Hutchison takes Commission to court over blocked Three/O2 deal

Hong Kong company CK Hutchison has confirmed that it has appealed against the European Commission’s decision to block Hutch’s Three UK from taking over Telefónica’s O2 UK.

The Commission prevented the £10.25 billion merger in May 2016, with competition vice president Margrethe Vestager saying that reducing the number of mobile operators in the UK from four to three would lead to an increase in prices.

Three UK’s owner said: “CK Hutchison can confirm that it has lodged an appeal to the European General Court against the decision adopted by the European Commission on 11 May 2016 to prohibit CK Hutchison’s acquisition of O2 UK.”

An appeal is unlikely to change the outcome. After looking at a number of alternative options, including a share flotation, a sale to private equity and a management buy-out, Telefónica has decided to hold on to O2 UK.

Hutchison warned on the day of the Commission’s decision that it was likely to sue.

Three UK is the smallest of the UK’s four operators. Other European members of the Hutchison group have successfully merged – Three Austria acquired Orange Austria in 2013, and later the same year Telefónica agreed to sell O2 Ireland to Three Ireland.

But Hutchison is now trying to merge its Italian business with VimpelCom’s Wind Italy. The legal action over the rejected UK deal may have much to do with the group’s desire to influence how the Commission reacts to that proposal.

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