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European Commission to carry out 'in-depth' probe into O2/Three merger

Friday, October 30th 2015 by Phil Wilkinson-Jones

The European Commission has opened an in-depth investigation into the proposed merger of two of the UK’s biggest mobile networks.

Hutchison Whampoa, which owns Three, confirmed in January that it had entered exclusive talks with Telefonica about the acquisition of O2.

Combined, Three and O2 would create the UK’s largest mobile network, with 41% of the market share compared to EE’s 32% and Vodafone’s 24%.

Earlier this month, the Competition and Markets Authority (CMA) said it wanted to investigate the takeover amid concerns it would “significantly” affect competition in the UK mobile market.

But today, the European Commission confirmed that it will take an in-depth look at the deal under the EU Merger Regulation.

The Commission has concerns that the deal could lead to higher prices, less choice and reduced mobile innovation in the UK.

It is also concerned that the merger would reduce the number of networks able to host mobile virtual network operators (MVNOs), giving current and future MVNOs less choice and weakening their negotiating power.

Margrethe Vestager, the commissioner 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.”

'Making mobile better'

The Commission will now carry out an in-depth investigation to determine whether its competition concerns are confirmed. It has until 16 March 2016 to make a decision.

The move comes after the proposed acquisition of EE by BT was given the provisional green light by the CMA, which said it was unlikely to result in a "lessening of competition" in either the fixed broadband or mobile markets.

The Three/EE merger is seen by many to be more of a threat to competition as it will see the number of mobile operators in the UK reduced from four to three.

Three said in January that any acquisition is likely to be a lengthy process and in the meantime it is “business as usual” at the company.

“We remain focussed on making mobile better for consumers in the UK. We are confident that if final agreement is reached it will benefit the customers of both companies," Three said.

O2 said in a statement: “Three is known for campaigning on behalf of its customers, much like O2.

“We are confident that an agreement will mutually benefit the customers of both companies, as well as drive better value, quality and investment in one of the most digitally competitive countries in the world.”

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