EU antitrust regulators have launched a full investigation into Hutchison Whampoa’s 10.3-billion-pound bid for British mobile operator O2, concerned that the deal may push up prices.
The European Commission has signalled a tougher line on telecoms mergers, putting it on a collision course with the companies who argue they need to consolidate to invest in faster networks.
Hutchison’s planned acquisition of Telefonica’s O2 would make it the top mobile operator in Britain. It already has a UK mobile business, Three, so the deal would reduce the number of network operators from four to three, a number which typically raises regulatory alarm bells.
“The Commission has concerns that the transaction would remove an important competitive force and that the merged entity would have limited incentives to exercise significant competitive pressure on the remaining competitors,” the Commission said on Friday.
The stakes are high for Hutchison, owned by Li Ka-shing. Failure to get EU approval for the deal could put a brake on its expansion and long-term prospects in Europe, credit rating agency Moody’s wrote in a note last month.
The company may have to sell parts of the combined entity’s network capacity and frequencies – or spectrum – to get regulatory approval.
“We believe the transaction will be good for both competition and consumers in the United Kingdom and are confident that the acquisition will be approved by the Commission,” Hutchison said on Friday.
Full content: The Financial Times
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