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EU blocks Three's takeover of O2 EU blocks Three's takeover of O2
(35 minutes later)
The European Commission has blocked the sale of O2 to Hutchison, the owner of mobile company Three. The European Commission has blocked the sale of O2 to CK Hutchison, the owner of mobile company Three.
The planned deal was worth £10.3bn, and would have left the UK with just three major mobile phone network operators.The planned deal was worth £10.3bn, and would have left the UK with just three major mobile phone network operators.
But Europe's competition commissioner, Margrethe Vestager, said she had strong concerns about the takeover. But Europe's competition commissioner, Margrethe Vestager, said she had strong concerns about the takeover, ruling that it would reduce customer choice and raise prices.
She said UK mobile customers would have less choice and pay higher prices. CK Hutchison said they were considering a legal challenge to the decision.
Concessions not 'sufficient'
"The goal of EU merger control is to ensure that tie-ups do not weaken competition at the expense of consumers and businesses," said Ms Vestager.
"We want the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality."
The decision ruled that concessions offered by Hong-Kong based Hutchison - including a five year price freeze and billions of pounds in investments - "were not sufficient to prevent" the hampering of innovation and network infrastructure development.
CK Hutchison responded to the decision, saying the acquisition of O2 from Spain's Telefonica would bring "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, enhancing network capacity, speeds and price competition for consumers."
Retail prices for mobile services in the UK are currently amongst the lowest in Europe.
The two other major UK operators are Vodafone and BT's Everything Everywhere, known as EE, and the four major operators have paired off to share the costs of developing Britain's 4G infrastructure.