Brussels has shut the door on the second European telecoms merger in a year in a landmark ruling that will put at risk tens of billions of euros of similar deals in Europe.
CK Hutchison’s ￡10.5bn attempt to buy O2, Telefónica’s British mobile operator, was blocked yesterday by Margrethe Vestager, the competition commissioner, who cited “strong concerns” that it would have led to less choice and higher prices for UK consumers.
The decision is the first time Brussels has formally ruled against a telecoms in a major European market, although it comes just months after it forced a similar in Denmark deal to collapse.
Hutchison wanted to merge O2 with Three
to create the UK’s largest mobile operator.
However, after almost a year of lobbying it failed to convince the antitrust authority that the deal would benefit consumers.
Ms Vestager said: “Allowing Hutchison to take over O2 at the terms they proposed would have been bad for UK consumers and bad for the UK mobile sector. The remedies offered by Hutchison were not sufficient to prevent this.”
The company said: “We are deeply disappointed by the commission’s decision to prohibit the merger between Three
UK and O2 UK. We will study the commission’s decision in detail and will be considering our options, including the possibility of a legal challenge.”
The ruling represents a personal victory for Ms Vestager, who has taken on a series of high-profile cases that put her at odds with some of the world’s largest companies. It is the first time she has shot down a prominent merger in any sector.
The decision is also a victory for the British competition and industry regulators, which have been vocal in their opposition to the deal.
Telefónica wanted to sell O2 to reduce high levels of debt and help pay its annual dividend. It will look for another buyer for the business.