The European Union’s competition regulator launched a probe on Friday into the proposed sale of Telefonica’s O2 unit to a Hong Kong investment company that would create Britain’s biggest mobile operator.
The European Commission, the EU’s executive arm, said it had concerns that the sale of O2 to CK Hutchinson “could lead to higher prices, less choice and reduced innovation for customers of mobile telecommunications services in the UK.”
O2 is Britain’s second biggest mobile operator, while the Hutchinson-owned Three UK is the fourth largest.
The proposed merger is the latest example of a national market in Europe potentially being reduced from four major players to three.
Last month, Nordic telecoms Telenor and TeliaSonora abandoned merger plans in Denmark faced with the concerns of EU regulators about the contraction of the Danish market.
Competition Commissioner Margrethe Vestager has expressed concern that cutting a market down to three operators can have negative consequences for consumers.
“With this investigation we want to ensure that consumers in the UK do not pay higher prices or face less choice as a result of this proposed takeover,” Vestager said in a statement.
The commission now has until March 16, 2016 to take a decision on the transaction, which can include a demand for concessions to alleviate concerns.