EU clears Hutchison's €780M acquisition of O2 Ireland, with concessions

The European Commission has cleared Hutchison Whampoa's €780 million ($1 billion) acquisition of Telefónica Ireland, opening the way to a merger of O2 Ireland with 3 Ireland.

As widely expected, the deal will be subject to a number of conditions based on a commitments package submitted by Hutchison Whampoa-owned H3G. The Commission said these commitments ensure that new competitors will enter the mobile telecommunications market in Ireland, and remove its concerns over the impact the merger would have on competition.

"In a context of increased data consumption on their mobile devices, European consumers should continue to benefit from improved services at attractive prices. To achieve this, it is essential that healthy competition is preserved in mobile telecoms markets. The commitments offered by Hutchison 3G ensure that Irish consumers will continue to enjoy these benefits," said Joaquín Almunia, Commission Vice President in charge of competition policy.

The merger brings together the second and the fourth-largest mobile network operators in Ireland, which the Commission noted is a relatively small telecoms market, with around 4.6 million inhabitants and 5.5 million mobile telecoms subscriptions.

"Since its entry in 2005, H3G--through of [sic] its subsidiary 3--has been an important competitive force on the Irish market, for instance by offering attractive data offers to consumers. The merger would remove this force and create a larger company facing only two competitors: Vodafone and Eircom," said the Commission.

To allay these concerns, H3G offered a package aimed at ensuring the short-term entry of two mobile virtual network operators (MVNOs), with an option for one of them to become a full mobile network operator by acquiring spectrum at a later stage.

H3G has committed to sell up to 30 per cent of the merged company's network capacity to two MVNOs in Ireland at fixed payments. To facilitate this, H3G committed to divest five blocks of spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands. The spectrum will be available for 10 years, starting from January 1, 2016.

It has previously been reported that Liberty Global's UPC could be the MVNO that will in future use 3 Ireland's network to offer mobile services to complement its cable operations. That deal has not yet been confirmed.

H3G also offered a concession package aimed at ensuring that Eircom stays a competitive mobile network operator in Ireland by committing to continue a network-sharing agreement between the two operators on improved terms. This allays the Commission's concerns that, after the merger, 3 Ireland could "frustrate or terminate the network-sharing agreement that Eircom, the third and smallest network competitor after the merger, currently has with O2 Ireland."

"These commitments address the Commission's competition concerns, taking due account of the different kinds of competitors and business models that are viable on the Irish market and of the market reality, for instance the importance of network sharing," the Commission said.

All eyes will now be on Telefónica Deutschland's proposed acquisition of KPN's E-Plus. The Commission on Monday extended the deadline for its decision on the E-Plus deal to July 10.

For more:
- see this release from the European Commission
- see this separate release from the Commission

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