European Commission launches lengthy probe into cell phone operators’ mobile payment service bid

UK mobile commerce

UK-mobile-commerce

The European Commission has announced its decision to launch an extensive antitrust investigation –

which will probably continue until the end of August – into the joint mobile payment venture of the largest mobile phone operators in Britain.

This probe is in response to concerns that had been raised over its ability to hold back innovation. It is believed that the investigation will deal a sizeable blow to the hopes of the operators to gain rapid approval and adoption for its advertising and mobile payment systems which had been labeled “Project Oscar.”

Though the majority of mergers are given the approval of the Commission, even following an extensive investigation, it still has the authority to stop a venture from proceeding, or to require that sizeable changes be made.

Last June, the merged France Telecom and Deutsche Telekom businesses in the United Kingdom – O2, Telefonica, Vodafone and Everything Everywhere – announced that they would be working together to provide consumers with a mobile wallet that would allow them to make purchases of products and services using their smartphones either over the internet or using contactless terminals.

The competition commissioner for Europe, Joaquín Alumnia, stated that he supports the efforts to draw new technologies into the marketplace, but that he had concerns that this particular venture had the potential to hold back any potential rivals. He explained that “We need to make sure that competing services can keep emerging on this market, so that incentives to innovate remain and customers get the best mobile commerce services at the best cost.”

The proposal has already seen strong opposition from the smallest mobile operator in the United Kingdom, Three. It has stated that the venture made it impossible for Three to enter into that marketplace and called on the European Commission in Brussels to investigate and cease a project that would be harmful to competition.

The probe is only the latest in a number of decisions that are causing strain in the relationship between the Brussels regulators and the telecom sector. An illegal collusion investigation is already underway by the Commission, which is looking into the top five European telecom groups over the standards being set for the industry. Among them, four are part of the Project Oscar mobile payment venture.

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