Citing an ongoing European Commission (EC) probe into Three’s proposed acquisition of British mobile operator O2 and the corresponding threat of legal action by the merger partners, British telecommunications regulator Ofcom confirmed late last week that it will postpone a planned national auction of fourth-generation (4G) wireless LTE spectrum in the 2.3 GHz and 3.4 GHz bands until the EC announces its decision on the Three-O2 merger. 
 
Three, a unit of Hong Kong’s Hutchison Whampoa, unveiled plans earlier this year to acquire O2, the British wireless unit of Spanish carrier Telefonica, in a U.S. $14 billion deal that would combine the second- and fourth-largest mobile network operators in the United Kingdom (UK) as the largest wireless carrier in the UK market.  Voicing concern that the transaction “would remove an important competitive force” in the UK market, EC Competition Commissioner Margrethe Vestager launched a formal investigation into the deal in October, cautioning that merged entity “would have limited incentives to exercise significant competitive pressures on the remaining competitors.”  As part of its probe, the EC delivered surveys this week to affected companies in the UK telecom sector that request feedback on the merger’s effects in four areas: retail competition, sales channels, infrastructure and the provision of wholesale services.  

Meanwhile, Hutchison and Telefonica told Ofcom in a recent filing they would seek judicial review if the regulator proceeds with plans to conduct 4G auctions early next year before the EC rules on the companies’ merger, warning that such an action risks “an inefficient auction outcome that could [harm] competition.”  Under these circumstances, Ofcom thus announced that “we have decided for reasons of good public administration to delay commencing the auction process” until the EC “has taken its decision as to whether the proposed merger between [O2] and [Three] is compatible with the common market.”  The EC is expected to rule on the Three-O2 merger by April 18.