Three merger with O2 on the rocks as European Commission says ‘Non’
As widely predicted The European Commission has blocked Telefonica’s sale of O2 to CK Hutchison, the owner of Three. The planned deal was worth £10.3bn, and would have left the UK with just three major mobile phone network operators.
But Europe’s competition commissioner, Margrethe Vestager, said she had strong concerns about the takeover, ruling that it would reduce customer choice and raise prices.
CK Hutchison said it was considering a legal challenge to the decision. “The goal of EU merger control is to ensure that tie-ups do not weaken competition at the expense of consumers and businesses,” said Ms Vestager.
“We want the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality.”
The decision ruled that concessions offered by Hong-Kong based Hutchison – including a five year price freeze and billions of pounds in investments – “were not sufficient to prevent” the hampering of innovation and network infrastructure development.
CK Hutchison responded to the decision, saying the acquisition of O2 from Spain’s Telefonica would bring “major benefits to the UK not only by unlocking £10bn of private sector investment in the UK’s digital infrastructure but also by addressing the country’s coverage issues, enhancing network capacity, speeds and price competition for consumers”.
O2 said the ruling had little impact on their UK operations. “We work in an industry of constant change and have learnt how to manage that change better than most,” said an O2 spokesperson.
“Regardless of what happens next, we will continue to deliver for our customers as we always have.”