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Hong Kong conglomerate says proposed remedies go far beyond those offered in other telco mergers.
3UK parent CK Hutchison has hit back at the U.K.’s Competition and Markets Authority (CMA) after the latter warned that its acquisition of O2 could cause long-term damage to the mobile market.
Earlier on Monday, CMA chief executive Alex Chisholm sent a letter to the European Commission’s competition commissioner Margrethe Vestager, warning her that the remedies proposed by CK Hutchison will not be enough to offset the loss of competition resulting from the 3UK/O2 merger.
He called for Hutch to divest either the 3UK or O2 mobile network in its entirety, or hive off physical assets and spectrum sufficient to create "a commercially viable" fourth mobile network operator (MNO).
"The divestiture of 3 or O2 to a new MNO to gain approval of the merger is a red herring," said CK Hutchison, in a statement. "There is no taker for such a remedy. It would also undermine the whole economic rationale of the merger and reinforce the spectrum inferiority and capacity constraints of both companies."
CK Hutchison insisted that the remedies it has offered go far beyond those proposed in other European telco mergers.
The Hong Kong conglomerate said it has struck capacity deals with Sky, Virgin, Tesco Mobile and UK Broadband that cover more than 40% of 3UK and O2’s combined network capacity.
"It is astonishing that [the] CMA has failed to refer to this," CK Hutchison said, adding that "the entry of so many diverse, strong and committed players will ensure that there is plenty of competition in the U.K. market."
CK Hutchison has also pledged to freeze prices for five years, and plough £5 billion into its U.K. mobile operations if the O2 deal is approved.
In addition, Hutch also noted that the CMA approved BT’s £12.5 billion acquisition of EE without remedies, "creating a dominant fixed-mobile behemoth in the U.K. market."
CK Hutchison argued that the CMA’s letter "can have no legitimate status" in the Commission’s merger review process.
Brussels has set a provisional deadline of 19 May by which to issue a decision.
