The European Commission (EC) has opened an in-depth investigation into the proposed acquisition of Telefonica Ireland by Hutchison 3G (H3G). The EC is concerned that the deal may reduce competition in the markets for retail mobile telephony and for wholesale access and call origination in Ireland. The Commission now has 90 working days, until 24 March 2014, to take a decision. Its initial market investigation indicated that the proposed acquisition may substantially lessen competition in the retail mobile telephony market in Ireland where 3 Ireland, a subsidiary of H3G, and Telefonica Ireland currently compete with each other.
It is concerned that the deal would remove an important competitive force and change the merged group's incentive to exert significant competitive pressure on the remaining competitors. It also has concerns that the transaction would reduce the merged group's incentive to continue a network sharing agreement with Eircom, which could hamper Eircom's ability to compete effectively after the merger; and that it would result in a significant reduction in the number of mobile network operators (MNOs) that are effectively willing to host mobile virtual network operators (MVNOs).
In a statement, 3 Ireland said that the decision was not unexpected in light of the EC's previous statements that it would take a close look at in-country telecoms mergers. The operator continues to believe that the merger will be good for both competition and consumers in Ireland and is confident that the merger will be approved by the Commission.
