Three’s proposed purchase of O2 should be blocked or severely restricted according to the UK’s competition watchdog.
Plans to merge the two networks were announced last January in response to news that BT was to buy EE, the UK’s largest mobile operator. The phone and broadband giant had been in talks with the owners of both EE and O2 before ultimately deciding to pursue EE.
The acquisition of O2 by Three is aimed at creating a business which can compete not just with the enlarged BT but also with Sky, which is launching its own mobile service later this year.
Despite requests for the £10bn deal to be considered by the UK’s Competition and Markets Authority, EU regulators will instead decide whether it can go ahead.
However the CMA, which is allowed to make submissions to its European counterpart, has said allowing the merger to go-ahead could cause “long-term damage” for UK consumers as it would leave only three mobile networks – Three/O2, EE/BT and Vodafone.
It’s been suggested that Three and O2 have offered a number of concessions aimed at getting the deal approved, including guaranteeing space on its network for smaller companies and virtual network operators.
However the CMA says these offers “fall well short” of what would be needed to ensure consumers continue to benefit from a competitive market.
The UK agency wants the merged firm to have to sell-off all or part of one of the networks, including its mobile masts, spectrum and other infrastructure, to allow a new fourth network to launch.