May 14, 2008 / 8:34 AM / 10 years ago

TomTom wins EU permission to buy Tele Atlas

BRUSSELS (Reuters) - TomTom (TOM2.AS), the world’s biggest maker of car navigation devices, won unconditional permission from the European Commission on Wednesday to buy its main map supplier, Tele Atlas TA.AS, for 2.9 billion euros ($4.5 billion).

“The Commission concluded that the transaction would not significantly impede effective competition,” the European Union executive said in a statement, confirming a Reuters report from mid-April.

TomTom and Tele Atlas issued a joint statement welcoming the news.

“The ruling of the EC is the best possible outcome for TomTom and Tele Atlas allowing the new combination to go ahead with the full execution of its strategy,” the statement said. It noted that U.S. authorities cleared the deal last year.

Tele Atlas shares were up 2.37 percent at 29.84 euros in late morning trading, and TomTom was down 0.31 percent at 25.95 euros.

The Commission said it had focused its investigation on the ability and incentive of the merged company to increase costs for rival makers of portable navigation devices.

It also looked at whether the new company would limit access to maps for competitors and if that might affect consumers.

“The merged company would be unlikely to pursue these strategies because its ability to restrict access to digital maps ... would be limited by the presence of an upstream competitor, Navteq,” the Commission said.

    “In addition, the merged company would have no incentive to restrict access to digital maps because the sales of digital maps lost by Tele Atlas would not be compensated by additional sales of” navigation devices, the Commission said.

    Those statements disposed of issues raised by competitors and which were the subject of much speculation during the review.

    The TomTom deal will let the Dutch company move beyond hardware where double-digit profit margins are expected to decline in line with other consumer electronics makers, analysts said.

    TomTom and Tele Atlas, which is also Dutch, said when the deal was announced they planned to tap into TomTom’s user base to get feedback on where maps were out of date and gather statistical information on traffic flows to create new features such as daily map updates and predicting traffic jams.

    The Commission will now turn its attention to Nokia NOK1V.HE, which has offered $8.1 billion for Navteq, the only other large maker of digital maps used in car navigation devices, Web maps for Yahoo YHOO.O and Google (GOOG.O) and in telephone handsets.

    Editing by Sue Thomas and Elizabeth Fullerton

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