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Three O2 merger opposed by UK regulator

The UK’s Competition and Markets Authority has filed an objection to the possible merger of Three and O2.

Three UK’s parent company, Hutchison Whampoa, agreed terms to buy O2 from Telefonica last March for a fee that could rise as high as £10.25 billion.

Since then, an extended EU antitrust investigation has kept the deal from going through. Now a UK regulator has voiced its concerns at the potentially anticompetitive nature of a Three-O2 merger.

Alex Chisholm of the Competition and Markets Authority (CMA) has written to Margaret Vestager of the European Commission ahead of its decision on the matter.
The deal would result in the formation of the UK’s biggest mobile phone company, and would reduce the number of UK networks from four to three. It’s that last point that the CMA objects to, as it would likely result in higher prices or inferior services for UK users.

It appears the CMA has concerns over the reduced competition on the UK mobile market, and the inadequate remedies the EC has proposed.

“The proposed remedies are materially deficient as they will not lead to the creation of a fourth mobile network operator (MNO) capable of competing effectively and in the long-term with the remaining three MNOs such that it would stem the loss of competition caused by the merger,” reads the CMA’s letter (via The Guardian).

Related: Three O2 Deal: Is it a good thing for consumers?

The CMA’s proposal is for the new combined company to sell either Three or O2 to an approved buyer in order to maintain the UK’s four-network setup.

An EC decision on the Three O2 merger will be made by April 18.