Pelephone, Cellcom ready for network merger antitrust battle

Antitrust experts do not expect the Antitrust Authority to approve the planned joint network.

Pelephone Communications Ltd. and Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) are preparing for a legal battle with the Antitrust Authority over the mobile network unification that was announced this week, and have hired Adv. Zvi Agmon (Cellcom) and Adv. Niv Zecler (Pelephone).

Agmon has supported Cellcom on antitrust issues in a number of cases over recent years, and Zecler represented Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) in their merger with DBS Satellite Services (1998) Ltd. (YES) before the Antitrust Authority and in the Supreme Court.

The two firms will submit their request to the Antitrust Authority. The companies’ decision to turn to legal council is not coincidental, as the agreement is complicated, and problematic in antitrust terms, and involves significant legal challenges. Antitrust experts do not expect the Antitrust Authority to approve the agreement because it would create a partnership between two large mobile telephony operators, and would effectively dominate the mobile telephony infrastructure in Israel.

Another possibility is that the Antitrust Authority will establish conditions for the network merger, and the companies will then need to decide whether to agree to their conditions, or abandon the merger. If this were to happen, they may choose to turn to the Antitrust Tribunal to challenge the Antitrust Authority, so the court would get involved with setting conditions. In any event, before turning to the court, the companies will attempt to convince the Antitrust Authority that the joint network does not harm competition.

Published by Globes [online], Israel business news - - on December 12, 2013

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