EC approves TomTom buy of Tele Atlas

Competition commissioner is satisfied that innovation and competition will continue in satnav products after the merger

The European Commission gave the go-ahead for Dutch satellite navigation (satnav) company TomTom to buy Dutch digital map maker Tele Atlas Wednesday after an in-depth probe of the planned deal.

Consolidation in the market for satnav devices follows the shift from them being dashboard options only in the most expensive luxury cars to becoming common add-ons attached to the windscreens of mass-market vehicles, visible on every motorway in Europe.

A similar deal involving Nokia and Navteq is being scrutinized by the European Commission competition department at the moment.

Referring to the deal cleared Wednesday, competition Commissioner Neelie Kroes said she is satisfied "that the innovation and competition we have seen in satnavs until now will continue after this merger, and that consumers will continue to benefit from new and innovative products."

The Commission's in-depth probe looked at whether the vertical integration of Tele Atlas, with its digital maps, combined with TomTom's strong position in the market for satnavs would restrict competition in the burgeoning market in Europe.

In particular, it saw a potential threat to competition if Tele Atlas stopped providing maps for other satnav makers, because there are only two makers of digital maps: Tele Atlas and Navteq.

However, the Commission concluded that the merged company probably wouldn't stop supplying rivals with maps because if it did this would allow Navteq to become the dominant map maker for the satnav market.

The loss in revenue from stifling supply of maps to rivals would outweigh the gains in sales of TomTom satnav devices, it concluded.

The Commission opened a probe of Nokia's planned acquisition of Navteq in March. On Wednesday it said that investigation is ongoing and likely to conclude during the summer months.