back to article UK competition watchdog gripes to Brussels about Three-O2 merger

Britain's competition regulator has written to Brussels to put the brakes on the proposed £10.25bn merger between Three and O2 unless a fourth mobile operator is proposed. In a letter to Europe's competition chief Margarethe Vestager, chief executive of the UK's Competition and Markets Authority, Alex Chisholm, reiterated the …

  1. Jason Bloomberg Silver badge

    BT+EE

    Can someone explain why the BT merger with EE was considered acceptable but this is not?

    1. Anonymous Coward
      Anonymous Coward

      Re: Ordinarily, I'd say follow the money

      In this case, I expect the money twists and turns, like a twisty turny thing.

    2. Julian 3

      Re: BT+EE

      They turned a blind eye to vertical integration with BT and EE as they consider most people would be too blind to see what was happening. Network mergers on the other hand are pretty obvious to all.

    3. Anonymous Coward
      Anonymous Coward

      Re: BT+EE

      Can someone please explain to me WTF it has to do with Eurocrats ?

      Vote for Brexit and no more interference in UK affairs.

      1. James 51 Silver badge

        Re: BT+EE

        This isn't the EU sticking it's oar in, it's the UK competition watch dog going to the EU to ask for help. But don't let the facts get in the way of a good rant.

      2. Anonymous Coward
        Anonymous Coward

        @Brexit AC Re: BT+EE

        Perhaps because our UK regulators are incompetent?

        Had it been left up to the UK watchdog I suspect this may have been waved through, but since it wasn't their choice I figure they want to score a few points against the Europeans.

    4. Patrician

      Re: BT+EE

      "Can someone explain why the BT merger with EE was considered acceptable but this is not?"

      Because the BT/EE merger didn't reduce the number of companies servicing the UK mobile market; there are still four.

      This merger would reduce it by one to just three....

      1. Roland6 Silver badge

        Re: BT+EE

        "Because the BT/EE merger didn't reduce the number of companies servicing the UK mobile market; there are still four."

        Actually it did, BT through its subsidary Niche Spectrum Ventures was a niche 4G network operator...

      2. Anonymous Coward
        Anonymous Coward

        Re: BT+EE

        3, like most other european countries.

        It's of course, not about number of operators, it's about 3 needing 02 network to offer competitive coverage. So by refusing this, they are strenghening EE and Vodaphone... How does that help customer choice? 2 strong operators, 2 week, or 3 solid networks able to compete on equal terms?

    5. Warm Braw Silver badge

      Re: BT+EE

      Or, indeed, why anyone thinks that a company with high levels of debt and, consequently, a limited ability to invest, is a practical guarantor of competition?

    6. Dan 55 Silver badge

      Re: BT+EE

      France (similar population) has three big operators, so does Germany (larger population).

      If three operators is not good enough for the UK, the reason needs to be made clear.

      1. Dr. Mouse Silver badge

        Re: BT+EE

        So, by mergers we have ended up with one super-operator, way bigger than the others. The only way for the others to match that is through mergers but, hang on, they aren't allowed to...

        I guess when one goes broke and we are left with 3 operators, that'll be way better...

      2. Philippe

        Re: BT+EE

        France has got 4 Operators Orange, Bouygues Telecom,SFR, and Free.

        the first two were negotiating a merger and they dropped the plan as it was too complicated.

        Germany has got 4 networks two. Telekom, Vodafone, O2 and E-Plus.

        The last two have been merging since 2004 and this is still going on,and might go on for another 2 years. They had to give away a significant share of their network in order to get green light and still prices have stopped falling since the merger was approved.

        4 Operators, good for competition.

        3 Operators, bad for competition

        Simple

        1. Charlie Clark Silver badge

          Re: BT+EE

          The last two have been merging since 2004

          That sounds a bit previous. Maybe you mean 2014? In any case the merger has now been approved. So now in Germany all three can offer at least 2-play services. There is also an extensive MVNO market.

        2. Roland6 Silver badge

          Re: BT+EE

          "France has got 4 Operators Orange, Bouygues Telecom,SFR, and Free."

          However, because of the length of time Bouygues has been up for sale, it's lack of investment in network renewal/upgrade is beginning to show and so effectively France is moving to a situation where it has only three effective players and one that is slowly dying... But then perhaps Three/Hutchison might make an offer conditional on a successful completion of the Three/O2 UK network merger...

    7. TheVogon Silver badge

      Re: BT+EE

      "Can someone explain why the BT merger with EE was considered acceptable but this is not?"

      Because BT didn't own any other UK mobile networks?

      However I would ask why the EE / T-Mobile merger was OK and this not....

      1. Roland6 Silver badge

        Re: BT+EE

        However I would ask why the EE / T-Mobile merger was OK and this not....

        Well we could also ask why this was okay after the Vodafone takeover of Mannesmann required them to sell Orange...

    8. Anonymous Coward
      Anonymous Coward

      Re: BT+EE

      One would assume our very honest politicians and former politicians don't have shares in BT from when it was sold or in some offshore company portfolio that no tax is paid or in fact be directors or related to directors, on the other hand maybe they do. Who am I to be cynical about politicians and their shady dealings?

    9. Anonymous Coward
      Anonymous Coward

      Re: BT+EE

      Revolving doors:

      http://www.computerweekly.com/news/2240186423/BT-CEO-Ian-Livingston-quits-to-become-government-minister

    10. Anonymous Coward
      Anonymous Coward

      Re: BT+EE

      simple ££££££££££££££££££££££

    11. Chloe Cresswell

      Re: BT+EE

      Because BT wasn't a MNO, so the BT and EE merge didn't change the number of mobile networks?

  2. kempsy

    BT+EE

    Because BT was not a mobile network operator at the time I suspect.

    1. Julian 3

      Re: BT+EE

      Actually BT Mobile was launched in March 2015 using EE's network.

      1. rhydian

        Re: BT+EE

        BT was only an MVNO, not an MNO. IIRC BT did buy up some 4G spectrum, and if I was in charge I'd look at how the combination of both BT and EE's spectrum holdings affect competition

  3. JeffyPoooh Silver badge
    Pint

    Canada provides some recent 'lessons (not yet) learned'

    Three major operators, effectively just two based on coverage (Telus is just a Bell wannabe).

    Those two (Rogers, Bell+Telus), effectively just one based on too obvious lock-step actions.

    Monopolistic prices. Some of the highest prices for service.

    Smaller operators kick started, eaten by the majors.

    Inept regulator. Frankly, the CRTC are quite stupid.

    At this point someone will be tempted to mention the vast size of Canada, but that's a red herring since most of the northernmost area is empty and has no coverage. Actual population and coverage is along the southern border. Mentioned to hopefully preempt the inevitable distraction from Ellesmere Island.

    Regulators should review the history. It's a case study of failure.

    1. Soruk

      Re: Canada provides some recent 'lessons (not yet) learned'

      Don't forget also that Rogers (GSM850+1900) bought their only GSM rival, Fido, and turned them into an MVNO on the Rogers network.

    2. YorksinOaks

      Re: Canada provides some recent 'lessons (not yet) learned'

      CRTC shows a pretty crappy model for an interventionist regulator (reserved spectrum for newcomers, but allied with Canadian company ownership/control ) with a series of failures with Mobilicity and Wind. They tried to retain independent operators but the minnows cannot invest and compete with capital restrictions.

      EC/CMA/OfCom seem destined to ignore this, despite BT adding almost as much spectrum to EE as 3UK has. BTEE is now more dominant, 3UK are too small and O2 starved of investment from a parent who wants out. Faced with this, why would Vodafone invest, so the UK will persist in having underperforming networks. Everyone's a critic when it comes to network coverage and quality, but they all want a bargain on their iPhone, Galaxy, Nexus, Z5 and Ascend.

      But hey, who cares about quality as long as we have 'cheap' packages.

  4. DrXym Silver badge

    What I don't understand

    Is why there is a picture of a neo-nazi muppet to go with this story

    1. m0rt Silver badge

      Re: What I don't understand

      Because it is the face of Three's most recent ad campaign.

      1. Jedit
        Joke

        "it is the face of Three's most recent ad campaign"

        I wasn't aware that Three were government owned.

    2. The Indomitable Gall

      Re: What I don't understand

      " What I don't understand

      Is why there is a picture of a neo-nazi muppet to go with this story "

      You may have confused this with a story on the US presidential primaries....

  5. Big_Ted
    Flame

    WTF

    So its no problem allowing 2 big companies (T-Mobile & orange) to join together into a company so big they distort competition, then allowing the countries biggest data network to take over that company with massive savings in backbone added to size. But to allow 2 companies to join together and offer competition is a bad idea ?

    WTF are the CMA thinking ? and the comment that if the 2 companies get together then they should be made to sale off most of their network is the most stupid idea I have heard yet.

    I say let 3 take over O2 and let the millions of us customers have no price increase whilst the net work is improved, the would force EE to respond and oh look competition happening....

    1. zaphy42

      Re: WTF

      Quite right!

      It could be argued that this is the government's own doing by allowing the merger of T-Mobile and Orange and then the subsequent sale of EE to BT.

      They've brought this on themselves because everyone is now trying to consolidate networks in order to be able to provide quad-play services to compete with the BT/EE network behemoth.

  6. BigAndos

    There is little competition anyway

    There is very limited competition in any case. Most of the operators offer a broadly equivalent set of tariffs, especially now Three have jacked their prices up. The only real competition is on network coverage, and joining O2 and Three would probably help someone else compete with EE.

    I recently moved from Vodafone, whose coverage is dreadful outside of major citie, to EE, whose coverage is better where I tend to go. I did this based on checking Ofcom's coverage checker in the end and EE were the only real option. If O2 and Three's networks were combined, and invested in as promised, I might have actually had a choice on who I went with!

    1. paul-m-w72
      Thumb Down

      Re: There is little competition anyway

      Exactly there is no competition out there on the market anyway, there are no incentives to get us to swap networks. If there is an incentive, by the time we are out of our billion year contracts the other networks stop them.

      Years ago networks would offer is more data and minutes than we could use to get our custom, now they are charging the earth for stupidly small amounts of data.

  7. DanboMB

    Three bought O2 in Ireland and it wasn't great...

    Some O2 customers were mandatorily moved to a new Three tariff, losing perks and price plans that had been in place years. They also ended up paying more with useless Three customer service in India. In addition some O2 masts were decommissioned and others merged into Three's network, meaning that network coverage actually degraded for some - they lost the nearby O2 mast and were pushed onto an over subscribed 3G mast further away. Overall O2 customers generally got the rough end of the deal.

    Add to that the MVNOs that used to mast share with O2 still have not been fully integrated into the Three network.

    Since there was now one less mobile phone carrier Three then increased their prices while the regulator just stuffed the brown envelope in his pocket no doubt...

    Bad news for the consumer really.

    /Just saying

  8. Johndoe888

    Why the big fuss about dropping from 4 to 3, initially there were only 2, Cellnet and Vodaphone.

    1. Chloe Cresswell

      vodafone.

      And that's why the extra licences were issues in a higher band afterwards, because the orginal 2 networks basically built their networks around the most profitable areas at the time.. and stopped.

      So the idea was "issue more licences, make them compete".

      We ended up with 5 networks, that was reduced to 4. Now they are trying to stop it going to 3 to prevent a repeat of the original problem: the networks going "that's good enough" and stopping.

    2. Nifty

      And calls cost 50p (80p in today's money) per minute, rounded up to the nearest minute.

  9. Down not across Silver badge

    Pointless

    "The only appropriate remedy that would meet the criteria that the Commission is bound to apply... is the divestment – to an appropriate buyer approved by the Commission – of either the Three or O2 mobile network businesses, in entirety, or possibly allowing for limited ‘carve-outs’ from the divested business."

    Doesn't that make it pretty pointless... buy something only to be forced to sell it. I guess you could, in theory, sell the other "business" without customers but could be difficult to find a buyer.

    The "approved by the Commission" bit says it all really.

  10. hoola

    Sky, Virgin

    And just how can it be a good idea to let Sky in particular and Virgin have even more bandwidth?

    1. Roland6 Silver badge

      Re: Sky, Virgin

      I suspect it is this part of the deal Ofcom are getting upset about. Three have realised that with the two network consortium's and the various sharing arrangements, their direct ownership of spectrum and mobile masts is increasingly irrelevant. The takeover of O2 really just enables infrastructure consolidation and a rejig of spectrum. Three can then resell O2 customers to Sky (remember the O2/BE broadband deal) and offer membership of the network consortium(s) to Sky and Virgin, enabling these companies to become full MNO's and hence share the costs of network upgrade to 4g etc, without having to first go through an Ofcom spectrum auction...

      So what we are actually seeing is that Ofcom are acting wholly in their interests, namely having sufficient bidders for any future spectrum auctions, and not in the interests of existing customers or the development of the UK's mobile networks.

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