The European Commission has decided to further investigate the potential negative effects on competition of two mergers that are meant to shake-up the market for navigable digital maps, an essential component of increasingly widespread navigation services.
The two mergers under scrutiny are Nokia’s bid to acquire Navteq and Tom Tom’s planned acquisition of Tele Atlas. Finnish group Nokia is the world leader in producing mobile phone handsets and is increasingly present in the market for mobile-based navigation services.
The acquisition of the US company Navteq would allow Nokia to manage its own content in navigation services, since Navteq is one of two global producers of navigable digital maps.
Dutch company Tom Tom is the world leader in the production of portable navigation devices and software, necessary for the use of the US satellite navigation system GPS (the EU alternative, Galileo, is still in the pipeline). Its merger with Dutch counterpart Tele Atlas, the other worldwide producer of navigable digital maps, aspires to similar goals as Nokia’s planned acquisition of Navteq.
The market for navigation services is expected to explode as the bandwidth available for mobile communications increases. The bandwidth available continues to increase in the US, and increases are expected in the EU too as a result of the reform of radio spectrum allocation proposed by the Commission (see EURACTIV 28/03/08 and our Links Dossier on the Telecoms package review).
Google and Microsoft’s internet mapping services are already among the most used on the web. With cheaper and easier data traffic on mobile tools, the use of mapping services is clearly expected to increase. At the same time, navigation services are increasingly part of the standard equipment of new cars.
Tom Tom has offered 1.8 billion euros for Tele Atlas, while Nokia’s offer for Navteq totals 5.4 billion. However, both mergers are being scrutinised by the European Commission due to their potential negative effects on competition and consumers.
Brussels is assessing whether the mergers “would increase the costs of navigable digital mapping for other companies providing navigation services on mobile handsets or limit their access to these maps”.
The Tom Tom/Tele Atlas merger was notified first. After two delays due to the ongoing investigation, the Commission’s decision is now expected by 21 May 2008. The deadline for the conclusion of the investigation on the Nokia/Navteq merger has instead been designated 8 August 2008.