, Europe's largest maker of car-navigation devices, Wednesday received approval from the European Commission to buy digital-mapping company Tele Atlas
The deal was accepted by the EU without conditions after a six-month antitrust probe. The deal is worth $4.5 billion and is expected to be finalized in June, according to a statement from TomTom. Both companies are based in the Netherlands.
For TomTom and Tele Atlas, this was "the best possible outcome allowing the new combination to go ahead with the full execution of its strategy," the companies said in a joint announcement.
The decision came a week ahead of a May 21 deadline, suggesting that even bigger deal under scrutiny by the EU will go through. Nokia, the Finnish mobile handset manufacturer, wants to buy the world's largest company in digital mapping technology, Chicago-based Navteq for $8.1 billion. The deadline for that review is August 8.
Both deals were accepted by the U.S. antitrust regulators last year without further investigation and the fact that the EU took a closer look surprised many industry experts. But as the potential for location-based services is growing, the commission wanted to make sure that these two deals--creating a virtual duopoly in digital mapping--would not hinder competition.
"I am now satisfied that the innovation and competition we have seen in satellite-navigation devices until now will continue after this merger," Neelie Kroes, EU Commissioner for Competition in Brussels, said in a statement Wednesday.
Navteq and Tele Atlas produce digital maps and software for navigation systems in cars and portable navigation devices such as Garmin or mobile phones. They also provide the data for Internet maps on sites like Google Maps.
Nokia argues concerns of the regulators that its acquisition will restrict the access for others to digital maps as unfounded.
"Why would Nokia pay the amount of money we are paying for having a very good base of customers and then try to aggrieve those customers?", Michael Halbherr, vice president of Context Based Services at Nokia said in an interview earlier this week with CNET News.com.
Nokia executives believe the Navteq-deal is related to the decision on Tele Atlas. Both companies have refused to accept demands from the regulators that they should guarantee that digital maps will be available for everyone. "I think that the Tele Atlas deal is not being reviewed in isolation. The European Commission has had enough time with both deals to basically form a complete thinking about the industry," said Michael Halbherr.
For Nokia, location based services is very much a promise of the future. The company expects to ship 35 million GPS-enabled phones this year.
From a European industry point of view, these deals consolidate world dominance of location based services in the home base. Navteq is the world's largest maker of maps used for car navigation, while Tele Atlas is No. 2.
In the U.S. the development is seen as positive. At ESRI, a company that sells software for geographic information systems, founder and Chief Executive Jack Dangermond welcomes more concerted efforts.
"The world needs utility companies that create and manage geospatial data," he said. "And these are companies that have fought their way to the top and they're very good: they serve their data and sell their data to our users in the private domain."
One company that has teamed up with ESRI is Google Maps, which now use digital maps from both Navteq and Tele Atlas. John Hanke, head of Google Maps and Google Earth, said that there is a vast amount of geodata locked up in different government agencies that should be made publicly available.
"I don't think it will happen anywhere in the near future. It's hard to share that data, to export it, but they should open up their servers as its public information," Hanke said during a break at the Where 2.0 conference in Burlingame, Calif.
Dangermond agrees. There will be no shortage of data despite concentration in a few hands.
"There are others, like Openstreetmap, emerging startups that I think also will participate in a smaller scale and then also individual agencies like cities. They all create and maintain their own data. It will remain an open and competitive environment I think."
He said he doesn't see a duopoly problem.
"There will be open competition and both of them are sincerely interested in the geo market. By having two competitors they're fighting against each other and keeping the prices low. If there was only one, then I might have a different opinion, but I think with two it's a healthy market. And it doesn't prohibit other people from getting in."
"They are doing the world a great service by taking on the responsibility of building these infrastructure layers."
He also said he feels the companies should be compensated.
"Well, free, they have to pay for all their investments. I suppose they are spending hundreds of millions of dollars a year just to create and maintain these infrastructures. So this kind of investment needs to be capitalized and get returns. But they both are good citizens in the GIS world at this point."