EU opens in-depth investigation into Hutchison, Vimpelcom Italian deal

By Julia Fioretti

BRUSSELS (Reuters) - European Union antitrust regulators have opened an in-depth investigation into Hutchison's planned merger of its Italian mobile telecoms business with Vimpelcom's (VIP.O), on concerns it could lead to higher prices for consumers.

"The Commission has concerns that the transaction could lead to higher prices, less choice and reduced innovation for mobile customers in Italy," the European Commission said in a statement on Wednesday.

The companies said in a joint statement they had expected the deal to be investigated and would cooperate. "The combined business will have the scale, financial strength and a more efficient cost structure to offer Italian consumers and businesses a state-of-the-art network," the statement said.

The proposed merger of Hutchison's 3 Italia SpA and Vimpelcom's WIND Telecommunicazioni will reduce the number of mobile network operators in Italy from four to three, a reduction which competition regulators think could lead to higher prices for users.

The transaction would also create the largest mobile operator by subscriber numbers in Italy.

The Commission has 90 days, until Aug. 10, to decide whether to approve the merger.

EU regulators have recently taken a harder line on mergers in the mobile telecoms market, casting doubt on claims that consolidation leads to higher investment in networks.

It said it had concerns that the deal could remove competitive pressure, leading to higher prices and less investment.

The merger would also reduce the number of operators who own infrastructure and can therefore give access to rivals who do not have their own networks. The Commission said mobile virtual network operators (MVNOs) would have less choice of networks and therefore weaker negotiating power.

Brussels also has concerns that mobile operators could coordinate their competitive behaviour and raise prices on the retail and wholesale markets.

Hutchison's proposed 10.3 billion pound takeover of Telefonica's (TEF.MC) O2 UK has also come under EU scrutiny.

(Editing by David Evans and David Holmes)