CK Hutchison has submitted its proposed takeover of O2 in the U.K. to European competition authorities.
The Hong Kong-based telco agreed to pay £10.25 billion for Telefonica’s U.K. mobile operator in March and submitted the case to the European Commission on 11 September.
The Commission’s competition department has set a provisional deadline of 16 October to make a ruling on the case.
Hutchison’s submission coincided with Telenor and TeliaSonera’s decision to withdraw from their planned merger in Denmark. On Friday the telcos announced that they had failed to reach agreement with the European Commission on conditions for the deal and had therefore decided to walk away.
European competition commissioner Margrethe Vestager later confirmed that the remedies proposed by the operators were "not sufficient to avoid harm to competition in Danish mobile markets."
Glossing over the fact that Telenor and TeliaSonera already share networks in Denmark, Vestager insisted that Denmark requires a fourth mobile network operator to protect competition. A tie-up between Telenor and TeliaSonera would have reduced the market to three infrastructure-based players.
That insistence on a fourth network operator could have a knock-on effect for Hutchison, which hopes to reduce the U.K. to three players by merging its 3UK unit with O2.
However, at a very basic level, there is a key difference between the competitive situation in the U.K. and that in Denmark.
A combined 3/O2 would lead the U.K. market in terms of customer numbers, b ut the deal would effectively even out the competitive landscape, leaving three strong players to fight it out.
Conversely, the Danish merger would have left two large players in TDC and TeliaSonera/Telenor, plus a much smaller operator in the form of Hutchison’s local 3 unit, which at the end of last year had a market share of only around 12%.
So while the failure of the Denmark deal is a cause for concern for Hutchison in the U.K., it is perhaps in a better position to win over European competition officials.
