EU regulators block merger of mobile carriers on competition grounds

European antitrust officials Wednesday rebuffed renewed efforts to consolidate the region’s telecommunications sector, blocking a proposed $14.5 billion deal between two major British carriers.

Under the proposed deal, Hutchison Whampoa, one of Hong Kong billionaire Li Ka-shing’s flagship companies, which owns the British operator Three, had sought to acquire O2, a rival in Britain owned by Spanish telecom giant Telefónica.

But Europe’s competition chief, Margrethe Vestager, said the deal would limit consumer choice and could raise prices in Britain.

“We want the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality,” Vestager said in a statement Wednesday.


Vestager’s tough stance comes as the Danish politician has taken a muscular approach to defending Europe’s competition rules, including charging Google for abusing its market position with some of its online search products and with its use of Android, its smartphone operating system.

The European Commission has also accused Russian energy giant Gazprom of antitrust practices in the natural gas markets. Google and Gazprom deny any wrongdoing.

Three’s failed takeover of O2, an antitrust decision widely expected by many in Europe’s flagging telecom industry, comes amid growing uncertainty in the sector after a series of other deals among the region’s more than 100 local carriers fell through.

Those include an attempt by Orange, France’s former monopoly, to buy Bouygues Telecom, a local rival, for more than $11 billion. That bid failed after the two sides said last month that they could not agree to terms. Last year, the carriers Telenor and TeliaSonera also called off talks to combine their Danish operations after failing to win European antitrust approval.

Many of the region’s policy makers remain skeptical over such deals, concerned that multibillion-dollar takeovers could lead to increased cellphone-plan prices just as people become increasingly reliant on their mobile devices. On average, Europeans pay roughly half as much for their monthly cellphone contracts as Americans do, according to the GSMA, an industry group.


But many in the telecom industry have urged greater consolidation, claiming that fewer players in each of the European Union’s 28 member states could help drive increased spending on high-speed mobile networks and other infrastructure needed to keep pace with the United States and Asia.

“The collapse of the deal leaves both Three and O2 in a precarious position with uncertain futures in the U.K.,” said Kester Mann, a London-based analyst with the research company CCS Insight.

Europe’s mounting hesitation to approve telecom deals also contrasts with the United States, where companies like Comcast and Verizon Communications, among others, are extending their reach beyond their traditional business into new markets. Last month, Comcast bought DreamWorks Animation, a movie studio, for $3.8 billion.