Seminal vote to suspend competition law in Guernsey allows merger to complete

Last week the States of Guernsey took the novel and historic step of voting to suspend the application of competition law to allow Sure Guernsey Limited (Sure) to complete the acquisition of Airtel Vodafone (Airtel). As far as we are aware this is the first time a merger has satisfied regulatory requirements in this way and enables Sure to finally conclude a merger process that began over two years ago in spring 2022.   

Bristows acted for Sure throughout the acquisition process.  

Background to the transaction  

Sure, one of three mobile networks operating in the Channel Islands, initially sought to acquire rival network operator Airtel in the light of Airtel’s intention to exit the Channel Islands market. The transaction raised complex competition law issues given its implementation would result in a reduction of three network providers to two in both the jurisdiction of Guernsey and neighbouring Jersey.   

Different jurisdictions, different routes to clearance  

In Jersey, the transaction was notified to the Jersey Competition Authority under the Jersey competition regime and was finally cleared in August 2024. A key commitment by Sure was to launch a virtual mobile network operator (MVNO) on its network. An MVNO leases network capacity from the network operator and uses its infrastructure but is free to compete for customers and win market share. As part of the transaction Sure therefore guaranteed that three mobile providers would remain for Channel Islanders to choose from post-merger.  

In Guernsey, the transaction gave rise to different challenges in view of Sure’s strong market presence deriving from its position as the island’s legacy telecoms operator. The parties therefore sought to rely on the ability under Guernsey law for an exemption to apply to remove the obligation for prior approval prior to completion on the grounds of public policy. The Channel Islands represent a unique telecoms market, distinct from other countries around Europe where recent telecoms mergers have been approved. The population of Guernsey, for example, is around 64,000 and it is particularly challenging in a sub-scale market such as this to attract the same kind of investment that larger jurisdictions enjoy. It is also difficult to encourage new entrants in circumstances where the population size only supports a few market players.  

The route to exemption involved engagement by the parties with the Guernsey Committee for Economic Development who, acting on the recommendations of the Guernsey Competition Authority, proposed to the States of Guernsey (the Guernsey government) that a temporary suspension of the competition law be granted to enable the acquisition to take place. The motion was carried by majority vote at the States of Guernsey meeting on 26 September 2024.  

The merger will unlock an investment from Sure of up to £48m across the Channel Islands to deliver a 5G network, as well as further binding commitments to ensure both Sure and Airtel customers receive improved network coverage and greater value for money.

Comment  

This suspension of competition law is in our view unprecedented. But it did drive a pragmatic solution to enable the transaction to proceed in circumstances where approval under the traditional route may have been challenging.  As a result, Guernsey’s politicians helped to tread a path to ensure continued investment in the Channel Islands and a willingness to consider different routes to regulatory approval depending on the particular circumstances of the case.