Three UK can’t take over O2, the European Comission rules

The European Commission announced today that it opposes the proposed acquisition of UK’s O2 by rival carrier Three.

The deal worth £10.3 billion was announced in January 2015 and would see Three and O2 joining forces to become UK’s largest mobile carrier, ahead of Vodafone and BT/EE.

The prospects of the acquisition going through are now dim, as the European Commission argued that allowing it would undermine competition at the expense of British consumers.

Margrethe Vestager, European commissioner for competition, said in a statement that the EC wants “the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality.”

In the regulator’s view, the measures that Three promised in response to competition concerns are insufficient. Three, which is owned by Honk Kong-based conglomerate CK Hutchinson, said it would freeze mobile services prices for five years after the buyout and invest billions in developing the network. But the EC argued that similar mergers in other European countries have resulted in less competition and ultimately worse services for customers.

CK Hutchinson expressed “deep disappointment” over the EC’s decision and said it’s considering a legal challenge.

The EC’s decision isn’t entirely unexpected. Earlier this year, the head of UK’s telecom arbiter Ofcom expressed doubts about the O2 buyout, a move that would see the market consolidate under the rule of just three big operators.

Across the Atlantic, AT&T’s bid to buy T-Mobile was blocked on similar grounds in 2011. The FCC ruled that the market would be thrown off-balance if AT&T became even bigger through the absorption of T-Mobile.

UK readers, what are your thoughts on this decision?