3 Ireland argued that its proposed acquisition of O2 Ireland will improve competition in the market as it confirmed it had received a Statement of Objections from the European Commission regarding the deal.
With the Irish market having one dominant player (namely Vodafone) and three operators lagging behind, 3 argued the gap to the market leader will grow if 3 and O2 do not merge.
It said the acquisition of O2 Ireland would give the combined company “the scale and financial strength” to compete “aggressively” in the market to benefit consumers. It would also allow it to roll out LTE services.
“Competition in Ireland will be better served by three credible operators with sufficient scale to compete for a total market of 4.6 million, than by the current market structure,” the company said in a statement.
The EC announced in November that it would conduct a further investigation into the €850 million bid by Hutchison Whampoa for Telefonica O2’s Irish unit. The deal would see 3 move from last place to second spot, narrowly behind Vodafone.
3 said the Statement of Objections was not unexpected in the context of the merger investigation and the EC’s previous statements that it would examine deals in which the number of operators in markets falls from four to three.
The Hutchison-owned operator pledged to put forward “strong and effective remedies” to address the EC concerns and is confident it can convince the regulator that the merger would have competitive benefits. “We will continue to work with the Commission in order to achieve a positive outcome,” it concluded.
Concessions in this type of deal typically involve giving up valuable radio spectrum or agreeing to ease the terms on which rivals such as MVNOs can access. Both were given up by Hutchison’s Austria unit to secure EC approval for the acquisition of Orange Austria.
The Irish deal and another in Germany (where Telefonica Deutschland wants to buy KPN’s E-Plus unit) are seen as key in the mobile industry for establishing whether the European Commission is prepared to allow consolidation.
The EC has set a deadline of 24 April to reach a decision on the Ireland deal.