UK O2-Three Merger: Ofcom Takes Strong Position Against The Proposed Acquisition

The head of the U.K.’s telecommunications regulator took a strong position Sunday against the proposed merger of two of Britain’s four firms that provide mobile phone services. Sharon White, the chief executive of the regulatory body Ofcom, wrote in an op-ed published in the Financial Times that allowing O2 and Three to merge could result in sharply increased phone bills for consumers.

The proposed acquisition of O2 by Three will be reviewed by the European Commission this week in Brussels and White says she has forwarded her concerns to the commission so that they can consider the implications of the merger beforehand. The market, she contests, is presently working and has been attracting investment into the sector.

“This is not a broken market,” White wrote. “Last year, UK mobile firms generated £15 billion of revenue. Competition, not consolidation, has driven investment.”

The results of a merger, she said, could be disastrous for other retailers in the U.K. as well.

“The merger of two of Britain's four operators could also hit rival high-street retailers and upset existing network arrangements," she said.

White and Ofcom have been perceived as being increasingly negative toward the merger lately as they believe that allowing the two to come together could damage competition in the national telecommunications market, according to Reuters.

The European Commission has been deliberating on the deal for three months and is expected to attach prohibitive concessions to the deal before it can go ahead. European Commissioner for Competition Margrethe Vestager has said it is necessary for a country to maintain at least four mobile carriers in order to remain competitive, according to the Telegraph. Some observers have predicted that the deal won’t even be approved by the EU and that regulators won’t bother with outlining prohibitive measures in the first place.