After a three-month review, the competition commissioner today (February 22, 2022) approved two merger transactions submitted for approval as part of a debt settlement proceeding being conducted in the Central District Court. One, a merger between Clearmark (Clear) and Expon (Marathon); And the second, a merger between Cellcom and Expon.
With respect to the merger transaction between Clearmark and Expon, it was found that there is no overlap between Clearmark’s areas of activity and Expon’s areas of activity. Thus, the merger does not raise the concern of harm to competition and is therefore unconditionally approved.
The second merger transaction between Cellcom and Expon is intended to regulate the relationship and ownership structure of the cellular network shared by Cellcom and Expon today. The Authority examined the changes between the existing partnership agreement and the new agreement and their effect on Cellcom’s and Expon’s incentives to compete in the cellular market in general and with each other in particular.
The Authority’s investigation found that Expon’s new cost structure is expected to improve its financial position and its ability to offer good terms to customers. Also, as far as the network ownership structure is concerned, Expon will be a partner in the establishment of a 5th generation network and a rights holder in the 4th generation network, so that it maintains to some extent its status as a network owner (MNO).
A purchase option included in the sharing agreement does not raise a significant concern of harm to competition prior to its exercise and will require the approval of the competition commissioner in the future.
Another clause under consideration concerns the possibility of Clearmark requiring Cellcom to grant it a loan to the extent that the purchase option is not approved. The parties sought to approve the loan option in advance, as part of the merger approval. However, exercising the loan option may in some cases cool the competition between Expon and Cellcom, given the oblivion relationship between them. Therefore, the Authority insisted that the loan option would also have to reach the approval of the competition commissioner before it is exercised.
The Commissioner decided to approve the merger between Cellcom and Expon on the condition that it prohibits the provision of credit between the parties without the prior written approval of the Competition Commissioner. The network sharing agreement between Cellcom and Expon will also be examined by the Authority as a restrictive arrangement, a reasoned exemption decision in the matter is available for viewing on the Authority’s website.