Nokia-Navteq Deal Hits An EU Air Pocket

Is it really possible that the European Union regulators are actually fair and balanced? Microsoft and a few dozen other global companies might disagree, but today’s actions point to an EU that is not afraid to shake-a-stick at one of its own.

Nokia’s $8.1 billion takeover of Chicago-based digital mapping company, Navteq has hit a snag. The European Union is going to conduct an in-depth investigation into the deal, reports The Wall Street Journal. The rationale behind the investigation, according to WSJ is that the “proposed merger raises serious doubts with regards to vertical competition concerns.”

Frankly I am a little surprised by the action. Now if our FTC was the one to raise a stink, it would be normal.

On paper, it seems to be a win-win for European Union. If this deal goes through, then two European companies – Nokia and Tom Tom – would become major players in the digital mapping business and thereby leaders in location based services. LBS and mapping are viewed as the future of mobile industry, a traditional stronghold of Europe.

Barring Nokia, European mobile industry has been ravaged by commoditization and many players have exited the market, and stopped making consumer devices. New comers like Apple and Google are trying to tilt the mobile center of gravity towards Silicon Valley, though it still remains a long shot. In order for Nokia to retain its dominant position, the company needs to look beyond pure vanilla hardware. LBS & Digital Mapping services are part of that future and a competitive advantage. Any delays – like the ones posed by this longer review – are going to put Nokia at a disadvantage.