EU Commission opens in-depth probe into Hutchison bid for O2

The European Commission has opened an in-depth investigation into Hutchison Whampoa's £10.3bn bid for Telefonica’s 02.

The Commission said it has concerns the deal could lead to higher prices, less choice and reduced innovation for customers of mobile telecommunications services in the UK.

“The Commission has concerns that the transaction would remove an important competitive force and that the merged entity would have limited incentives to exercise significant competitive pressure on the remaining competitors. This would lead to higher prices and less investment in mobile telecommunications networks.”

It added that the deal would reduce the number of mobile network operators that are effectively willing to host mobile virtual network operators. Prospective and existing MVNOs would have less choice of host networks and hence weaker negotiating power to obtain favourable wholesale access terms, the Commission said.

Finally, the regulator said a reduction in the number of competitors following the merger could lead to a weakening of competitive pressure and increased likelihood that MNOs will coordinate their competitive behaviour and increase prices on a sustainable basis on the retail and wholesale markets.

The transaction would combine Telefonica UK with Three UK, which is a subsidiary of Hutchison. They are respectively the second and fourth largest mobile network operators in the UK.