The European Commission has opened an in-depth investigation to assess whether the planned acquisition of Telefónica Ireland by Hutchison 3G UK (H3G) is in line with the EU Merger Regulation. Both companies provide mobile telephony services in Ireland. The Commission has concerns that the transaction may reduce competition in the markets for retail mobile telephony and for wholesale access and call origination in Ireland. The opening of an in-depth inquiry does not prejudge the outcome of the investigation. The Commission now has 90 working days, until 24 March 2014, to take a decision. The Commission’s initial market investigation indicated that the proposed acquisition may substantially lessen competition in the retail mobile telephony market in Ireland where Three Ireland, a subsidiary of H3G, and Telefónica Ireland currently compete with each other.
The transaction would combine two of the four mobile networks in Ireland and create a player of similar size to the currently largest operator, Vodafone. The Commission has concerns that the transaction would remove an important competitive force and change the merged entity’s incentive to exert significant competitive pressure on the remaining competitors. The Commission also has concerns that the transaction would reduce the merged entity’s incentive to continue a network sharing agreement with Eircom, which could hamper Eircom’s ability to compete effectively after the merger. Here to read more.