Three-O2 merger should be ‘blocked’, CMA says

The Competition and Markets Authority (CMA) expressed “serious concerns” about the deal to the European Commission

'The fine reflects the seriousness of the breach, given the potential impact on public health and safety,' Ofcom said (PA)

The UK’s competition watchdog has urged European regulators to effectively block the £10.3 billion merger of mobile phone networks Three and O2.

CK Hutchison owned Three deal with Telefonica’s O2 would create the UK’s largest mobile group and reduce the number of big players in the market from four to three.

But the Competition and Markets Authority (CMA) expressed “serious concerns” about the deal to the European Commission.

It warned the merger would be a “significant impediment to effective competition” in the UK mobile phone market and could cause “long-term” damage for UK customers.

“It is clear that the remedies offered fall well short of what would be required to meet the relevant legal standard, as detailed in our case submissions.

“The proposed remedies are materially deficient as they will not lead to the creation of a fourth mobile network operator (MNO) capable of competing effectively and in the long-term with the remaining three MNOs such that it would stem the loss of competition caused by the merger,” Alex Chisholm, the CMA’s chief executive has written to the commissioner Margrethe Vestager.

Sharon White, head of communication watchdog Ofcom urged the European Commission to throw out the deal in February. She said the proposed merger between O2 and three could push up mobile phone bills for users.

“We are concerned that the smallest mobile network, Three proposes to become the biggest by acquiring its rival, O2. The combined group would control more than four in 10 mobile connections,” White said.

UK mobile companies generated £15 billion of revenue in 2015, partly because of strong competition, White argued. “This is not a broken market,” she said. “Competition, not consolidation, has driven investment.”

European competition regulators opened a full inquiry into the deal in October. They have until the 19th of May to decide whether or not to block it.