The European Commission has informed O2 CZ and T-Mobile CZ of its preliminary view that their network sharing agreement restricts competition in breach of EU antitrust rules.
Background: The Commission opened a formal investigation in October 2016 into the network sharing agreement between O2 and T-Mobile. The network sharing cooperation started in 2011 and has increased in scope over the years – currently covers 2G, 3G and 4G technologies and almost the entire territory of the Czech Republic with the exception of Prague and Brno, thus amounting to around 85% of the population.
What is the concern? Recognising that network sharing is usually beneficial in terms of faster roll out, cost savings and coverage in rural areas, the EC believe that the agreement reduces competition in the more densely populated areas of the country. These concerns were heightened by the fact that it is only a three player market and that between them, O2 and T-Mobile serve approximately three quarters of subscribers.
What is the suggestion of harm? The EC’s preliminary view is that instead of leading to greater efficiencies and higher service quality, the network sharing agreement is likely to remove the incentives for the two mobile operators to improve their networks and services to the benefit of users. Interestingly the assessment concerns current and legacy technologies (2G/3G/4G) and is without any prejudice to any future assessment of network agreements involving emerging technologies such as 5G, which may have very different characteristics.
