The European Commission on Friday launched an in-depth investigation into 3UK parent CK Hutchison’s proposed acquisition of O2 UK, warning that the merger may lead to higher prices and less choice for consumers.
If approved, the £10.25 billion deal would combine the second and fourth largest mobile network operators in the U.K., creating a new market leader with around 33 million customers. It would also reduce the number of MNOs in the country to three from four.
"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," said the EU’s competition commissioner Margrethe Vestager, in a statement.
The Commission’s investigation will seek to examine three principle areas of concern.
The first is that the transaction will remove an important competitive force in the retail telecoms market, potentially leading to higher prices and lower network investment.
Secondly, Brussels is worried that the 3UK/O2 deal will reduce the choice, and by extension the negotiating power of MVNOs.
Finally, the Commission believes that the reduction in the number of MNOs will increase the likelihood of co ordination between the remaining players that will lead to higher prices both in the retail and wholesale markets.
"The Commission will now investigate the transaction in-depth in order to determine whether its competition concerns are confirmed. The Commission will in particular examine questions such as the extent to which the parties are close competitors, the market incentives that would be faced by the merged entity and the potential reaction of its competitors," the Commission said.
A decision is due by 16 March 2016.
Friday’s announcement will come as a blow to the U.K.’s Competition and Markets Authority (CMA), which earlier this month asked the Commission for the right to examine the deal, arguing that its impact will likely only affect consumers in the U.K.
