TomTom wins EU OK for Tele Atlas bid

Netherlands-based TomTom has built up a 29.9 percent stake in Tele Atlas since it started bidding for the Dutch digital mapmaker last summer in a deal worth euro2.9 billion (US$4.5 billion).

Nokia Corp. then followed with a US$8.1 billion for Tele Atlas's only major rival, Chicago-based digital mapmaker Navteq Corp, in a deal that is also still under investigation by EU antitrust regulators.

The European Commission said its careful probe of the TomTom deal looked at whether the new company -which effectively forms a duopoly with Navteq -would be able to hike prices or limit access to the digital maps used by other portable navigation device makers.

"The Commission found that the merged company would be unlikely to pursue these strategies because its ability to restrict access to digital maps ... would be limited by the presence of an upstream competitor, Navteq," it said.

The new company "would have no incentive to restrict access to digital maps because the sales of digital maps lost by Tele Atlas would not be compensated by additional sales of personal navigation devices," it said.

Experts believe that navigation will get better in the future as mobile devices automatically relay information from the field to instantly update digital maps and plan routes for other users -a system that will require close integration of maps and devices.

Sales are booming -TomTom sold 2 million personal navigation devices in the first three months of this year from a year ago as prices drop to around euro117 (US$187) per device. TomTom earns fell sharply in the first quarter due to low pricing power.

The navigation-device companies that own the mapmakers may have a competitive advantage.

After Nokia appeared to have the Navteq deal locked up, device maker Garmin bid on Tele Atlas, forcing TomTom to bid higher or risk being left without a partner.

In November, after TomTom had increased its initial offer price for Tele Atlas by almost 50 percent. Garmin signed a long-term deal with Navteq guaranteeing access to its maps for the coming decade, and neatly dropped out of the bidding.