EU prohibits Hutchison's proposed acquisition of Telefonica UK

The competition regulators of the European Union (EU) has blocked the proposed acquisition of "O2" by Hutchison, ruling that the deal would reduce customer choice and raise prices.

The planned deal would combine Telefonica UK's "O2" and Hutchison 3G UK's "Three," creating a new market leader in the UK mobile market. The takeover would remove an important competitor, leaving only two mobile network operators, Vodafone and BT's Everything Everywhere (EE), to challenge the merged entity.

The significantly reduced competition in the market would likely have resulted in higher prices for mobile services in the UK and less choice for consumers than without the deal, the European Commission said in a statement released on Wednesday.

Meanwhile, it has strong concerns that the takeover would also likely have a negative impact on quality of service for UK consumers by hampering the development of mobile network infrastructure in the UK.

Finally, the EU competition supervisor concerned that the takeover would reduce the number of mobile network operators willing to host other mobile operators on their networks.

To address EU's competition concerns, Hutchison has offered remedies. However, after an in-depth investigation, the regulators said the proposed measures failed to prevent the likely negative impact on prices, quality of service and network innovation in the UK mobile sector as a result of the takeover.

"Allowing Hutchison to takeover O2 at the terms they proposed would have been bad for UK consumers and bad for the UK mobile sector," said EU Commissioner Margrethe Vestager, in charge of competition policy.

"We want the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality," she added. Endit