Europe blocks Three’s O2 bid
A £10.3billion deal to create Britain’s biggest mobile network operator has been blocked by the European Commission.
Three’s takeover of O2 was rejected because it would lead to less choice, higher tariffs and harm innovation.
A merged group would have had a market share of more than 40 per cent and left just three major UK players, the others being BT’s EE and Vodafone.
Proposed concessions by Three’s Hong Kong owner Hutchison included offering Virgin Media and Tesco Mobile access to the merged network, billions in investment and a five-year price freeze but were deemed insufficient to address competition concerns.
Hutchison said it was disappointed by the verdict and is considering its options, including a possible legal challenge.
It said: “We strongly believe the merger would have brought major benefits... not only by unlocking £10billion of private sector investment in the UK’s digital infrastructure but also by addressing the country’s coverage issues.
“It would have enhanced network capacity, speeds and price competition for consumers and businesses across the country and dealt with the competition issues arising from the current significant imbalance in spectrum ownership between the UK’s mobile network operators.” O2 is likely to become a target for Virgin Media owner Liberty Global, although its current owner, Spain’s Telefonica, could consider a stock market listing or further investment in its subsidiary.
European commissioner for competition Margrethe Vestager, pictured, said: “Allowing Hutchison to take over O2 on 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.”
Imran Choudhary, consumer insight director at analyst Kantar Worldpanel, said: “In the longer term, the question of how sustainable a four-operator market structure is for the UK will be tested as it becomes increasingly difficult for networks to generate revenue and spending becomes more of a burden.”