EU poised to block O2 sale to Li Ka-shing’s Hutchison
Commission may act out of concerns the deal will raise UK telecom prices
The European Commission is likely to shoot down Telefonica’s blockbuster sale of British telecom giant O2 to Hong Kong group Hutchison because of fears it would inflict higher prices on British consumers, a source revealed.
“We expect European Competition Commissioner Margrethe Vestager to block the sale,” said a source close to the matter, indicating that a decision was expected this month.
A spokesman for the commission declined to comment, saying only that the EU’s executive branch has until May 19 to hand down a ruling.
Hutchison is controlled by one of the richest men in Asia, Li Ka-shing, and his buyout of O2 from Spain’s Telefonica for £10.25 billion (HK$115.50 billion) would create Britain’s biggest mobile phone company.
Should the deal be approved by Brussels, it would be especially sensitive as it could revive accusations in the UK of meddling by the EU ahead of a June 23 referendum on whether Britain will remain in the bloc. A move out of the union is termed Brexit.
It would also be a major setback for telecom companies in Europe which have lobbied Brussels to relax anti-trust rules in order to unify a highly-fragmented market and boost investment.
Crucially, such a deal would reduce the national market in Britain to three players from four, in a downsized landscape the EU believes hurts competition.