Belgian Competition Authority Investigates Deal Between Proximus, Fiberklaar, Wyre, and Telenet for Roll-out of Fibre Networks in Flanders
- 30/07/2024
- News
The Belgian Competition Authority (BCA) announced on 26 July 2024 the opening of an investigation into an agreement on the rolling out of fibre telecommunications networks in Flanders (see, attached BCA press release). The BCA’s move was prompted by a Memorandum of Understanding (MoU) concluded the previous day between telecommunications operator Proximus, Fiberklaar (a joint venture company between Swedish investment firm EQT and Proximus), telecommunications operator Telenet, and Wyre (a joint venture company between utilities firm Fluvius and Telenet).
The MoU sets forth the basic principles for cooperation regarding the roll-out of fibre networks in geographical areas of medium and low population density and would concern 2.7 million residences. In medium density population areas (which cover 2 million homes) Wyre and Fiberklaar would build complementary Fiber-to-the-Home (FTTH) networks and organise reciprocal wholesale access for their respective partners, Proximus and Telenet. In areas that are sparsely populated and concern 0.7 million homes, Proximus would offer services via the Hybrid Fiber Coax network of Wyre. Elsewhere (in large cities and densely populated zones) network competition would play out to the fullest extent and both groups would roll out their own separate infrastructure.
The parties do not expect to sign a fully-fledged cooperation agreement before the fourth quarter of 2024 and expressly indicated that they would seek approval from both the BCA and the Belgian Institute for Postal Services and Telecommunications (BIPT).
Despite the parties’ ostensible intention to clear the transaction with the authorities (mandatory merger control rules would not seem to apply), the BCA was quick to announce an investigation of its own motion. The BCA stated that it would be particularly interested to learn whether the envisaged cooperation is likely to reserve a fair share of the cost-savings and other efficiency gains for network users. The BCA apparently has in mind access conditions, scope and speed of rollout, and other pay-offs of the close cooperation. It said it would take a long-term perspective, given the large investments at stake. The BCA would do well to also consider the societal benefits of the reduced volume of public works which the cooperation promises.
The BCA’s new investigation follows the BCA’s inquiry into NetCo, as Wyre was formerly known. The BCA was concerned that the creation of NetCo would give rise to conflicts of interest distorting competition in the deployment of fibre networks, due to (i) the indirect ownership of Fluvius by Flemish cities and municipalities responsible for the granting of public works permits; (ii) the unique position of Fluvius as a network operator in the fields of energy, heating and water; and (iii) the dealings between Fluvius and telecommunications network operators in the framework of public work synergies. Telenet and Fluvius accommodated these concerns by adopting a series of measures that would apply for seven years, starting in April 2023. The BCA then decided to terminate its inquiry. The creation of NetCo was separately authorised by the European Commission under the European merger control rules in May 2023.
Building on this episode, the BCA announced on 16 October 2023 that it would examine any form of cooperation between telecommunications operators for the roll-out of fibre infrastructure in Belgium in close cooperation with the BIPT. The BCA message mirrored the position of the BIPT which had been made public a few days earlier and was widely regarded as an attempt to balance the need for promoting effective infrastructure-based competition with an awareness of the economic impact of duplicating FTTH infrastructure.
