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European Commission gives Equinix the go-ahead to acquire datacentre rival TelecityGroup

European Commission clears datacentre merger, after resolving concerns about its impact on European colocation pricing

Equinix has been given the green light by the European Commission’s (EC) regulators to go ahead with its purchase of TelecityGroup, provided both firms sell off a number of their datacentres first.

The deal – which was first announced in May 2015 – will see Equinix part with £2.35bn for Telecity Group.

The proposed merger won the backing of both firms’ boards almost immediately, but only received conditional EC approval for its bid on 13 November 2015.

This has been granted on the basis that both Equinix and TelecityGroup have agreed to sell-off datacentres located in London, Amsterdam and Frankfurt.

In the nine months to September 2015, these facilities are confirmed to have accounted for approximately 4% of the companies’ combined revenue.

In a statement, the EC said the caveat was necessary to ensure healthy competition is maintained in the European datacentre market.

EC competition commissioner Margrethe Vestager said: "With the ever-growing economic importance of cloud services, it is crucial to maintain competition between datacentres.

“The commission is satisfied the commitments offered by Equinix will ensure that companies continue to have a choice for hosting their data at competitive prices.”

The statement goes on to outline the commission’s concerns about how the deal, in its original form, could have resulted in colocation prices rising across the continent.

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“The commission's findings showed that Equinix and Telecity are perceived as close competitors in Amsterdam, London and Frankfurt, and that the remaining competitors would have been unlikely to replace the competitive pressure currently exercised by Telecity,” it said.

“In addition to this, new players would have faced significant difficulties to enter the market due to the high investment and deployment times needed to build new datacentres of competitive size and characteristics.”

The deal is expected to close in early 2016, at which point the two firms will operate a total of 145 datacentres between them.

Equinix CEO and president Steve Smith said the firm was pleased to have finally secured the commission’s permission to proceed with the deal.

“The combination of Telecity and Equinix is a milestone in the ongoing development of our platform and will bring the benefits of greater cloud and network density to our customers in Europe and beyond,” he said.

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