The deal creates a joint venture company Nokia Siemens Networks
which will be equally held by Nokia and Siemens. It merges the
network equipment businesses of both firms.
The Commission has conducted a market investigation since the
deal was announced in June and has concluded that competition in
the sector is strong enough to cope with such a powerful new
player. The combined company will rank third in its market.
"The main competitive impact of the proposed transaction would
be in the mobile network equipment sector, since Nokia has few
activities in fixed-line telecommunications," said a Commission
statement. "The Commission’s market investigation revealed that,
despite the considerable market shares the merged entity would have
in the mobile network equipment sector, the market structure would
remain competitive."
The Commission concluded that customers of the firms would still
have a choice. "A sufficient number of credible competitors would
remain in the market, inter alia market leader Ericsson
and Alcatel-Lucent. Customers, mostly network operators, would
still have alternative suppliers."
Though it involves assets of around €25 billion, the transaction
will not involve any cash payments. Nokia and Siemens will equally
own the company, and it will have a Nokia executive as chief
executive and a Siemens executive as chief financial officer.
Nokia's network equipment business makes base stations and
switching equipment for the routing of mobile phone calls. The
Siemens equipment business is thought to involve equipment more
concerned with the routing of fixed line traffic, including voice
calls and internet traffic, around networks.
It is thought that up to 9,000 jobs could be lost as part of the
deal because the companies plan to share research and development
tasks. The combined company expects to make cost savings through
the deal of around €1.5 billion a year by 2010 and to have revenues
this year of just under €16 billion.
