The in-depth investigation carried out by the Commission on the merger between Telefónica UK’s “O2” and Hutchison 3G UK’s “Three”, showed important competition concerns in the UK mobile market.
The transaction would have left only two mobile network operators, Vodafone and BT’s Everything Everywhere (EE) as competitors of the new merged entity, which would likely resulted in higher prices and less choice for consumers. In addition, the Commission considered that the transaction would have a probable negative impact on the quality of service due to hindering new development of the mobile network infrastructure.
Together with the above-mentioned mobile network operators, there are some mobile virtual operators in the UK retail mobile market (Virgin Media, Talk Talk and Dixons Carphone’s iD). These operators do not own the networks they use to provide mobile services, reason why they need access to the other operators’ network at wholesale rates. In this sense, the Commission also considered that the acquisition would reduce the number of mobile network operators willing to host other operators on their networks.
In order to address these fears, Hutchison offered remedies, which however did not adequately solve the Commission’s competition concerns. More concretely, Hutchison proposed measures to strengthen the development of existing mobile virtual operators or to support the market entry of new ones. It also committed to assume certain behavioral remedies aimed at, inter alia, granting mobile virtual operators access to 4G and future technologies.
Not being satisfied with these remedies, the Commission has decided to block the acquisition. This is the first prohibition decision taken in the last three years. The last one was adopted during the mandate of the former Competition Commissioner, Joaquín Almunia, and concerned the merger between Ryanair and Aer Lingus
