Vodafone, ComReg slam EC for clearing O2 Ireland acquisition

Vodafone said it is exploring a legal challenge to the acquisition of Telefónica's O2 Ireland by Hutchison Whampoa, and called on Irish regulator ComReg to ensure a level playing field going forward, after the European Commission (EC) approved the deal on Wednesday.

In an emailed statement, the UK-headquartered operator slammed the EC's decision to clear the deal, which will reduce the number of players in Ireland from four to three despite Hutchison's unit H3G agreeing to open up 30 per cent of the combined network to virtual network operators. Hutchison plans to merge its local unit 3 Ireland with O2 Ireland.

Vodafone, Ireland's leading mobile operator by sales, said it is considering legal action at European and Irish levels over the deal, and called on ComReg "to ensure that all operators receive an efficient allocation of spectrum that will sustain dynamic competition in Ireland."

The operator also hinted the EC's decision could deter potential network investment at a time when "investors are looking for positive returns" on the sums pumped into infrastructure, and accused the Commission of moving in the wrong direction "by favouring operators who do not invest in infrastructure over those that do," referring to the MVNO provision.

Hutchison''s 3 Ireland hit back by pointing out it plans to invest €300 million ($408 million) into constructing an LTE network in Ireland in the next three years, in a move that would take its total investment in the country to €2 billion. Robert Finnegan, CEO of 3 Ireland, said the combined company "will have the scale and financial strength necessary to compete more aggressively against the number one in the market."

ComReg argued the EC has done little to protect consumers by clearing the acquisition. The regulator states it is concerned the clearance could result in "significant negative consequences for Irish consumer welfare", and that the "behavioural [network sharing] commitments are insufficient to address the structural competition deficit identified as likely to result from the Proposed Acquisition."

Ovum analyst James Robinson noted the clearance in Ireland is a positive sign for Telefónica Deutschland, which is awaiting approval of a planned acquisition of E-Plus in a move that would consolidate the number of mobile operators in Germany.

"The EC's decision regarding the takeover in Ireland could be a signal that it is ready to accept some in-market consolidation, despite usually favouring the disruptive nature of smaller players such as Free Mobile in France," Robinson said.

For more:
- see this ComReg statement [PDF]
- see Three Ireland's response
- see this Ovum press release

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