Equinix cleared to buy Telecity but must sell London, Amsterdam and Frankfurt facilities

datacentreThe European Commission has approved the proposed acquisition of data centre operator Telecity by rival Equinix. However, to assuage anti competition concerns, Equinix had to agree to sell off a number of data centres in Amsterdam, London and Frankfurt.

BCN reported in May that Equinix and TelecityGroup agreed to the $2.35bn takeover in which US-based Equinx would buy all issued Telecity shares. The acquisition gives Equinix a stronger presence in the UK and would extend its footprint into new locations with identified cloud and interconnection needs including Dublin, Helsinki, Istanbul, Milan, Stockholm and Warsaw. Equinix provides colocation services in 33 metropolitan areas worldwide. Telecity operates data centres in 12 metropolitan areas in the European Economic Area (EEA) and Turkey.

However, the activities of Equinix and Telecity overlap in the four EEA metro areas of Amsterdam, Frankfurt, London and Paris.

In a statement issued by the EC Commissioner in charge of competition policy Margrethe Vestager said the growing economic importance of cloud services makes it crucial to maintain competition between data centres. However the deal does not necessarily stifle competition, Vestager said. “The Commission is satisfied that the commitments offered by Equinix will ensure that companies continue to have a choice for hosting their data at competitive prices,” said Vestager.

The Commission has concerns that the concentration of data centres controlled by one vendor could lead to higher prices of colocation services in the Amsterdam, London and Frankfurt metropolitan areas. The remaining competitors in these areas are unlikely to be able to match the competitive pressure currently exercised by Telecity, it had concluded, and new players would have faced significant difficulties to enter the market due to the high investment and deployment times needed.

To address the Commission’s concerns, Equinix submitted commitments, offering to divest a number of data centres in Amsterdam, London and Frankfurt.