RCS&RDS alliance with UPC may create competitive tension on telecom market, lawyers say

A potential acquisition of UPC Romania by RCS&RDS, which would turn the new company into the owner of the biggest private communications infrastructure and the undisputed leader of the TV and Internet markets could be under scrutiny by the Competition Council for as much as six months, and the authority might require RCS to drop certain operations, the officials of Mușat & Asociații and Nestor Nestor Diculescu Kingston Petersen (NNDKP) told Ziarul Financiar.
“One may believe that there might be some chances of approval, but it depends on how and under what terms the deal will be approved,” says Georgeta Harapcea, competitive law practice manager with NNDKP. It all depends on the result of the Competition Council’s analysis, “i.e. on whether the acquisition raises significant obstacles in terms of competition or whether, even though a powerful entity is created, there are enough current/potential competitive constraints left, which this entity will have to face.” Is it therefore possible for a merger that would create a player with more than 40% of the TV, fixed telephony and Internet market to get CC’s approval?
“CC may, for instance, agree only to a partial takeover of UPC’s business by RCS&RDS, or condition it to the divestment of certain operations of RCS&RDS,” Harapcea adds.
“Market shares in themselves are not indicative of a dominant position but only of the possibility thereof. As such, they are only the beginning of the analysis,” explained Anca Buta Mușat, Mușat & Asociații partner in charge of the competition department.