EU regulator has 'concerns' about Hutchison's O2 Ireland bid - sources

BRUSSELS Mon Jan 27, 2014 8:14am EST

BRUSSELS Jan 27 (Reuters) - EU competition regulators will tell Hutchison Whampoa this week that the $1 billion deal for its 3 Ireland mobile phone business to take over Telefonica's O2 Ireland unit might be problematic unless it offers concessions, two people familiar with the matter said on Monday.

Regulatory reviews of the Irish merger and another in Germany where Telefonica Deutschland is seeking to buy Dutch group KPN's local unit E-Plus, are seen as critical for the mobile industry in determining whether the European Commission will allow deals which reduce the number of players in a national market.

The European Commission opened an in-depth investigation into the 780 million-euro ($1 billion) bid by Hutchison for O2 Ireland two months ago and will send a statement of objections laying out its concerns to Hutchison this week, the sources said.

"It shows the Commission getting tough on three to four deals," one of the people said.

"Hutchison will be offering concrete remedies once it receives the statement of objections," the person said.

The acquisition of Telefonica's mobile business in Ireland would quadruple Hutchison's share of the Irish market to 37.5 percent, behind market leader Vodafone's 39.4 percent but ahead of rival Meteor's 19.7 percent.

Commission spokesman Antoine Colombani, declined to comment.

The EU watchdog has set an April 24 deadline for its decision. It can extend the review depending on when Hutchison submits concessions. The company can request an oral hearing in front of senior Commission officials to argue its case.

Last year Hutchison's Austrian unit won EU regulatory approval for its acquisition of Orange Austria from France Telecom only after agreeing to divest some radio spectrum and making it easier for rivals to access its network. ($1=0.7307 euros) (Additional reporting by Sam Cage in Dublin; Editing by Greg Mahlich)