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Hong Kong company will not extend its proposed remedies in order to appease Brussels, sources say.
CK Hutchison is not prepared to offer any further concessions in order to secure the European Commission’s approval for its planned takeover of O2 in the U.K., it emerged on Wednesday.
Quoting unnamed sources familiar with the situation, Reuters reported that the Hong Kong-based company believes the remedies it has offered to date to be substantial enough and still hopes to convince Brussels to rule in its favour.
The sources also said the firm is ready to challenge any adverse ruling in court, backing up claims made by Bloomberg sources at the weekend.
In recent weeks Hutchison has brokered a series of deals that will see it sell as much as 40% of its U.K. network capacity to Sky, Virgin, Tesco Mobile and UK Broadband, provided it gets the go-ahead to merge its 3UK business with Telefonica’s O2 UK. It has also pledged to freeze prices and invest heavily in its U.K. mobile operations.
But it still faces strong opposition to the deal. Last week the U.K.’s Competition and Markets Authority (CMA) made it clear that it does not support the 3UK/O2 tie-up, warning of long-term damage to the market stemming from a lack of competition. In a letter to European competition commissioner Margrethe Vestager, the CMA argued that the U.K. requires a fourth mobile network operator in order to remain competitive and to ensure consumers are not hit by rising prices.
It falls to the European Commission’s competition arm to make a final ruling in the case, but it is starting to look as though Hutch faces an uphill battle; rumour has it that the Commission will rule against in the coming weeks, ahead of its 19 May deadline.
Telefonica is already said to be considering its options, should the deal with Hutchison fail. In a separate report on Wednesday, Bloomberg said the Spanish incumbent is mulling restarting the sales process, naming cableco Liberty Global and private equity firms as possible buyers. It could also look to spin off and list O2 UK.
There has been no official comment from Telefonica or from CK Hutchison.
