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Europe blocks O2-Three carrier merger in the UK

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Europe’s Competition Commission has blocked a proposed merger that would have seen the number of major carriers in the UK mobile market reduced from four to three.

The department said it had concerns the proposed acquisition of O2 UK by Hutchison, which owns the market’s smallest mobile network operator, Three UK, would have reduced choice for consumers and ushered in higher prices.

It was also worried that future development of UK mobile network infrastructure would have been hampered with fewer major network operators in play, and that fewer network operators would have impeded the mobile virtual network operator (MVNO) market, where carriers sell access to their networks to smaller entities to resell to consumers under their own brands.

The UK’s regulator also expressed concerns about the proposed merger.

In a statement, European Commissioner Margrethe Vestager said: “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 goal of EU merger control is to ensure that tie-ups do not weaken competition at the expense of consumers and businesses.

“Allowing Hutchison to takeover O2 at the terms they proposed would have been bad for UK consumers and bad for the UK mobile sector. We had strong concerns that consumers would have had less choice finding a mobile package that suits their needs and paid more than without the deal. It would also have hampered innovation and the development of network infrastructure in the UK, which is a serious concern especially for fast moving markets. The remedies offered by Hutchison were not sufficient to prevent this.”

The UK network operator landscape has already seen one piece of major consolidation this year, with a $19 billion merger between telco BT and carrier EE approved by the local regulator in January.

That acquisition passed muster with UK competition authorities after a 10-month investigation because BT was considered only a minor player in the mobile market, with the core of its business focused on fixed-line broadband, landline telephone and pay TV, rather than cellular services.

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