O2 and Three's merger on the rocks?

11 April 2016

jackson three Three's mascot, 'Jackson', may have been shouting "Alright! Alright! It's really alright!", but the proposed merger with O2 is anything but.

Watchdog, the Competition and Markets Authority, have hit out against the merger saying it will harm the consumer's choice in the UK mobile market. A probe by the European Commission listed their objections to this partnership, in a report that was hundreds of pages long.

So while Hutchison (who own Three) agreed to buy O2 for £10.25 billion, the deal is far from done. The CMA think that the European Commission's objection don't go far enough, and fall "well short" of what's needed to keep competition healthy in the UK.

The long and short of it is that this deal will see Britain's mobile market having only three mobile, with EE, Vodafone, and this O2 + Three affair. When there's only three operators, prices are likely to go up. In a completely separate study, Ofcom pointed out that, in places where there's only three mobile operators, prices go up by 10%.

In a letter to the Commission, Alex Chisholm, the CMA's chief executive, wrote: "The proposed remedies are materially deficient as they will not lead to the creation of a fourth mobile network operator capable of competing effectively and in the long term."

He asked the Commission's competition chief, Margrethe Vestager, to "prevent the long-term damage to the UK telecoms market" by adding more conditions to the merger. Chisholm urged that Three and O2 would need to sell off some of their mobile network infrastructure and spectrum, so that a fourth network can be set up.

If not, then the CMA will try and stop the deal going through.

TOPICS:   Mobile

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