News
Commission will approach national regulators seeking backing for O2/3UK tie-up veto this week, sources say.
The European Commission is reportedly on the verge of blocking CK Hutchison’s plan to acquire O2 in the U.K. and merge it with 3UK.
The Commission has decided to reject the deal and plans to seek the backing of national competition regulators this week, Reuters quoted two unnamed sources as saying. It added that this step in proceedings is usually a formality.
Hutchison’s prospects for completing the £10.25 billion deal it agreed in March last year have looked bleak for a few weeks.
Earlier this month the U.K.’s Competition and Markets Authority (CMA) contacted EU competition commissioner Margrethe Vestager to warn that the remedies proposed by the Hong Kong-based company are not sufficient to protect the market from the loss of competition that would result from the merger of two mobile network operators.
The CMA called for Hutchison to be required to sell off one of the networks or to hive off enough spectrum and infrastructure to facilitate the creation of a new fourth mobile network operator.
Naturally, Hutchison objected vehemently to the suggestion, insisting there would be no taker for such a remedy and that it would undermine the economic rationale of the merger.
Hutchison has proposed a number of remedies of its own, including price freezes, network investment and a series of network capacity deals with Sky, Virgin, Tesco Mobile and UK Broadband.
Late last week Reuters reported that Hutch believes those measures to be sufficient and will not improve upon them in order to win over Brussels. It is, however, working on a legal challenge, should the European Commission not rule in its favour, the newswire said.
