Jan. 27 (Bloomberg) -- Hutchison Whampoa Ltd. may get a formal complaint from European Union competition regulators cataloging concerns over its bid for Telefonica SA’s Irish unit as soon as this week, according to two people familiar with the EU process.
The European Commission 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 sell services under their own brands using networks provided by mobile operators, one of the people said. Both spoke on condition of anonymity because the merger probe is private.
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 ($1.2 billion.) The deal would combine O2 with Hutchison’s Three Ireland, the third-largest wireless carrier. It’s one of two mobile-phone transactions facing in-depth EU scrutiny for cutting the number of competitors from four to three. Regulators have also opened a probe into Telefonica Deutschland’s bid for Royal KPN NV’s E-Plus unit in Germany.
Getting a statement of objections in an EU merger review is a sign that the EU is leaning toward blocking the transaction unless it receives concessions allaying its concerns. These typically include promises to sell units or change market behavior.
Recipients must defend their deal in writing and can also seek an oral hearing before the EU makes a decision to block or clear the transaction. The EU currently has until April 24 to rule on the Hutchison bid.
Hutchison, the biggest Asian investor in European wireless assets, had to make concessions to EU regulators before it won approval in December 2012 to take over Orange in Austria, a transaction that also reduced the number of phone operators. It had to offer radio spectrum and network access to rivals to alleviate antitrust concerns.
Hutchison’s Three Ireland said it is “continuing to work with the European Commission with a view to getting approval of the acquisition as soon as possible.” The company declined to comment on a statement of objections.
Eircom said it remains “fully engaged with the commission as it moves through” its investigation of the deal.
Antoine Colombani, a spokesman for the commission in Brussels, declined to comment.
Reuters reported earlier today that the EU may send a statement of objections.
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