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Sharon White says deal may lead to higher prices, establishing a new fourth player would take time, investment.
Ofcom CEO Sharon White on Sunday made clear her opposition to 3UK parent Hutchison’s proposed acquisition of O2, warning that it could lead to higher prices, disruption to networks, and less choice for customers.
Writing in the Financial Times, White said that U.K. consumers enjoy innovative services and some of the lowest mobile tariffs in Europe, thanks largely to four competitive mobile network operators, of which 3UK is the disruptive challenger.
"Our findings show that average prices are around 10%-20% lower in markets with four operators and a disruptive player than in those with only three established networks," White said.
"Austria’s regulator says that, since the deal there [between 3 Austria and Orange], overall mobile prices have climbed 15% and by 30% for customers who only make calls and send texts."
White also claimed that the 3UK/O2 merger could also jeopardise the network-sharing agreements between 3UK and EE – which last week officially became part of BT – and Vodafone and O2.
In addition, the Ofcom chief pointed out that most phone contracts are sold in high street stores, with independent retailers accounting for a big share. She claimed that the proposed merger would shift the balance of power towards mobile operators and away from independent retailers, which help to constrain prices.
With the mobile mergers that were approved in Austria and Germany, the European Commission applied remedies aimed at safeguarding competition, such as selling spectrum to facilitate a new market entrant, and providing wholesale network access on favourable terms.
Similar remedies are expected should Brussels give the green light to the 3UK/O2 deal; however, "establishing a new mobile network might be one answer, but this would take time, and considerable investment," White warned on Sunday.
She said Ofcom has submitted these arguments to the European Commission, which has set 22 April as a provisional deadline for deciding whether to approve the deal.
