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Major mobile merger blocked in UK as EU says 'enough is enough'

European competition authorities have blocked a proposed merger between British mobile networks Three and O2, the latest in a string of big changes for the UK market.

The UK mobile market is relatively good for consumers, but the EU worries another big merger could change that.

Ian Gavan/Getty Images

Competition watchdogs have blocked a proposed merger between two of the UK's major mobile companies, potentially signalling an end to several years of upheaval in the British phone market.

The proposed merger of O2, owned by Telefónica, and Three, owned by Hutchison, would have created a new market leader.

But after a spate of recent mergers and acquisitions, EU competition authorities "have said 'enough is enough'," according to industry expert Professor John Colley of Warwick Business School.

Britain's phone market has drastically transformed in the past few years. Of the major players, T-Mobile merged with Orange to become EE, which has in turn been swallowed up by BT. Although a range of mobile virtual network operators (MVNOs) keep prices relatively low in the UK, the proposed merger of Three with O2 would have further reduced the number of major networks that operate their own infrastructure.

"The evidence from markets elsewhere shows that three players results in higher prices for consumers compared to four," said Professor Colley. "Competition reduces, and the consumer pays the price for that."

Hutchison is "deeply disappointed" by the decision, according to a spokesperson, and will consider an appeal. The company is also seeking clearance from the European Commission for a proposed merger between Three Italia and rival Italian carrier Wind.

Back in the UK, an O2 spokesperson stressed that it's business as usual after the decision. "Our customers are our priority and we will continue to differentiate, compete fiercely and remain successful, long into the future," they said in a statement.