KPNQwest/ Ebone/ GTS Horizontal Merger

Editor's Note: This case is based on European Commission decision Case COMP/M.2648 - KPNQwest/Ebone/GTS. Click here to access to the decision.

In December 2001, the Dutch carrier KPNQwest sought approval from the European Commission (EC) for the acquisition of Global TeleSystem’s Ebone and Central Europe businesses. Both KPNQwest and GTS previously supplied a range of wholesale and retail services including dedicated transit services, wholesale internet connectivity, dedicated internet access, corporate managed data services, and web hosting.

The EC found, however, that “according to the information submitted in the Form CO the proposed transaction does not lead to any horizontally affected market, i.e. irrespective of the market definition chosen the combined market shares of the parties amount to less than 15% for the services identified above.”

The EC also found no need to precisely define the product and geographic markets for the set of services affected because, at a global level, the merged entity would not have sufficient market share to raise significant competition concerns (particularly when European consumers remained primarily dependent on U.S.-based service providers).

In the global and European wholesale internet connectivity markets, the EC determined that the merged entity would have a share of less than 10% in both. Even with the addition of Qwest’s market shares it was not likely that the merged entity would reach a “significant market position.”

Despite several third party arguments that the merged entity would represent one of the largest providers in Europe, the Commission approved the merger on January 16 2002.

The commission stated that the new entity would continue to face strong competition from various European providers.


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