3 Ireland plans remedies for EU concerns on O2 merger

Hutchison Whampoa's 3 Ireland said it will propose some remedies to address a list of concerns it has received from the European Commission over its planned acquisition of Telefónica's O2 Ireland for up to €850 million ($1.1 billion).

"In our view, the acquisition will increase competition and bring much needed investment to the Irish market," the company said in a statement. "Nonetheless, 3 will put forward strong and effective remedies to address the Commission's concerns."

The company added that it is confident it can convince the Commission of the "pro-competitive benefits" of the proposed acquisition, although it did not detail the concerns that were raised.

In 3 Ireland's view, the Irish mobile market has one dominant player and three much weaker ones. "Without 3's acquisition of O2 Ireland and the scale it can achieve, this gap will only increase," the company commented.

The Financial Times noted that 3 Ireland controls less than 10 per cent of the Irish mobile market and the acquisition of O2 would lift that share to 37.5 per cent. That would make it a stronger competitor to Vodafone Ireland, which has a 39 per cent share of the market. Meteor, which is owned by Eircom, has 18 per cent of the market.

"Competition in Ireland will be better served by three credible operators with sufficient scale to compete for a total market of 4.6 million, than by the current market structure," added 3 Ireland.

The European Commission confirmed in November that it has opened an in-depth investigation to assess whether Hutchison 3G UK (H3G)'s planned acquisition of Telefónica Ireland is in line with European Union merger rules.

The Commission said at the time it was concerned that the transaction would reduce competition in the markets for retail mobile telephony and for wholesale access and call origination in Ireland. A decision is expected to be reached by March 24, 2014.

Telefónica is selling its Irish unit to reduce its debt and concentrate its operations in larger European markets. The company has just completed the sale of its Czech unit to PPF for €2.46 billion.

Meanwhile Telefónica Deutschland's €8.6 billion bid for KPN's German unit E-Plus is also currently facing a full probe by European competition authorities. The planned acquisition will not be scrutinised by German competition authorities after the European Commission declined to relinquish control of an investigation into the effects of the deal on the German market.

For more:
- see this 3 Ireland release
- see this Financial Times article (sub. req.)

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