You've Been Disconnected: The Commission Blocks British Telecom Merger

The European Commission has earlier cleared several 4-to-3 mergers in the mobile telecommunications sector. But as illustrated by the European Commission's recent refusal to clear the proposed acquisition of mobile network operator O2 by Hutchison, 4-to-3 mergers generally give rise to competition concerns. O2 is the second largest mobile operator in terms of revenue in the UK, and the largest in terms of number of subscribers. Hutchison's Three is a recent entrant on the UK market and is considered one of the most important drivers of competition. According to the Commission, the proposed acquisition would have resulted in less choice and higher prices for UK mobile customers. In the absence of an effective remedy, the European Commission blocked the acquisition: its 25^th prohibition in 25 years. Companies should therefore be aware that 4-to-3 mergers are not impossible but need careful scrutiny and, possibly, remedies.