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Europe to investigate Hutchison 3G – Telefónica merger without UK referral

The European Commission will not refer the planned acquisition of Telefónica UK by Hutchison to the UK competition authority, but will apply its own merger control rules. 07 Dec 2015

The Commission said it believed it is better placed to apply consistent rules on mobile industry mergers across the European Economic Area.

Hutchison notified its plans to acquire control of Telefónica on 11 September. On 2 October, the UK Competition and Markets Authority (CMA) asked the Commission to refer the case back to it, using a request process that is allowed under the EU merger regulation when competition effects are purely national, the Commission said.

CK Hutchison Holding, based in Hong Kong, owns UK mobile network Three UK while Telefónica UK is a subsidiary of Spanish firm Telefónica.

However, the Commission concluded that, given its experience in assessing cases in this industry, it is better placed to deal with this case, it said.

The Commission will continue to cooperate closely with the UK competition Authority, it said.

In a response emailed to Out-Law.com the UK CMA said: "The CMA has had extensive, constructive engagement with the Commission on this case and fully expects this co-operation to continue and increase now that the case remains with the Commission. In particular, the CMA intends to make representations on the competition impact of the merger in the UK as well as on any potential remedy proposals made by the parties."

The decision is "not at all surprising", said competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com.

"The Commission has consistently rebuffed such reference back requests by EU national competition authorities, the rationale being that it is essential for the Commission to decide such cases in order to ensure consistency of analysis and approach across the EU," he said.

The Commission has until 18 April to make a final decision on the merger.