Brussels: The European Commission on Wednesday shot down Telefonica’s blockbuster sale of British telecom giant O2 to Hong Kong group Hutchison on fears it would inflict higher prices on British consumers.

“Today the commission has decided to block Hutchison’s plan to takeover O2 in the UK," said the European Union’s competition commissioner Margrethe Vestager at a news briefing.

“Our investigations revealed significant competition concerns with this deal," she added. “It would very likely have led to higher prices and less choice for UK consumers."

Hutchison is controlled by one of the richest men in Asia, Li Ka-shing, and his buyout of O2 from Spain’s Telefonica for £10.25 billion (€14 billion euros; $15.2 billion) would have created Britain’s biggest mobile phone company.

The decision deals a major setback for telecom companies in Europe which have lobbied Brussels to relax anti-trust rules in order to help build telecom champions.

It is also especially sensitive as it could revive accusations in the UK of meddling in national affairs by the EU ahead of a 23 June referendum on whether Britain will remain in the bloc.

The deal would reduce the national market in Britain to three players from four, in a downsized landscape the EU believes hurts competition.

Hutchison owns operator Three and hoped to merge the company with O2.

“These competition concerns are very serious and we could not allow this transaction to go on," Vestager said.

Vestager, the former Danish economy minister, has already grabbed headlines for taking on internet giant Google over anti-trust violations on its search engine and Android mobile phone platform.

Hutchison and Telefonica in March offered concessions to push through the deal but Vestager said these were insufficient.

Last year, Scandinavian groups TeliaSonera and Telenor abandoned plans to merge their Danish mobile operations ahead of an almost-certain veto by the EU’s anti-trust chief.

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