European Competition Commission Halts O2 And Three Merger

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The collapse of the deal is also thought to be a disappointment to Telefonica which was attempting to reduce its debt through the sale of O2 UK.

The European Union’s competition regulator on Wednesday closed the door on CK Hutchison Holdings’ proposed merger of O2 and its company Three which would have made the group the biggest mobile telecoms network operator in Europe.

Hutchison’s 10.3-billion-pound ($14.9 billion) purchase of O2 UK from Spanish operator Telefonica was indicated by the commission as being likely to cause higher mobile phone costs in Britain through a reduction in choice.

Europe’s competition commissioner, Margrethe Vestager, said:

“The goal of EU merger control is to ensure that tie-ups do not weaken competition at the expense of consumers and businesses.”

“We want the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality.”

Through the combination of the two operators the group would have had market share of over 40 percent which was seen as reducing infrastructure development, weakening negotiating power of smaller companies who wanted to gain access to mobile networks.

At current O2’s owner, Hutchison is awaiting approval for another merger with Vimpelcom and its Italian subsidiary 3 Italia which has been valued at 21.8 billion-euro ($24.8 billion).

Following the release from the competition regulator Hutchison said it was disappointed to hear that the merger would be halted and said it would review its options which would also include legally challenging the decision. It also added that it would focus on working with the commission to agree on its proposed merger of Wind and 3 Italia.

The end to the deal will also disappoint Telefonica which is currently attempted to reduce its debt. Telefonica did state last month that if the deal did collapse it have other options such as listing O2 UK on the stock exchange, finding a new buyer or developing the company further.

In September 2015 a similar deal between TeliaSonera and Telenor saw its Danish mobile merger be stopped after the European Competition Commissioneer Margrethe Vestager also said she felt the market needed a minimum of four mobile networks competing to avoid a drop in competition.

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