Ofcom postpones auction after threats from Telefonica and Hutchison

UK telecoms regulator Ofcom has delayed its planned auction of spectrum in the 2.3GHz and 3.4GHz bands following threats of legal action from Telefonica and Hutchison.

The regulator revealed that it received notices from Telefonica and Hutchison – the parent companies of O2 and Three – threatening “judicial review proceedings” against its decision to proceed with the auction before a decision is made about the plan to merge the two operators.

“After careful consideration, given these specific circumstances, we have decided for reasons of good public administration to delay commencing the auction process,” said the regulator.

“Therefore, Ofcom will not now commence the auction process until the European Commission has taken its decision as to whether the proposed merger between Telefónica UK Limited and Hutchison 3G UK Limited is compatible with the common market,” said the regulator. 

In March 2015, Telefonica agreed to sell O2 to Hutchison 3G for £10.25 billion. The European Commission announced in October that it would launch a probe into the deal after concerns that the merger will lead to higher prices for consumers. 

O2 and Three have welcomed the regulator’s decision to delay the spectrum auction.

“Proceeding with a major spectrum award immediately before the conclusion of two significant competition investigations would have created uncertainty in spectrum valuation. This would have risked an inefficient auction outcome that could have harmed competition, increased costs and prevented best use of the spectrum, ultimately leading to disadvantages for customers,” said the companies. 

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