The European Commission has blocked the takeover of O2 by the owner of Three over fears it would throw the balance of UK network providers by combining two important competitors.
The £10.3bn takeover by mobile phone operator Hutchison would have merged two of the UK’s biggest mobile networks, which the antitrust regulators claim would have meant higher prices and less freedom for UK customers.
European Commission chief Margrethe Vestager said "Allowing Hutchison to take over O2 at the terms they proposed would have been bad for UK consumers and bad for the UK mobile sector."
The move signals a stricter approach by the watchdog toward mergers that are deemed to harm competition.
Ofcom said the decision was the "right outcome" for mobile customers.
However Hutchison said it may challenge the decision.
"We strongly believe that the merger would have brought major benefits to the UK, not only by unlocking £10 billion 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,” said the group.
O2, owned by the Spanish Telefonica, is now likely to become a takeover target for Liberty Global, said analysts.
Liberty's chief executive Mike Fries told the press yesterday that "it would be strange if we didn't evaluate that option".