Monday 11 April 2016 7:31 am

CMA urges European Commission to force Three or O2 sell-off before approving Telefonica-Hutchison 3G merger

The head of the CMA has written to the European Commission, warning that the merger between Hutchison 3G and Telefonica would create "a significant impediment to effective competition" in the British telecoms market. 

The £10.25bn deal, which was agreed in March 2015, has been undergoing a lengthy probe by the European Commission. In January Ofcom came out against the merger, saying it could lead to higher prices for consumers.

In a letter made public today Alex Chisholm, chief executive of the Competition and Markets Authority told commissioner Margrethe Vestager that while the EC had made "considerable efforts" address any issues brought about by the merger, all solutions offered  were "materially deficient".

Chisholm said the only solution would be for either Three or O2 to be sold off in entirety, or possibly allowing for limited ‘carve-outs’ from the divested business.

"The divestment would need to include the mobile network infrastructure and sufficient spectrum to ensure a commercially viable fourth MNO in the UK," he wrote. "Absent such structural remedies, the only option available to the commission is prohibition.

"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."