One of Europe’s most hotly-anticipated telecoms mergers is off, after the European Commission blocked the $15 billion union of the U.K.’s Three and O2 mobile operators.
CK Hutchison Holdings, the Hong Kong-headquartered owner of Three U.K., recently unveiled network-sharing agreements as way of easing regulators’ fears over the merger with Telefonica’s British arm, which would have created the largest mobile operator in the country.
But to no avail. According to the Commission, the O2-Three merger would have led to less choice and higher prices for consumers, by reducing the number of network-owning operators from four to three.
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In this, competition commissioner Margrethe Vestager followed the lead of the U.K.’s own telecoms operator, Ofcom, which said in February that four operators was just right for the market. The U.K. Competition and Markets Authority also wasn’t a big fan of the proposed merger.
Here’s what Vestager said on Wednesday:
The Commission noted that the combined operation would have had a market share of over 40%, and would have had less incentive than its constituent parts to compete with rivals Vodafone and EE. The consolidation would have also weakened the negotiating position of virtual network operators looking for connectivity to resell.
In a statement, CK Hutchison said it was “deeply disappointed” by the Commission’s decision and was considering the possibility of a legal challenge.
“We strongly believe that the merger would have brought major benefits to the U.K.,” it said.
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Vestager last September effectively blocked the merger of Telenor and TeliaSonera’s operations in her native Denmark—she set conditions for the merger that led the two Scandinavian telcos to just give up.
Her department is also currently investigating the proposed merger of the Italian operations of Three and Wind, owned by Russia’s VimpelCom. Again, this would reduce the number of major players in the country from four to three.
Vestager’s predecessor, Joaquin Almunia, was much more amenable to the idea of reducing the numbers of big players in European countries, giving the green light to such mergers in Germany (O2 and E-Plus) and Ireland (again, O2 and Three).