Three-O2 deal does not 'address competition concerns' - ComReg

Wednesday 28 May 2014 19.07
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Hutchison Whampoa has agreed a number of measures aimed at aiding smaller competitors
Hutchison Whampoa has agreed a number of measures aimed at aiding smaller competitors
Three Ireland's CEO Robert Finnegan says O2 deal will take its market share to 37%
Three Ireland's CEO Robert Finnegan says O2 deal will take its market share to 37%

The measures agreed by Hutchison Whampoa as part of its acquisition of O2 Ireland do not fully address competition concerns, according to regulator ComReg.

The European Union’s competition regulators have cleared the Hong Kong company – which owns Three Ireland – to takeover Telefonica's O2 Ireland as long as it takes a number of steps to aid smaller competitors.

These include the sale of up to 30% of the merged company's network capacity to two mobile virtual network operators and the divestment of five blocks of spectrum at a later stage.

Hutchison must also continue a network-sharing agreement with Eircom as part of the deal.

However in a notice on the agreement, ComReg said it remains concerned that the European Commission’s competition concerns “will not be fully addressed” and that “negative consequences for Irish consumer welfare may result”.

ComReg said the agreed measures “appear inadequate and ineffective to address the serious competition concerns and consumer harm identified by the EC” and did not seem to comply with its own requirements.

It noted the EC’s position as “the decision-making body for assessment” of the bid, however, and welcomed the  end of the “uncertainty” surrounding the deal and the promised network investment that has been promised as part of it.

Responding to ComReg's notice in a statement, Three Ireland said that "a market with three strong networks is a lot better than a dysfunctional four player market".

Hutchison is controlled by Asia's richest man, Li Ka-shing, and wants to strengthen its position in Europe where it operates in six countries. 

Its acquisition of O2 Ireland will considerably boost Hutchison's market share, though Vodafone will remain the biggest mobile operator here.

The EU's Competition COmmissioner, Joaquin Almunia, said the remedies agreed by the company as part of the deal will preserve healthy competition.

"It is essential that healthy competition is preserved in mobile telecoms markets. The commitments offered by Hutchison 3G ensure that Irish consumers will continue to enjoy these benefits," he said.

Welcoming news of the approval of its takeover of O2, Three said the development would take its market share to 37% and bring subscriber numbers to over 2 million active users.

According to the company, combined revenues at the new entity were €736m in 2013, compared to €180m for Three alone in 2013. 

"With the combined strengths of the two businesses, Three will have the scale and financial strength necessary to compete more aggressively against the number one in the market. Our ability to invest coupled with the combined subscriber base of both businesses will create new competitive dynamics in the Irish telecoms market", said Robert Finnegan, Three's chief executive. 

He said the deal "leaves Three optimally positioned to become the number one player by providing the best value and service" to its customers.

The deal will allow Three to invest significantly in building a state of the art 4G network, the company added.