Hutch hits back at CMA’s Three/O2 merger fears

Hutch hits back at CMA’s Three/O2 merger fears

CK Hutchison has called out the Competition and Markets Authority (CMA) over its Three/O2 merger concerns, branding them ‘one-sided’.

 The Three owner has expressed disappointment at a strongly worded letter the UK regulator wrote to the European watchdog. Hutch recently launched its third set of merger remedies to ease competition concerns, which the CMA slammed as ‘materially deficient.’

Hutch responded by calling out both Ofcom and the CMA’s decision to approve the BT/EE merger. A spokesperson said: ‘It is no surprise that CMA opposes the merger. It always has, and so has Ofcom. But it is for the Commission to assess any competition concerns, on the basis of the facts and proposed remedies.

‘We are very disappointed that the UK CMA has published a letter to Commissioner Vestager this morning concerning the proposed Three UK /O2 merger. This can have no legitimate status in the merger control process.

‘It is interesting to contrast the content of the letter with the attitude of the CMA (when it was the decision maker) and Ofcom in the BT-EE CMA merger clearance, which was approved without conditions or remedies, creating a dominant fixed-mobile behemoth in the UK market.’

‘Insufficient’ remedies

Hutch continued to say that the concessions it has put forward so far ‘go beyond remedies accepted in previous merger cases’. The latest set of remedies pledged to give 40% of its spectrum to Sky, Virgin, Tesco Mobile and UK broadband, a 10% increase from its previous remedies.

However, Hutch has previously come under fire from a number of industry figures, which claimed the ‘insufficient’ remedies would lock small MVNOs out of the market. Vivian Woodell, CEO of MVNO the Phone Co-op, questioned Hutch’s move to only provide capacity to large and established MVNOs, making it harder for new entrants.

 A ‘red herring’

 Part of the European watchdog’s demands on Hutch was also that the newly combined Three/O2 should give up spectrum to create a new fourth player. However the Hutch described this as a red herring, claiming it would undermine the entire process.

‘The CMA letter claims that the creation of a 4th full-fledged network operator is the only possible solution to address competition concerns. But no analysis or argument is given to support this, nor why Hutchison’s proposed remedies are insufficient. It is an entirely one-sided argument designed to support a preordained outcome.

‘The divestiture of Three or O2 to a new MNO to gain approval of the merger is a red herring.  There is no taker for such a remedy.  It would also undermine the whole economic rationale of the merger and reinforce the spectrum inferiority and capacity constraints of both companies.’

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