CK Hutchison defended the proposed merger on Wednesday and said it might mount a legal challenge to the commission's decision.
"We are deeply disappointed by the commission's decision to prohibit the merger between Three UK and O2 UK. We will study the commission's decision in detail and will be considering our options, including the possibility of a legal challenge," it said in a statement emailed to CNBC.
"We strongly believe that the merger would have brought major benefits to the U.K., 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 and businesses across the country and dealing with the competition issues arising from the current significant imbalance in spectrum ownership," it added.
European Competition Commissioner Margrethe Vesager said the deal would have hampered innovation and the development of network infrastructure in Britain.
Hutchison, controlled by Asia's richest man Li Ka-shing, had aimed to expand its telecoms footprint in Britain, where it already operates as "Three".
"We had strong concerns that consumers would have had less choice finding a mobile package that suits their needs and paid more than without the deal," Vesager said in a statement on Wednesday.