Three/O2 merger blocked, Hutch threatens legal challenge

Three/O2 merger blocked, Hutch threatens legal challenge

Three UK owners CK Hutchison has threatened a legal challenge after its takeover of O2 was blocked by the European Commission (EC).

The regulator expressed strong concerns that the merger would result in less choice and prices would increase. It was also rejected on the grounds that it would negatively impact on the UK wholesale market and reduce innovation.

Hutchison reacts

Hutchison has expressed disappointment at the decision and said it was considering a legal challenge.

A spokesperson said: ‘We are deeply disappointed by the Commission’s Decision to prohibit the merger between Three UK and O2 UK. We will study the Commission’s Decision in detail and will be considering our options, including the possibility of a legal challenge. 

‘We strongly believe that the merger would have brought major benefits to the UK, not only by unlocking £10 billion of private sector investment in the UK’s digital infrastructure but also by addressing the country’s coverage issues, enhancing network capacity, speeds and price competition for consumers and businesses across the country and dealing with the competition issues arising from the current significant imbalance in spectrum ownership between the UK’s MNOs.   

O2 responds

Telefonica recently said that if the merger failed to go through, it would consider other buyers for the O2 network. Responded to the decision to block the deal, an O2 spokesperson said:

‘The O2 business has continued to perform well in the market whilst the Commission process has taken place. Our customers are our priority and we will continue to differentiate, compete fiercely and remain successful, long into the future.’

 ‘Bad for mobile’

Hutchison put forward a number of remedies to address UK competition concerns, all of which were branded insufficient by EC. Antitrust chief Margrethe Vestager said that Hutch’s concessions ‘failed to adequately address’ market fears, claiming that the merger would be bad for UK mobile.

‘Allowing Hutchison to takeover O2 at the terms they proposed would have been bad for UK consumers’, she said, ‘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.’

Her comments have been previously backed up by UK regulators as well as a number of industry figures, who have publically slammed the suggestions put forward by Hutch.









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