Who's in charge of mobile?
The UK Competition and Markets Authority is pushing for Hutchison Whampoa’s £9.25 billion bid for mobile operator O2 to be overseen by domestic regulators, sidelining interference from Brussels. Under European law significant cross-border deals are part of the European Commission’s remit unless two-thirds of each organisation’s activities are conducted in EU member states - O2 is owned by Spain’s Telefonica, while Hong Kong-based Hutchison is behind rival mobile op 3 UK.
The CMA argues that the Hutchison/O2 deal is exceptional because BT is also in the process of acquiring EE, the UK’s largest mobile company, and so it is in a better position to evaluate a market where the two planned acquisitions would lead to the number of operators reduced from the current four to just three. However, the CMA is getting pushback from Brussels, which says that the Commission is better placed to ensure consistency in competition rules in the telecoms sector.
IHS says it has serious doubts as to whether the UK regulator will approve further in the mobile sector, with EE itself a result of the merger of Orange UK and Deutsche Telekom’s T-Mobile UK in 2010.
Hutchison’s “audacious bid” for O2 UK would not only create a new dominant operator in the UK, but will significantly alter market dynamics, states IHS, adding that is hard to see how Hutchison can sweeten the deal and assure regulators that the merger will not damage competition.