Nokia gets green light for $8.1B Navteq buyout

Nokia has gotten the final okay from the European Commission on its plans to buy digital map maker Navteq, following a detail investigation around the impact of the $8.1 billion deal, particularly on competing mobile phone makers.

As previously reported in BetaNews, at the end of March, the EC issued a statement announcing an investigation into Nokia's proposed Navteq acquisition and voicing worries that the deal might "in the light of the duopoly market for navigable digital maps and Nokia's strong position [in] the market for mobile handsets, lead to a significant impediment of competition."

Then in May, the EC gave its seal of approval to an $8.1 billion merger between Tele Atlas -- a top rival of Navteq -- and GPS specialist TomTom.

Navteq's existing customer base includes Google and Yahoo, in addition to other makers of mobile and GPS devices.

Meanwhile, Nokia had been surging ahead with new Internet services in the same general space as Google and Yahoo, including the location-based Nokia Maps.

In confidential documents leaked to Reuters in May, European regulators suggested that they viewed Nokia's intended buyout of Navteq as both similar to and different from the TomTom/TeleAtlas deal.

The EC conveyed this mixed message in "confidential" questionnaires sent out to customers and competitors of Nokia. "Although the two transactions involve largely the same markets...the merger regulation obliges the Commission to investigate separately the Nokia/Navteq merger," regulators said in a questionnaire dated in February.

"[But] if you responded to the market investigation in the TomTom/Tele Atlas case, you can provide the same answers by 'copying and pasting' the submission you made on that occasion."

On the other hand, though, the EC used a longer questionnaire for the Nokia/Navteq case, containing questions that weren't included on the document that needed to be filled out for the TomTom/Tele Atlas merger.

In one of these extra questions, the commission asked competitors whether there was any "conflict...with regard to the inclusion of a specific service that your company would have wanted to embed into its [mobile] handset."

In its investigation, the EC focused on "whether the vertical integration of Navteq into Nokia could lead to a significant restriction of competition within the EEA, in particular with regard to the duopoly market for navigable digital map databases (Navteq and Tele Atlas being the only suppliers) and Nokia's strong position on the market for mobile telephones," according to a statement by the EC this week.

Ultimately, the commission decided that Nokia would have nothing to gain in withholding Navteq's maps from other companies -- and that, even if Nokia tried, competitors could always buy maps from the merged TeleAtlas/TomTom entity, anyway.

"The Commission concluded that the merged company would be unlikely to pursue a strategy of closing off competitors. The merged firm's ability to deny competitors access to map databases is limited by the presence of the other competitor, Tele Atlas. In addition, the merged company would lack incentives to close off supplies of digital map databases to its competitors because a loss in sales of maps would not be compensated by increased sales of mobile telephones," according to the EC's statement this week.

"Other mobile phone manufacturers could still compete with Nokia by working together with independent developers of navigation applications or by developing other features of their handsets. As a result, the Commission concluded that the proposed concentration would not raise any competition concerns."