The Federation of Communication Services (FCS) has reacted with bemusement at the public disagreement between Ofcom CEO Sharon White and Hutchison Whampoa MD Canning Fok.
In a strongly worded statement last week, Fok said that if Hutchison Whampoa was allowed to buy O2 and Three UK, the business would seek to promote competition and would not raise prices. It was in response to an article written by Sharon White in the Financial Times in which she attacked the deal for Three’s owner’s acquisition of O2.
In the piece, White reveals that the regulator has warned the European Commission – which is judging the proposed merger – of the potential negative effect on competition.
‘This whole thing is vaguely surreal,’ Chris Pateman, the CEO of the FCS told Mobile. ‘First we have a regulator that remained silent while BT was acquiring EE, expressing doubts about vertical integration in the mobile market – as though that were the greater threat to industry competition.
‘Now we have the boss of Three seemingly saying that no matter what BT/EE or Vodafone get up to in the market for the next five years, he will take no action to defend his margin or neutralise his competition. Not sure I’d be rushing to buy Hutchison shares on that basis – at least, not before checking the fine print.’
Pateman went on to criticise Sharon White’s assessment of the UK market, accusing the regulator of stifling competition by not properly regulating the wholesale market: ‘Sharon White says the market is “not broken”. Maybe not, but it’s certainly not free, either. And that’s Ofcom’s fault in the first place, for setting and maintaining a regulatory regime that was designed to encourage big-spending market entry at the infrastructure level when the mobile phone industry first got started, rather than open and transparent wholesale access to support a lively and innovative reseller dynamic.’
Responding to Pateman’s remarks, an Ofcom spokesperson told Mobile that they believed that the regulator had provided adequate guidance to the competition, and had successfully fostered a thriving wholesale market: ‘We provided detailed analysis to the CMA about the deal between BT and EE. Ofcom believes any mergers must work in the interests of consumers.
'So we were clear that, should any competition concerns emerge, we have powers to step in to protect mobile users. ‘The UK has one of the most vibrant and competitive mobile markets in Europe, and some of the lowest prices. Companies have enjoyed wholesale access to networks for many years. In fact, we have nearly 30 ‘virtual’ operators competing for retail customers.’
Three UK declined to comment individually on the viewpoints expressed by Pateman.
However, in a response to the European Commission’s Statement of Objections issued this week, CK Hutchison said: ‘The merger will be good for both competition and consumers in the UK, bringing together the two most competitively constrained players to create a strong third mobile network operator with the financial scale and strength to compete against the two large incumbents.’