TomTom-Tele Atlas Deal Receives EU Approval

May 14, 2008

After a six-month review by European antitrust officials, Netherlands-based TomTom received unconditional approval today to proceed with its €2.9 billion ($4.5 billion) acquisition of digital mapmaker Tele Atlas.

TomTom originally announced merger plans last year; in November of last year the European Commission, which handles antitrust regulatory duties within the European Union, initiated a second-phase review — it does so in only 3 percent of the mergers that it reviews. During that time, TomTom and regulators haggled over the question of future licensing of Tele Atlas maps. The commission said today that the merger would not significantly impede effective competition in Europe.

"After thorough investigation, I am now satisfied that the innovation and competition we have seen in sat navs until now will continue after this merger, and that consumers will continue to benefit from new and innovative products," said Neelie Kroes, competition commissioner.

The Commission said its investigation focused on the merged company's ability and incentive to increase the costs of other personal navigation device (PND) manufacturers for digital maps, or to limit their access to these maps. But it concluded that the merged company would be unlikely to pursue these strategies because its ability to restrict access to digital maps for other PND manufacturers would be limited by the presence of Tele Atlas competitor Navteq. Furthermore, sales of digital maps lost by Tele Atlas would not be compensated by additional sales of PNDs, the Commission said.

For its part, while TomTom reportedly balked at the idea of being forced to license map data, the company stated once again that Tele Atlas customers' relationship with the company will remain exactly the same. All Tele Atlas customers, including TomTom, will have access to the same maps, at the same time, and will pay a comparable price, according to TomTom.

The merger has already received approval from U.S. officials. TomTom looks to close the deal by the end of this month.

In related news, Navteq is the object of a merger with mobile phone giant Nokia; that plan is also undergoing a second-phase review by the European Commission which is still ongoing, the Commission said.

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