UK regulator has told European Commissioner Margrethe Vestager that either Three or O2 should be sold, or the £10.25 billion deal should be scrapped
The Competition and Markets Authority has challenged the European Commission to block CK Hutchison’s £10.15 billion bid to buy O2 if it fails to create a fourth network operator.
The EC is set to rule on the Three owners bid to create the UK’s biggest mobile operator within the next week, but the CMA warned reducing the number of networks in the UK (from four to three) could harm customers and lead to increasing prices.
In October, the CMA asked Brussels to hand it control over the acquisition of O2 from Telefonica, which was agreed in January of last year. The EC turned down the request in December.
In a letter to European Commissioner Margrethe Vestager, CMA chief executive Alex Chisholm merger would give “rise to a significant impediment to effective competition in retail and wholesale mobile telecoms markets in the United Kingdom.”
Chisholm added: “It is clear that the remedies offered fall well short of what would be required to meet the relevant legal standard, as detailed in our case submissions. The proposed remedies are materially deficient as they will not lead to the creation of a fourth mobile network operator (MNO) capable of competing effectively and in the long-term with the remaining three MNOs such that it would stem the loss of competition caused by the merger.”
He recommended that Hutchison is forced to sell off either O2 or Three to an approved buyer, or the EC should scrap the deal entirely.
The CMA’s opposition is the latest development to cast doubt on the future of Hutchison’s takeover. At the beginning of February, Ofcom CEO Sharon White called on the EC to block the deal, claiming it could lead to a price hike for customers.
This prompted Hutch to offer a number of concessions in order to push through the buyout. These included offering a five year price freeze for customers, offering up to a third of its combined spectrum to rivals Sky and Virgin Media, and promising to invest £5 billion in its network.
Mobile News is awaiting comment from CK Hutchison at this time.