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European Commission blocks O2 and Three merger

European Commission blocks O2 and Three merger


Concerns over higher prices and competition in Britain

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The European Commission has blocked Hutchison Whampoa's planned acquisition of O2, Britain's second-biggest wireless carrier. A proposed deal was announced in January last year, reportedly worth more than $15 billion. "The Commission has blocked the proposed acquisition of O2 by Hutchison under the EU Merger Regulation," says a European Commission spokesperson. "It had strong concerns that UK mobile customers would have had less choice and paid higher prices as a result of the takeover that would also have harmed innovation in the important mobile sector."

Hutchison Whampoa operates Three in the UK, and the commission notes that the mobile network operator entered the market and immediately created competitive pricing for other networks to follow. As a result, competition in Britain's mobile market has been fierce, driving costs down and increasing the benefits to consumers.

Three UK owner Hutchison attempted to offer concessions in order to secure its O2 acquisition, but they clearly weren't enough for investigators. "The Commission could not conclude that the claimed efficiencies would be able to outweigh the harm to consumers." O2 owner Telefonica may now seek to find another buyer. Virgin Media owner Liberty Global has already signaled its interest, but Telefonica has also previously said it's open to making the company public.