BRUSSELS/VIENNA (Reuters) - Hutchison 3G (0013.HK) won European Union approval for its 1.3 billion euro ($1.7 billion) takeover of Orange Austria FTE.PA on condition it helped new players enter the market.
The European Commission said it had been worried that the transaction would lead to higher prices and less competition but said Hutchison's commitments to sell radio spectrum and open up its network to new rivals had addressed its concerns.
The ruling on the deal, which was agreed by the parties a year ago, will be a relief to the telecoms sector, where operators had worried that regulators would frown on mergers reducing the number of competitors in national markets.
Analysts say four-player markets like Germany and Spain are ripe for consolidation that could help to offset falling sales and profits.
Completion of the Hutchison-Orange takeover is still conditional on a linked deal for Austrian incumbent Telekom Austria (TELA.VI) to buy budget mobile brand Yesss from Orange, which could be stopped by Austria's BWB competition authority.
A BWB spokesman said this week it would likely appeal against the Austrian cartel court's approval of the 390 million euro Yesss deal, which would delay completion for long enough for Telekom Austria to be able to walk away.
The BWB will decide whether to put in an official appeal by the beginning of next week.
Orange Austria and Hutchison 3G Austria welcomed the European Commission's decision on Wednesday, which comes after 10 months of wrangling with authorities in Brussels and Vienna.
"The combination of the two businesses will result in a stronger challenger in the Austrian market, able to take the fight to the two incumbent mobile network operators," Hutchison 3G Austria Chief Executive Jan Trionow said in a statement.
The takeover of Austria's second-smallest operator by the smallest will give Hutchison a market share of about 24 percent, behind leader Telekom Austria with about 46 percent and Deutsche Telekom's (DTEGn.DE) T-Mobile with about 30 percent.
EU Competition Commissioner Joaquin Almunia said in a statement: "The risks posed by more concentration in national mobile telephony markets cannot be ignored."
"The commitments proposed by H3G ensure that competition is preserved so that Austrian consumers continue to enjoy the benefits of innovation and fair prices."
Mobile customers in Austria, a country of 8.4 million people, enjoy monthly tariffs as low as 7 euros for all-inclusive packages.
Helmut Gahleitner of the Chamber of Labour, which represents the interests of working people, said: "We are going to have to keep a closer eye in future on price developments at mobile providers."
Hutchison, a unit of Hutchison Whampoa, which is controlled by Hong Kong billionaire Li Ka-shing, promised to sell radio spectrum and other rights to new entrants.
It also promised wholesale access to its network for rivals, allotting up to 30 percent of its capacity for as many as 16 mobile virtual network operators (MVNOs) in the next 10 years, and will have to seal at least one such deal before the takeover is done.