The takeover of O2 by Three’s owner Hutchison Whampoa will be investigated ‘in-depth’ by the European Commission (EC).
Concerns over higher prices, less choice and reduced innovation has led the EC it to examine the merger in greater detail.
The news comes as a blow to O2 and Three who will now have to wait longer and possible have to make concessions to see a deal go through.
The two brands saw their major rival EE have its merger with BT granted preliminary approval by the UK Competition and Markets Authority (CMA) this week, with EE quickly expressing an eagerness to complete the deal.
BT's £12.5bn EE takeover approved by CMA
CMA has previously stated that it would like the opportunity to assess the O2/Three merger on a national level expressing fears about the impact on competition.
European Commission's reasoning
The Commission explained that it had decided to give the deal closer examination for three main reasons. Firstly, it wanted to assess whether the deal would lead to the removal of a competitive force from the UK mobile market, resulting in higher prices and less innovation.
CMA asks to investigate O2/Three merger
Secondly, the EC was concerned about the impact on the wholesale MVNO market. In particular the possibility that MVNO’s could have less network hosting options and therefore weaker negotiating power.
The EC’s final concern was that with fewer operators in the market there could be an incentive for the network’s to ’coordinate their competitive behaviour and increase prices’.
BT/EE merger approval…What it means for mobile
Reacting to the news an O2 spokesperson told Mobile that it was already in discussions with the body about the proposed takeover and welcomed a thorough approach: ‘We have been engaged in an open and constructive dialogue with the European Commission throughout Phase I of their merger review.
‘Due to the importance of the proposed transaction, we anticipated that the matter would be referred to a Phase II investigation and we welcome the opportunity to continue our discussions with the European Commission. The proposed acquisition of O2 by CK Hutchison will be good for both competition and consumers in the UK and we’re confident that the European Commission will also see the benefits.’
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