The European Commission has opened an in-depth investigation into Hutchison's acquisition of O2 UK from Telefonica. The Commission said it's concerned that the merger of O2 and 3 UK could lead to higher prices, less choice and reduced innovation for mobile customers in the UK. The merger of O2 and 3 would create the UK's largest mobile operator and reduce the market from four network operators to three.
The EC outlined three concerns found in its initial investigation of the deal. First, the merger would remove "an important competitive force" and the new company "would have limited incentives to exercise significant competitive pressure on the remaining competitors". This would lead to higher prices and less investment in mobile networks, the EC said.
Second, the transaction would reduce the number of operators willing to host mobile virtual network operators. MVNOs would have less choice of host networks and hence weaker negotiating power to obtain favourable wholesale access terms.
Third, the weaker competitive pressure with only three network operators increases the likelihood that MNOs will coordinate their competitive behaviour and increase prices on a sustainable basis on the retail and wholesale markets, the EC said.
The Commission now has 90 working days, until 16 March 2016, to take a decision.
