The European Union's competition watchdog has blocked the takeover of mobile phone operator Telefonica U.K.'s O2 by Hutchison U.K. over concerns the merger would have stifled innovation in the mobile phone sector.

E.U. antitrust commissioner, Margrethe Vestager, said Wednesday the merger would have created "a market leader that would have had influence over the entire mobile network infrastructure in the U.K."

Vestager said the buyout would have resulted in higher prices and less choice for consumers. Hong Kong billionaire Li Ka-shing's flagship company Hutchison had said it was offering about $15 billion for the British business of European mobile phone operator Telefonica.