The UK competition watchdog has called for EU regulators to block the proposed Three and O2 merger.
In a damming statement to the European Commission the Competition and Markets Authority (CMA) expressed “Serious concerns” about merger.
Following hot in the footsteps of the EE and BT merger, UK network Three’s parent company Hutchinson-Whampoa negotiated the purchase of O2, but subsequently has faced a series of regulatory steps to gain approval for the transaction, which if allowed would form the UK’s largest mobile network. Leaving only EE and Vodafone as competition for networks in the UK, the deal has raised a significant amount of concerns with various members of the telecoms community.
The main concern is that it would be detrimental to consumers with potentially increased prices and lower levels of investment in diversification leading to what the CMA stated would be “long term damage” for UK consumers. This sentiment was echoed by Ofcom, the UK telecoms watchdog, who pointed to recent mergers throughout the EU in Austria, Ireland and Germany to show that prices have increased with the markets incentive to progress greatly reduced. The Austrian regulators found that “since the deal there, overall mobile prices have climbed 15 per cent – despite some falls in recent months – and by 30 per cent for customers who only make calls and send texts.”
Although the proposed purchase was announced early last year, Three have had to negotiate with the European Commission regulators making various concessions in order to secure the deal. There have been suggestions that Sky and Tesco mobile would use the network to launch their own services and increase competition and rival firm Virgins chief executive said “”A combined O2-Three would provide a counter balance to the strength of BT/EE, offering an alternative source of capacity to other providers who will drive competition in their own right.” Ultimately the decision lies with the European Commission, who have until the 19th of May.