Mergers: Commission clears proposed merger between Hutchison 3G (H3G) and Telefónica Ireland (O2 Ireland) subject to conditions

The Commission had concerns on two markets in Ireland, namely the retail market for mobile telecommunications, and the wholesale market for network access and call origination.

On the retail market, the Commission identified two concerns:

- The Commission's main concern was that the merger would eliminate competition between the merging parties and remove Three as an important competitive force in the market. Three was the smallest player among the four Mobile Network Operators (MNOs), with clear incentives to grow its subscriber base by offering attractive prices and services. For instance, Three had very attractive data offers, including so-called "all-you-can-eat" data plans (that is, unlimited data use under certain conditions). The merger would remove this important competitive force and result in a larger merged company that would only face competition from Vodafone and Eircom as remaining mobile network operators. The Commission's investigation showed that this would reduce overall competitive pressure in the Irish retail market, resulting in higher prices for consumers.

- The Commission was also concerned about the future of the network sharing agreement that Eircom has with O2 in Ireland. This agreement is important for Eircom to achieve its network roll-out plans, including for 4G/LTE services. The Commission was concerned that after the merger, Three would have the ability and incentive to terminate or frustrate the network sharing agreement. That would severely limit Eircom's options for achieving its network roll-out plans.

In relation to the wholesale market, Three and O2 are mobile network operators which compete as network hosts for MVNOs that wish to offer their services to end consumers. The merged company would only face Vodafone as its main competitor. The Commission had concerns that without a network with national coverage, Eircom would not be a credible network host for MVNOs. The roll-out of its national network would be in jeopardy if Three were to terminate or frustrate the network sharing agreement that Eircom had with O2 in Ireland. For these reasons, the Commission's investigation revealed concerns about the reduction in the number of network hosts in Ireland. This could lead to deteriorated access conditions for MVNOs. Ultimately, this would have a negative impact for end consumers as well. 

 However, there was no need for the Commission to reach a final conclusion in this respect, as the commitments addressing the concerns on the retail market also address any concerns on the wholesale market. 

source: http://europa.eu/rapid/press-release_MEMO-14-387_en.htm