EU competition watchdog slams brakes on O2 merger with Three

 
Clara Guibourg
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Race car slamming brakes
The merger risks raising prices and reducing choice (Source: Getty)

The EU’s competition watchdog has slammed the brakes on a proposed merger between O2 and Hong Kong investment group CK Hutchison, a takeover which would create the UK’s biggest mobile operator.

The European Commission is launching an in-depth investigation of Hutchison’s proposed takeover over competition concerns.

CK Hutchison, owned by Asia’s richest man Li Ka-Shing, wants to buy O2 from current owner, Spain’s Telefónica, and merge the operator with existing mobile group Three.

Read more: O2 could become a public company after merger with Three

Critics have voiced competition concerns over this, as the merger would mean that UK mobile prices were being set by just three large providers.

Following a request from the Competition and Markets Authority, the European Commission has now launched a probe into the takeover, expressing worries that it would reduce consumers’ choice and lead to higher prices.

Commissioner Margrethe Vestager, in charge of competition policy, said:

Mobile telecom services are increasingly important to consumers. Both to keep in touch with family and friends and to access online services. With this investigation we want to ensure that consumers in the UK do not pay higher prices or face less choice as a result of this proposed takeover.

Ofcom welcomed the Commission's probe, with a spokesperson voicing concerns over the takeover:

The deal could undermine important aspects of the UK market, such as shared networks and high street retail competition, which have helped deliver good results for mobile users over many years. Once competition is weakened, it is hard to re-establish.

The proposed merger between O2 and Three, currently the second and fourth largest UK operators, respectively, would create an operator with over 31 million subscribers.

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