Hutchison Pledges to Allay EU Concerns on O2 Ireland Takeover

Hutchison Whampoa Ltd. (13)’s Three Ireland said it will offer European Union regulators “strong and effective remedies” to allay antitrust concerns over its bid for Telefonica SA (TEF)’s Irish operations.

Three made the pledge today as it acknowledged receipt of a statement of objections listing the European Commission’s concerns with its plans to buy O2 Ireland.

“Three will put forward strong and effective remedies to address the commission’s concerns,” the company said in an e-mailed statement. “Three will detail these and other points in our response to the commission’s statement of objections, and are confident that we can convince the commission of the pro-competitive benefits of the proposed acquisition.”

The EU is concerned that the deal to merge two of Ireland’s four mobile-phone operators would shrink competition, hamper smaller rival Eircom Group by threatening a network-sharing deal and reduce options for companies seeking to market services under their own brands using networks provided by mobile operators, a person familiar with the EU process said last week.

The commission’s decision to issue the formal statement isn’t unexpected, Three Ireland said, because regulators previously opened an in-depth probe into the transaction and signaled they would take a close look at deals that reduced the number of phone companies from four to three.

E-Plus Probe

The deal is one of two to test regulators’ attitude toward consolidation in the industry. Last week, Germany lost a turf war with the European Union over Telefonica Deutschland’s 8.55 billion ($11.6 billion) bid for a Royal KPN unit after the EU said it was “better placed” to rule on big telecommunications deals.

Statements of objections in EU merger reviews cite possible competition problems that the firms must allay. Companies often make concessions to soothe regulatory worries, which can include selling units or assets or a pledge to change business behavior.

Billionaire Li Ka-shing’s Hutchison agreed in June to buy O2, Ireland’s No. 2 mobile operator, for as much as 850 million euros. The deal would combine O2 with Hutchison’s Three Ireland, the third-largest wireless carrier. It will increase Hutchison’s customers in Ireland to about 2 million and its wireless market share to 37.5 percent, the Hong Kong-based company said last year.

The Brussels-based commission currently has an April 24 deadline to rule on the Hutchison bid.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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