Europe's competition watchdog on Wednesday opened an investigation into the proposed merger between Telefónica Ireland and Hutchison 3G UK.
The European Commission is concerned that because both companies provide mobile phone services in Ireland, the deal may "reduce competition in the markets for retail mobile telephony and for wholesale access and call origination in Ireland."
The transaction would combine two of the four mobile networks in Ireland and create a player of similar size to the current largest operator, Vodafone, thus significantly reducing choice for consumers, the Commission noted. The fourth operator is Eircom.
An initial examination of the proposed merger raised concerns that "the transaction would reduce the merged entity's incentive to continue a network sharing agreement with Eircom, which could hamper Eircom's ability to compete effectively after the merger."
If given the go-ahead, the merger would reduce the number of mobile network operators to three, making it more difficult for mobile virtual network operators to obtain favourable wholesale access terms.
The Commission will now investigate the proposed acquisition in-depth to determine whether these initial concerns are confirmed or not and will make its decision by March 24, 2014.