EU blocks Three's O2 takeover

11 May 2016
Three takeover

As expected, the European Commission has stopped the sale of O2 by Telefonica to the owner of Three, CK Hutchison.

The deal was worth a whopping £10.3 billion, however, the problem lay in the fact that the takeover would have left the UK with only three major mobile phone network operators, which reduces competition in the market.

The competition commissioner, Margrethe Vestager, has voiced concerns about this, thinking that a lack of competition would see a rise in prices, and a reduction in choice for consumers.

There's not much point making it easier for people to switch mobile accounts, if there's not much to choose from.

It is thought that this decision is going to be met with a legal challenge from CK Hutchison.

"The goal of EU merger control is to ensure that tie-ups do not weaken competition at the expense of consumers and businesses," said Vestager.

"We want the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality."

CK Hutchison had a plan - they were going to offer a five year price freeze and millions in investment, but it seems that their assurances were not enough for the commission.

They said that this deal would bring "major benefits to the UK not only by unlocking £10 billion of private sector investment in the UK's digital infrastructure but also by addressing the country's coverage issues, enhancing network capacity, speeds and price competition for consumers".

O2 added: "Regardless of what happens next, we will continue to deliver for our customers as we always have."

UK regulator Ofcom had previously argued, agreeing with the European commission, that the reduction in companies in the mobile operations market would see an inevitable rise in prices, and added that it could well end up in a poorer service.

However, there could be another deal on the horizon - Liberty Global who own Virgin Media - have said that they might take over O2, now that CK Hutchison's bid has failed.

TOPICS:   Mobile

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