The EC believes Oscar could hamper competition

The European Commission’s competition watchdog has opened an in-depth investigation into the proposed creation of a mobile wallet joint venture by UK carriers Vodafone, Telefónica and Everything Everywhere (T-Mobile and Orange).

The Commission VP in charge of Competition policy, Joaquín Almunia, said he is looking at the venture under EU Merger Regulations with regards to competition in the nascent sector of m-payments, mobile advertising and data analytics – all areas in which the mobile operators will have a strong presence.

It seems likely competitive concerns were raised by the one UK operator absent from the joint venture, 3UK, which would find itself shut out of the party.

Indeed, Almunia said that the Commission’s initial investigation revealed that the joint venture – known as Oscar – and its three parent companies may have the technical and commercial ability and incentive to block future competitors from offering their own mobile wallet services to customers in the UK, or to degrade the quality of these competing mobile wallets so that they become less attractive.

“We need to make sure that competing services can keep emerging on this market, so that incentives to innovate remain and customers get the best mobile commerce services at the best cost,” he said.

The Commission now has 90 working days, until 27 August 2012, to take a final decision on whether the proposed transaction would reduce effective competition in the European Economic Area.

Watch this space for our mobile money focus.

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