The Portuguese Competition Authority (AdC) intervened to prevent Vodafone from acquiring Cabonitel, the parent company of Nowo, a provider of mobile and fixed-line services.
The AdC’s decision was based on a thorough investigation that concluded the acquisition would reduce competition and negatively impact consumers.
According to the AdC, approving the deal would have strengthened Vodafone’s market dominance and exacerbated barriers to entry for other competitors. This, in turn, was projected to have adverse consequences for consumers.
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The authority contended that Nowo currently exerts significant competitive pressure on other operators, and merging it with Vodafone would likely lead to substantial price hikes. While Vodafone’s own prices might rise to a lesser degree, competitors’ services would see only slight increases.
The AdC stated that the acquisition’s primary aim was to bolster Vodafone’s market position, potentially resulting in annual losses of consumer surplus and social welfare amounting to approximately EUR 54 million and EUR 20 million, respectively.
The merger would also intensify the level of coordinated behavior among Vodafone, NOS, and MEO, the leading operators in Portugal. This heightened coordination would erect barriers that discourage new competitors from entering the market.
The AdC specifically highlighted concerns about Vodafone’s increased control over spectrum, which could potentially restrict access for new entrants. This concentration of spectrum was identified as a significant factor contributing to the regulatory decision to block the merger.
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Vodafone had previously put forward “commitment packages,” which included offering wholesale access to its fiber network to Digi, a new entrant preparing to enter the Portuguese market.
Additionally, Vodafone proposed selling Nowo’s recently acquired spectrum rights to Digi, aiming to alleviate the AdC’s concerns. However, these plans were deemed inadequate by the regulatory authority.
In October 2022, Vodafone announced its intention to acquire Cabonitel from Lorca JVCO. This move was aimed at expanding Vodafone’s customer base and enhancing its coverage of fixed networks throughout Portugal.
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