Noticias

The Chilean Competition Authority (FNE) has cleared in Phase 2, subject to structural remedies, the acquisition by OnNet of Entel’s fiber to the home network infrastructure assets (FTTH). The transaction also includes a long-term and exclusive wholesale service agreement, in which OnNet will supply wholesale FTTH services to Entel.

Following an in-depth investigation of the competitive conditions in the market of wholesale access to FTTH in Chile, the FNE found that the transaction implied the concentration of two competitively close rivals, whose networks overlap significantly in certain communes that are commercially attractive to Internet Services Providers, mainly in the Metropolitan (i.e., Santiago) and Valparaiso regions. Consequently, wholesale access to FTTH in these areas would only be possible through the merged entity, thus becoming an ineludible commercial counterpart for Internet Service Providers that want to access such areas. Hence, after the transaction, OnNet could increase prices or decline the quality of its services.

Additionally, the FNE concluded that certain clauses of the vertical wholesale service agreement between the parties could generate anticompetitive effects, rising artificial barriers that could difficult entry or expansion in the market.

To address such concerns, OnNet and Entel offered to divest Entel’s FTTH infrastructure in 8 communes –Santiago, Providencia, Vitacura, Lo Barnechea, Las Condes, La Reina, Concón and Calama–, and to enter into a wholesale service agreement with the buyer to supply FTTH wholesale services to Entel in these areas.

The parties also offered to modify some of the vertical wholesale agreement clauses that the FNE deemed anticompetitive. In particular, the parties reduced the length of an exclusivity clause from 15 to 5 years; modified a wholesale non-compete clause from 15 to 2 years, and removed a right of first offer clause, a right to match clause and a retail non-compete clause, from the agreement.

The FNE found the remedies’ package to be effective, proportional, and suitable to prevent the merger from substantially lessening competition.

The parties

OnNet (InfraCo SpA), an association between KKR Alameda Aggregator Partners L.P. and Telefónica Chile S.A., is an infrastructure operator that offers wholesale FTTH services in Chile. Entel (Empresa Nacional de Telecomunicaciones S.A.) is a telecommunications company, active in providing retail and wholesale fixed and mobile services.

The resolution and the approval report of the transaction will be published on FNE’s website once the public versions of these documents are available.