The European Commission has blocked mobile phone giant Hutchison’s proposed £10.3 billion takeover of O2 amid fears the move could drive up prices for British customers.
The planned deal would have left the UK with just three major mobile phone network operators. Margrethe Vestager, the European Union’s competition commissioner, ruled that it would reduce customer choice and raise prices.
The intervention was seized on by campaigners seeking a vote to leave the EU in next month’s referendum, who said it undermines the UK government’s role.
However, the Remain camp insisted EU membership provides overwhelming economic advantages.
Hutchison, which operates Three, said it was “deeply disappointed” by the decision and warned it could launch a legal challenge.
But Ms Vestager said: “The goal of EU merger control is to ensure that tie-ups do not weaken competition at the expense of consumers and businesses.
“We want the mobile telecoms sector to be competitive, so that consumers can enjoy innovative mobile services at fair prices and high network quality.”
Brexit campaigners said the decision underlines why the UK needs to “take back control” over such issues and vote to leave the EU next month.
Peter Bone MP, of Grassroots Out, said: “Judgments on corporate takeovers in the UK should be a matter for the UK government. This is just another example of the unelected and unaccountable bureaucrats in Brussels telling Brits what to do, how to behave and how to run our country.
“If we vote to Leave on 23 June, we will take back control and make sure crucial decisions such as these are taken democratically within the United Kingdom.”
But a spokesman for the Scotland Stronger In Europe campaign said: “People can disagree on individual decisions, but the bottom line is that being in the European Union delivers more jobs and investment by being an integral part of the single market, rights for families such as maternity and paternity leave, and protection for workers including health and safety standards and paid holiday leave.”
The EC ruling found that concessions offered by Hong-Kong based Hutchison – including a five-year price freeze and billions of pounds in investments – “were not sufficient to prevent” the hampering of innovation and network infrastructure development.
Hutchison said in a statement: “We will study the Commission’s decision in detail and will be considering our options, including the possibility of a legal challenge.
“We strongly believe that the merger would have brought major benefits to the UK, not only by unlocking £10bn of private sector investment in the UK’s digital infrastructure but also by addressing the country’s coverage issues, enhancing network capacity, speeds and price competition for consumers.”
The European Commission has intervened in several proposed telecoms deals recently. A merger between the Danish operations of TeliaSonera and Telenor was abandoned last year after a commission inquiry.