UK regulator the Competition and Markets Authority (CMA) is reportedly lobbying the European Commission to review Hutchison Whampoa’s £10.25bn acquisition of O2 instead of the Brussels watchdog.
CMA officials have been in discussions with the EC for…
UK regulator the Competition and Markets Authority (CMA) is reportedly lobbying the European Commission to review Hutchison Whampoa’s £10.25bn acquisition of O2 instead of the Brussels watchdog.
CMA officials have been in discussions with the EC for several weeks and argue that the domestic regulator is best placed to review a deal as it will already be critiquing BT’s takeover of EE, Sky News reported citing city sources.
Both the CMA and the EC declined to comment on the report.
Hutchison’s proposal to merge O2 with its own UK unit, Three, would follow a trend in Europe of mobile markets shrinking from four operators to three.
The EC, the default regulator for large mergers and acquisitions across the European Union, has now allowed such consolidation deals in Austria, Ireland and Germany.
However, the BT-EE tie-up will not be reviewed by the EC. This is due to an exemption which states that if both parties generate more than two thirds of their EU-wide turnover within one country, a deal is not considered to have a sufficient EU dimension for the EC to review it.
Hutchison has already been the protagonist in four-to-three mergers in Austria and Ireland, and also has operations in Denmark, Italy and Sweden, hence why its O2 acquisition would be assessed by the EC.
An industry lawyer has suggested to TelecomFinance that just because it is likely the EC will review Hutchison’s latest deal, it did not mean it would be all plain sailing for the Hong Kong group.
“Despite having quite stringent remedies placed on them, prices have gone up a lot, especially in Austria – this could mean the [EC’s] remedies are not working,” the lawyer said.
Officials from Germany and Austria’s antitrust authorities both tried and failed to convince the EC that they should be allowed to review mobile consolidation in their countries.
Speaking at the TelecomFinance 2015 conference, Markus Wagemann, the head of the telecoms department at Germany’s Federal Cartel Office, said he felt the EC was softer than national regulators and more understanding the operators’ view than ever before.
He predicted that the EC’s role in telecoms mergers was likely to become more prominent as companies with larger revenues combined. Wagemann said he imagined local regulators would try and rule on these deals, but did expect the EC to delegate.
More recently, in January, the EC rejected a request from the Spanish competition regulator to review Orange’s fixed-mobile convergence deal to buy Jazztel. In a statement it said: “The Commission concluded that it was better placed to deal with the case with a view to ensuring consistency in the application of the merger control rules in the fixed and mobile telecommunications sectors across the European Economic Area (EEA).”
