The European Commission has decided to launch a further investigation into the proposed €850 million bid by Hutchison Whampoa for Telefonica’s O2 unit in Ireland.
Hutchison’s takeover would reduce the number of operators in the Irish market from four to three, and position the Hutchison/O2 combination with a 39 per cent market share behind market leader Vodafone with 40 per cent (GSMA Intelligence, Q3 2013 figures).
The commission will rule on the deal by March 24, with possible concessions it might extract from Hutchison including giving back spectrum or improving the terms on which rivals can access its network.
Consolidation has emerged as a key theme in the European mobile market as operators look to protect margins in an increasingly competitive market.
The decision on Ireland will be closely watched along with another one: What the commission decides about Telefonica’s proposed purchase of smaller rival E-Plus in Germany which would also reduce the number of competitors from four to three.
The news about Ireland is not unexpected. Three Ireland CEO Robert Finnegan said this summer that he expected a longer probe into the deal.
In a statement, the EU regulator said: “The commission has concerns that the transaction would remove an important competitive force and change the merged entity’s incentive to exert significant competitive pressure on the remaining competitors.”
The country’s other mobile operator is Eircom, with an estimated 20 per cent market share.