EU competition chief warns mergers could cost consumers

European Commissioner for Cometition Margrethe Vestager

Proposed deals such as Hutchison’s £10.25bn takeover of O2 could lead to more expensive bills for end user, said Margrethe Vestager

The European Commissioner for Competition has thrown doubt over potential mergers in the European telecoms space such as Hutchison’s £10.25 billion bid for O2, warning consolidation could damage competition.

During a speech made in Paris earlier this week, competition chief Margrethe Vestager dismissed suggestions that a wave of mergers will boost investment in infrastructure.

Vestager took aim at countries where the number of operators will drop from four to three, including the UK where Three will combine with O2 should a deal be approved.

“Incumbent operators argue that if they cannot merge with their rivals in the same country they will be unable to increase their investment. I’ve heard this claim quite often, but I have not seen evidence that this is the case,” she said.

“Instead, there is ample evidence that excessive consolidation may lead not only to less competition and more expensive bills for consumers, but that it also reduces the incentives in national markets to innovate.”

The speech will come as a blow to Three-owner Hutchison Whampoa, who is hoping to seal a deal to acquire the UK’s second largest operator by early next year.

Hutchison will likely need approval from the European Commission due to the size of the deal, and also because it involves a two non-UK based companies (O2-owner Telefonica and Hutchison).

BT’s £12.5 billion acquisition of EE may not require approval from Europe.