EU stops €13bn merger of telecom firms Three and O2
The EU Commission has blocked CK Hutchison’s proposed acquisition of the UK mobile network O2 from its owner, Telefonica.
Hutchison planned to merge O2 with its own telecoms business Three and had reportedly offered roughly £10.25 billion (€13 billion) for its rival.
Join EUobserver today
Become an expert on Europe
Get instant access to all articles — and 20 years of archives. 14-day free trial.
Choose your plan
... or subscribe as a group
Already a member?
Announcing the decision on Wednesday (11 May), EU antitrust commissioner Margrethe Vestager said the move would have weakened competition, risked driving up consumer prices and reduced incentives to invest in technology.
"The UK mobile market is currently competitive," said Vestager.
"Retail mobile prices are among the lowest in the entire EU. The UK is also one of the most advanced countries in the EU in terms of roll-out of 4G technology and take-up of 4G services.
"Allowing Hutchison to takeover O2 at the terms they proposed would have been bad for UK consumers and bad for the UK mobile sector. The remedies offered by Hutchison were not sufficient to prevent this.”
If Three were to merge with O2, it would have become the unrivalled leader on the UK mobile network market, ahead of Vodafone and BT’s Everything Everywhere (EE).
Vestager said there was no "magic number" of providers. But she has repeatedly warned that reducing the number of networks from four to three can drive prices up and innovation down.
The commission is currently investigating another Hutchison merger with Italian mobile operator Wind and Three Italia.
'Possible legal challenge'
The decision comes shortly before the UK vote on EU membership, on 23 June. Questions of competition have not featured prominently in the campaign.
UK communications regulator Ofcom and markets watchdog the Competition and Markets Authority (CMA) had both alerted the commission of problems linked to the planned acquisition.
In April, CMA chief executive Alex Chisholm told Vestager in a letter that Hutchison had made insufficient proposals to address its concerns.
Vestager said that the decision had nothing to do with politics or the UK referendum.
Telefonica chairman Jose Maria Alvarez-Pallete Lopez said the company would look for other buyers for its UK business.
CK Hutchison, which is registered in the Cayman Islands and has its headquarters in Hong Kong, said it would study the decision in detail.
“We will be considering our options, including the possibility of a legal challenge,” the firm wrote in a statement.