Three-O2 merger in doubt as UK watchdog slams Brussels deal –

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In a letter to the Commission, Alex Chisholm, the CMA’s chief executive, wrote: “The proposed remedies are materially deficient as they will not lead to the creation of a fourth mobile network operator capable of competing effectively and in the long term.”

He urged the Commission’s competition chief, Margrethe Vestager, to “prevent the long-term damage to the UK telecoms market” by attaching more onerous conditions to the merger.

Instead, he proposes forcing a merged Three and O2 to sell off some of its mobile network infrastructure and spectrum – the airwaves that carry voice and data – so that a fourth mobile network can be set up. Otherwise, Mr Chisholm said the “only option” was to stop the deal.

CK Hutchison questioned the legitimacy of the CMA’s intervention in a response to Mr Chilsholm’s letter, saying “it is for the Commission to assess any competition concerns.” 

Hutchison, which is controlled by Asia’s richest man Li Ka-shing, said it had proposed deals that would see 40pc of O2 and Three’s combined network taken up by rivals. “It is astonishing that CMA has failed to refer to this,” the company said.

It comes after a similar deal in Denmark collapsed after Brussels attached onerous concessions, including selling off spectrum, which effectively blocked the merger.

Tom Mockridge, the chief executive of Virgin Media, criticised the CMA’s intervention, highlighting its decision earlier this year to approve BT’s £12.5bn takeover of EE unconditionally.

Virgin Media hopes to benefit from the merger of Three and O2 by getting a better deal for its own mobile service, which is currently hosted on the EE network.

Mr Mockridge said: “A combined O2 and Three would provide a counterbalance to the strength of BT and EE, offering an alternative source of capacity to other providers who will drive competition in their own right.”

Three-O2 merger in doubt as UK watchdog slams Brussels deal –