Senior EU Officials Reject CK Hutchison Bid for Telefónica's O2
May 04 2016 - 2:09PM
Dow Jones News
By Natalia Drozdiak and Laurence Norman
BRUSSELS -- Senior European Union officials on Wednesday decided
to block CK Hutchison Holdings Ltd.'s multibillion-dollar purchase
of Telefónica's British mobile operator O2, two people familiar
with the matter said.
The decision will pave the way for a formal signoff on the
decision by the bloc's 28 commissioners expected next week, the
people said.
Senior technical experts meet to hash out final points of
contention among the commission's various departments before final
approval is sought. Once there is a consensus at this level, it is
rare for commissioners to overturn it.
The EU has until May 19 to make a final decision on the
deal.
The companies had offered commitments to help waive the deal
through, but ultimately the remedies couldn't mollify the EU
antitrust regulator's concerns the merger would lead to higher
prices and less choice for U.K. consumers.
A spokeswoman for the commission declined to comment. Hutchison
declined to comment.
The imminent EU decision represents a tougher attitude by EU
regulators toward consolidation among telecom companies in the
region, particularly in cases in which the number of operators in a
given country shrinks from four to three, as would have been the
case with CK Hutchison's U.K. deal.
The deal would have joined Hong Kong-based CK Hutchison's Three
U.K., the country's fourth-largest operator, with Telefónica SA's
O2, the U.K.'s second-largest mobile operator.
Telecom operators in Europe have been racing to merge in recent
years in efforts to share costs as revenues dwindle. They argue
they need to merge with rivals in the same country to increase
investment in networks and to share costs.
EU antitrust chief Margrethe Vestager's predecessor, Joaquín
Almunia, waved through a series of so-called "four-to-three" deals,
including in Germany and Ireland, but in speeches, she has warned
that excessive consolidation can lead to larger bills for customers
and can kill incentives to innovate.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and
Laurence Norman at laurence.norman@wsj.com
(END) Dow Jones Newswires
May 04, 2016 13:54 ET (17:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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