines,188 conglomerate effects require (a) the ability to
            foreclose, (b) the incentives to foreclose and (c) the likelihood that a
            foreclosure strategy would have a significant detrimental effect on
            competition and harm consumers. In order to be taken into account, any
            conglomerate effect must be merger specific. In other words, the
            conglomerate effect must result from TMA's acquisition of UPC.
4.4.1. The Notifying Party's views
    (366) The Notifying Party submits that the Transaction does not raise any concerns
            with regard to a hypothetical market for multiple-play services in Austria.
    (367) First of all, as TMA is essentially not active on such a hypothetical market,
            the Parties' activities do not overlap.
    (368) According to the Notifying Party, the Transaction will establish a third fixed-
            mobile operator which owns fixed and mobile infrastructure and will be able
            to offer a broad range of fixed and mobile telecommunications services (fixed
            telephony, fixed internet, cable TV and mobile telecommunications) to
            business and private customers in Austria. As such, TMA/UPC will be able to
            compete with the incumbent A1 and with H3A in an increasingly convergent
            market environment.
    (369) The significant market share detained by UPC in the triple play segment is not
            very informative, because of the interaction between the different bundles. In
            any event, the market shares of the individual services included in a multiple-
            play offering are much more informative than shares of hypothetical segments
            for multiple-play services and show that (i) the merged entity's estimated
            market shares do not exceed 30% on any of the four retail markets for the
            single components of multiple-play services and (ii) A1 is the clear market
            leader in the area of fixed and mobile telecommunications services in Austria,
            including in the field of multiple-play services.
    (370) In any case, the Notifying Party submits that the Transaction will neither
            create nor increase the merged entity's ability or incentive to engage in
            practices which result in anticompetitive foreclosure of competitors:
            -     the Transaction will neither create nor increase the merged entity's ability
                  or incentive to offer fixed-mobile multiple-play services, because
                  (i) UPC is already active as fixed and mobile provider and therefore is
                  already in a position to sell both fixed and mobile services as well as
                  fixed-mobile multiple-play services regardless of the Transaction, and
188 Non-horizontal Merger Guidelines, paragraph 91 onwards.
                                                     75
 ---pagebreak---                 (ii) UPC's position on the retail fixed markets will remain substantially
                unchanged, as TMA is not active on any of these markets;
          -     there will not be any incentive to increase price of fixed services to
                cross-subsidize a mobile component in fixed-mobile bundles, because
                (i) the demand for fixed-mobile bundles is still underdeveloped in
                Austria and therefore customers would switch to another provider of
                fixed products, and (ii) A1 and other providers of fixed services would
                have strong incentives to undermine any hypothetical strategy to increase
                prices for fixed services by continuing to compete aggressively for
                standalone fixed customers;
          -     as a counterstrategy, mobile-only operators could decide to launch fixed-
                mobile multiple-play services on the basis of A1's regulated wholesale
                access services to engage in bundle-to-bundle competition;
          -     more than 50% of Austrian TV households have satellite connections
                and do not usually purchase TV services in a bundle with mobile
                telecommunications services. Consequently, there is a large customer
                base in Austria which is not interested in purchasing TV services in a
                bundle with mobile telecommunications services;
          -     outside the UPC footprint, the merged entity will not be in a position to
                offer fixed-mobile multiple-play services on the basis of UPC's cable
                network;
          -     fixed-mobile convergence is still at a nascent stage in Austria compared
                to other Member States.
    (371) The Notifying Party concludes that the Transaction does not give rise to
          anticompetitive conglomerate effects. On the contrary, the merged entity's
          ability to offer fixed-mobile multiple-play services is pro-competitive.
4.4.2. The Commission's assessment
    (372) The Commission has assessed the likely impact of the Transaction on the
          merged entity's ability and incentive to engage in practices related to multiple
          play bundles which would result in anticompetitive foreclosure of competitors
          in the retail market for mobile telecommunications services, in the retail
          market for fixed telephony services, in the retail market for internet access
          services, the retail market for fixed telephony services and/or in a potential
          market for multiple-play bundles with mobile and fixed components..
    (373) Some participants to the market investigation have expressed concerns with
          respect to the possibility for the merged entity to foreclose mobile operators
          by offering multiple play bundles.
    (374) Ventocom submits that the Transaction will enable TMA to market multiple
          play products and consequently to leverage its market power in the mobile
          area to the fixed services markets, with a consequential "lock in" effect for
          subscribers, in particular also with respect to bundles of residential broadband
          and mobile. That would be detrimental for MVNOs which cannot offer
          bundles (for lacking access to residential broadband market).
                                                76
 ---pagebreak---     (375) Similarly, H3A submits that the Transaction can have exclusionary effects, as
            it will create a symmetric duopoly (A1/TMA-UPC) of two incumbents with
            market power in the retail markets of both fixed and mobile
            telecommunications services. According to H3A, the two incumbents will
            pursue a fixed-mobile convergence (FMC) strategy with the intention and
            effect of marginalising mobile-only players […]. H3A submits that the
            merged entity will have […].
    (376) A1 also submits that the merged entity could leverage the strong market
            position in the fixed broadband segment to other business areas, and
            ultimately increase prices in such areas as well. In particular, the combination
            of UPC with TMA as a strong mobile provider would enable the merged
            entity to expand and secure UPC’s existing strong position through the
            offering of bundled (fixed and mobile) products.
    (377) Another respondent to the market investigation argues that following the
            Transaction the merged entity would be able to provide stronger multiple play
            offers which would further strengthen its position and attract customers from
            mobile operators.189 Other respondents pointed to negative effects because of
            the reinforcement of TMA and the ability of the merged entity to offer
            fixed/mobile products.
    (378) The Commission has assessed whether the merged entity could be able to use
            its market power in one market to foreclose competitors in another market by
            bundling fixed and mobile products after the Transaction.
    (379) As regards the ability to engage in bundling, the Commission notes that UPC
            is currently able to offer fixed-mobile bundles, by relying on an MVNO
            agreement. As such, one of the Parties already has prior to the Transaction the
            ability to engage in bundling. The Transaction will allow the merged entity to
            offer fixed-mobile bundles that are based on its own fixed and mobile network
            infrastructure.
    (380) As regards the ability to foreclose rivals, the new entity must have a
            significant degree of market power in at least one of the concerned markets.
            That is, at least one of the merging parties' products must be viewed by many
            customers as particularly important and there must be few relevant
            alternatives for that product.190
    (381) With respect to the market for retail mobile telecommunications services in
            Austria, the merged entity's market share will be below 30%, which can be
            seen as a first indication of the lack of market power. Moreover, there are at
            least two significant competitors with comparable market position (A1 and
            H3A). The Commission is therefore of the view that based on its position in
            the retail mobile market, it is unlikely that after the Transaction the merged
            entity will have the ability to leverage its position in the retail mobile market
            into the retail market for fixed telephony services, the retail market for
            internet access services, the retail market for TV and/or in a potential market
            for multiple-play bundles with mobile and fixed components.
189 Questionnaire Q2, reply to question F.1.1.1.
190 Non-horizontal Merger Guidelines, paragraph 99.
                                                    77
 ---pagebreak---     (382) Similarly, the merged entity's estimated market shares will not exceed 30% on
              any of the three retail markets for the single fixed components.191 With
              respect to dual play offers, currently UPC has a limited market share of
              [10-20]% in the fixed Internet and TV segment and [10-20]% in the fixed
              internet and fixed telephony segment.
    (383) The only potential market where UPC has a sizable market share is the fixed
              triple play offers (internet, telephony and TV), where it has an estimated share
              of [50-60]%. However, the Commission notes that customers in Austria have
              relevant alternatives in the TV market: triple play bundles including TV
              represent just about 15% of the total TV households in Austria. Satellite TV
              connections are common in Austria and satellite customers do not normally
              buy fixed triple play bundles. Furthermore, triple bundles are offered by A1,
              which is also the market leader in the single components, and by other fixed
              operators active at local level. Moreover, irrespectively of the market
              definition, fixed triple play products can be substituted by the included
              components. For example, instead of a fixed triple play product, customers
              could buy separately TV and fixed internet/telephony. Therefore, the merged
              entity will not enjoy a strong enough position even in this specific segment to
              foreclose in the adjacent markets.
    (384) In any case, the Commission has also assessed whether the merged entity will
              have an incentive to engage in bundling of fixed and mobile services to
              foreclose mobile-only rivals from effectively competing for customers who
              purchase both fixed and mobile services.
    (385) After the Transaction, the merged entity might have an incentive to introduce
              a price-discrimination strategy consisting of somewhat increasing the price of
              the standalone products and/or to lower the price of fixed-mobile bundles.192
    (386) However, as regards the incentive for the merged entity to increase the price
              of the standalone fixed components after the Transaction, in light of the
              merged entity's market position in the relevant markets (see paragraphs (381)
              - (383)) and the fact that many consumers in Austria still subscribe separately
              to fixed and mobile products, in particular the incentives to increase the prices
              of the standalone products are limited.193 In this regard, in particular A1
              enjoys a strong market position and offers alternative fixed and mobile
              products. The incentives are further mitigated by the fact that the merged
              entity will have a fixed cable infrastructure that covers only about [30-40]%
              of the Austrian households and hence cannot rely on this infrastructure to
              offer fixed and mobile bundles in large parts of Austria. As regards the claim
              that low churn rates for bundles would allow the merged entity to raise price,
191 The retail market for fixed telephony services, the retail market for internet access services and the
    retail TV distribution market.
192 Commission decision of 3 August 2016 in case M.7978 – Vodafone/Liberty Global/Dutch JV,
    recital 625. The Commission considers that that the merged entity will have no incentive to
    "subsidize" mobile-only products, offering such products at a price below average variable costs or
    average total costs. Such a predatory strategy cannot be expected to induce H3A to leave the market as
    H3A is a well-established market participant and there are no indications that it would suffer from any
    liquidity constraints.
193 In light of this the Commission also considers that the merged entity will have no incentive to engage
    in pure bundling, that is, to exclusively offer fixed-mobile bundles.
                                                          78
 ---pagebreak---              the Commission notes that churn rates may well increase if prices of bundles
             were increased.
    (387) As a result of this price discrimination strategy, customers who buy fixed and
             mobile products separately could incur an increase in their total cost of
             ownership while customers who opt into the bundle could be better-off.
             However, unless it has the (intended or unintended) consequence of
             marginalising mobile-only competitors, price discrimination is unlikely to
             have significant anticompetitive effects.
    (388) As for the possible impact on mobile-only operators, it appears that only
             relatively few customers currently use fixed-mobile bundles194 and a
             significant demand for mobile-only products will remain on the market.
             Moreover, any potential impact of such price discrimination strategy is further
             mitigated (i) by the ability of mobile-only operators to respond by lowering
             the price of the mobile component, and (ii) by the possibility for mobile-only
             operators to start offering fixed/mobile bundles (possibly including hybrid
             products) based on A1's regulated fixed wholesale offer.
    (389) It can be added that H3A is not a pure mobile operator, as in November 2017
             H3A completed the acquisition of Tele2's Austrian unit, active as provider of
             fixed telecommunications services mainly to business customers in Austria.
             H3A itself has publicly announced that after the consolidation, it plans to roll
             out new offers of complete telecommunication and IT, as well as innovative
             bundles for its residential customers.195
    (390) Based on the above, the Commission considers that the Transaction may only
             confer to the merged entity a limited ability (if any) to leverage its market
             position in the fixed triple play market to foreclose mobile competitors. The
             Commission does not consider that the Transaction would confer to the
             merged entity the ability to impact the market share of mobile-only players to
             such an extent that they would be marginalised or entirely foreclosed.
    (391) The Transaction might accelerate the trend towards fixed-mobile
             convergence. By joining a strong fixed offer with a strong mobile offer, the
             Transaction could somewhat speed up the uptake of fixed-mobile bundles.
             However, the Commission considers that even where customers would be
             converted more rapidly into fixed-mobile bundles, this does not in itself
             undermine the ability of mobile-only competitors to effectively compete for
             customers.
    (392) As for the concerns regarding coordination between the merged entity and A1
             with respect to fixed-mobile bundles, leading to higher prices, the
             Commission considers that there is no increased risk of stable coordination
             emerging post-Transaction.
194 The Notifying Party mentions a market study of 2017 by Informa/Ovum in accordance to which only
    2% of fixed broadband services customers purchase those services as part of a bundle including mobile
    voice.
195 See        https://www.telegeography.com/products/commsupdate/articles/2017/11/09/hutchison-drei-
    completes-takeover-of-tele2-austria/,
                                                     79
 ---pagebreak---     (393) Given that at present TMA in not active in this market, the Transaction will
            not decrease the number of providers that offer a full range of bundles. There
            are also no indications that coordination with the merged entity would be
            materially easier than with UPC pre-Transaction. In any case, the Commission
            has already analysed a possible scenario of coordination for the home internet
            access services market in paragraphs (283) to (302) and has concluded that
            there is not sufficient evidence to find that the Transaction would give rise to
            serious doubts as a result of coordinated effects on that market. Most of the
            observations made in this respect are valid for multiple-play bundles as well.
            It can be added that that the number of multiple play bundles is currently
            increasing and that multiple play bundles are more complex products than the
            included components, which also makes coordination more difficult.196 The
            Commission hence draws the conclusion that the Transaction does not give
            rise to serious doubts as a result of coordinated effects with respect to
            multiple-play bundles.
4.4.2.1. Conclusion on conglomerate effects
    (394) Based on the above considerations, the Commission is of the view that the
            Transaction does not give rise to serious doubts as to its compatibility with the
            internal market in relation to anti-competitive conglomerate effects. In
            particular, the Commission considers that the Transaction would not lead to
            the marginalisation of mobile-only rivals.
5.      CONCLUSION
    (395) For the above reasons, the European Commission has decided not to oppose
            the notified operation and to declare it compatible with the internal market
            and with the EEA Agreement. This decision is adopted in application of
            Article 6(1)(b) of the Merger Regulation and Article 57 of the EEA
            Agreement.
                                                        For the Commission
                                                        (Signed)
                                                        Margrethe VESTAGER
                                                        Member of the Commission
196 Horizontal Merger Guidelines, paragraph 45.
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