Three-O2 merger raises “serious concerns”, says UK watchdog

12 Apr 201611 Shares

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Hutchison Whampoa – owner of Three – is looking to acquire O2 in the UK, but the £10.5bn deal has come under attack from the UK’s competition watchdog.

The Competition and Markets Authority (CMA) has posited its argument against the merger, which would reduce the total number of mobile networks in the UK to three.

In laying out its “serious concerns”, CMA chief executive Alex Chisolm said “significant harm to competition” in the UK would likely result in increased prices or a drop in quality for customers.

With a decision on the deal expected from the European Commission in the next few weeks, Hutchison Whampoa has said it’s not surprised by the CMA’s stance, as it “always has” objected to the merger.

Three, O2, one…

Three’s owner also argues that Sky, Virgin, Tesco and UK Broadband’s decision to use the resultant shared Three-O2 airwaves to provide their services “will ensure that there is plenty of competition” in the market.

But the CMA isn’t convinced and, citing Ofcom as a helpful aid in its pursuit, is calling on the European Commission to block the deal.

“The CMA urges the Commission to act to prevent the long-term damage to the UK mobile telecoms market, and therefore to the interests of UK consumers, that both of our authorities have predicted will result from this merger,” added Chisolm.

In the summer of 2014, Hutchison Whampoa spent €850m buying O2 in Ireland, with consolidation of the networks over here passing through a bit easier. Earlier this year, the CMA approved a £12.5bn takeover of EE by BT.

Three image via mubus7/Shutterstock

Gordon Hunt is a journalist at Siliconrepublic.com

editorial@siliconrepublic.com