TEF Telefonica SA

BRUSSELS—The European Commission formally announced its decision to reject CK Hutchison Holdings Ltd.'s multibillion-dollar acquisition of Telefó nica's British mobile operator O2, in a move signaling the bloc's stricter bearing toward telecoms mergers in the region.

The announcement on Wednesday was expected after senior EU officials agreed to block the deal last week, paving the way for a formal signoff on the decision by the bloc's 28 commissioners, according to people familiar with the matter.

The bloc's antitrust agency said the deal would have resulted in higher prices and less choice for U.K. customers and hampered innovation and the development of network infrastructure in the country.

"Allowing Hutchison to takeover O2 at the terms they proposed would have been bad for U.K. consumers and bad for the U.K. mobile sector," said EU antitrust chief Margrethe Vestager.

The commission said the parties proposed to divest Telefonica's stake in its joint mobile venture with supermarket giant Tesco and to offer shares of network capacity to Tesco Mobile and Virgin Media to waive the deal through. But, ultimately, the proposed solutions didn't resolve the EU's concerns, particularly because they couldn't replace the ensuing weakened competition in the mobile telecoms markets, the commission said.

The remedies offered would have been difficult to implement and monitor effectively, the EU added.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

(END) Dow Jones Newswires

May 11, 2016 06:25 ET (10:25 GMT)

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