Several major telecom companies, as well as Amazon.com, Inc. AMZN, have come under recent scrutiny from the European Union, as concerns over market dominance continue to grow. Among the EU’s expressed risks for consumers are more expensive bills and reduced innovation as a result of these companies’ increasing market share.
Merger Prevalence
Currently, the EU is investigating several merger proposals in the telecom sector, including an upcoming $16 billion deal between British telecom companies Hutchison Whampoa Ltd. (ADR) OTC: HUWHY) and Telefonica’s O2 UK. The deal, if it goes through, would make Hutchison Whampoa the largest telecom operator in Britain.
While operators claim that mergers are necessary to increase their investment, the EU argues that there is no evidence to support this claim and that too many mergers will reduce competition and lead to negative consequences for consumers.
U.S. Concerns
A 2011 bid by AT&T Inc. T to purchase T-Mobile was blocked by the U.S. Department of Justice for the same reasons that are currently troubling the EU, and a proposed 2014 merger between T-Mobile and Sprint Corp S was dropped after similar regulatory push-back.
Ebook Monopoly?
The EU’s concerns over Amazon arise from the company’s contracts with publishers – contracts which could prevent Amazon’s competitors from being able to strike more favorable publishing deals.
EU Action
Disclosure: The author holds a short position in Amazon.
Image Credit: Public Domain© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.