The UK Competition and Markets Authority (CMA) has written to the European Commission outlining its concerns about the proposed merger between Hutchison 3G UK and Telefonica UK (O2) and proposed remedies. CEO Alex Chisholm reiterated his agency's serious concerns regarding the proposed merger. The CMA believes that the merger would give rise to a significant impediment to effective competition in retail and wholesale mobile markets in the UK.
It also believes that the remedies proposed by the EC fall well short of what would be required to meet the relevant legal standard to eliminate the adverse effects identified. The CMA insists that these 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.
They also fail to address concerns arising from the presence of the merged entity in both the network sharing arrangements. The CMA said that the only appropriate remedy that would alleviate competition concerns is the divestment – to an appropriate buyer approved by the Commission – of either the Three or O2 mobile network businesses, in entirety, or possibly allowing for limited 'carve-outs' from the divested business. This divestment would need to include the mobile network infrastructure and sufficient spectrum to ensure a commercially viable fourth MNO in the UK.
Source: http://www.telecompaper.com/news/cma-expresses-concerns-about-threeo2-uk-merger--1137788