Ex-post Analysis of Mobile Telecom Mergers: The Case of Austria and The Netherlands

Abstract

Recently there has been an increased attention towards the ex-post evaluation of competition policy enforcement decisions and in particular merger decisions. In this paper we study the effects of two mobile telecommunication mergers on prices. We apply a standard difference-in-differences approach which is widely used in the literature on ex-post evaluation of mergers. For the Austrian T-Mobile/tele.ring merger, we conclude that after the acquisition (for which remedies were imposed) prices in Austria did not increase relative to the considered control countries. For the Dutch T-Mobile/Orange merger, we observe an increase in the mobile tariff prices in the Netherlands in the analysed period, relative to the control countries. We cannot firmly establish whether this price increase was exclusively caused by the T-Mobile/Orange merger or in part by possible price effects brought about by the KPN/Telfort merger consummated two years earlier in the Netherlands. However, we believe that such price increase could be linked to the structural changes brought by both KPN/Telfort and T-Mobile/Orange mergers together.

Static or Dynamic Efficiency: Horizontal Merger Effects in the Wireless Telecommunications Industry

“…14 The estimation results for the Austrian market (Table 4) suggest that, while in general prices for the mobile services experienced a downward trend in the postmerger period (see Appendix 2), post-merger prices in Austria declined also relative to the control group. These results are in line with Aguzzoni et al (2015) that finds that on aggregate there was a statistically significant price decrease in the range of − 2% to − 20% as a result of this merger in Austria. Our results further suggest that the price reaction to the merger was to a larger extent driven by the rivals, as can be seen by the magnitude and significance of the Merging/Rival coefficient in the RPM equations.…”

Static or Dynamic Efficiency: Horizontal Merger Effects in the Wireless Telecommunications Industry

“…Mobile Penetration − 0.006 0.008 − 0.008 0.008 1.348*** 0.137 1.352*** 0.137 to the control group. These results are in line with Aguzzoni et al (2015) that finds that on aggregate there was a statistically significant price decrease in the range of − 2% to − 20% as a result of this merger in Austria. Our results further suggest that the price reaction to the merger was to a larger extent driven by the rivals, as can be seen by the magnitude and significance of the Merging/Rival coefficient in the RPM equations.…”

Evaluating market consolidation in mobile communications

“…Instead of doing this on each merger event separately, here we use the entire panel to identify and quantify the effects. It is interesting to note that a recent study by Aguzzoni et al (2015), which follows this methodology and looks at the merger between T-Mobile and Orange in the Netherlands in 2007, estimates a 10%-17% increase in prices. To further understand heterogeneity in market structure effects, it would be interesting to see more case studies in future research, perhaps also using alternative methods such as structural approaches.…”