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By | Kat Hall 11th May 2016 11:00

EU vetoes O2 and Three merger: Hutchison mulls legal challenge

Ofcom whispers 'non' into EU's ear, regulator over the water sleepily agrees

Hutchison is considering a legal challenge against the EU over its decision today to block the proposed £10.25bn merger between mobile operators Three and O2.

"We will study the commission’s decision in detail and will be considering our options, including the possibility of a legal challenge," said Three's owner Hutchison in a statement.

The move to block the merger will surprise few, given the commission's public stance against the reduction of mobile operators in the UK.

The commission outlined "strong concerns" that UK mobile customers would have had less choice and paid higher prices as a result of the takeover, and that the deal would have harmed innovation in the mobile sector.

EU Competition Commissioner Margrethe 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. We had strong concerns that consumers would have had less choice finding a mobile package that suits their needs and paid more than without the deal.

"It would also have hampered innovation and the development of network infrastructure in the UK, which is a serious concern, especially for fast moving markets. The remedies offered by Hutchison were not sufficient to prevent this."

Ofcom head Sharon White, who has been advising the commission on its decision, has also spoken out about the deal. She outlined concerns that Three would become the biggest mobile operator by acquiring its rival, O2."The combined group would control more than four in 10 mobile connections," she said.

Last month Three UK made a last-ditch attempt to win EU approval of the merger with a number of sweeteners, including £3bn in network deals with competitors, according to reports.

It had previously promised that for five years it would not hike up bills for consumers and would also plough £5bn of investment into the UK over that period.

In its response to the EU, Hutchison said: "We strongly believe that the merger would have brought major benefits to the UK, not only by unlocking £10bn of private sector investment in the UK’s digital infrastructure but also by addressing the country’s coverage issues."

It claimed such a move would enhance network capacity, speeds and price competition for consumers and businesses across the country "and dealing with the competition issues arising from the current significant imbalance in spectrum ownership between the UK’s MNOs." ®

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