What people forget is that Telefonica were having problems running O2, it's only with an exit strategy from the UK market have things picked up a bit.
Also Hutchinson have worked hard with Three, but ultimately as a business they're in it to make money and compete with Vodafone and EE.
As the smallest operator, they've gone through investment stages and growing their customer base, and they've been disruptive. But once your network infrastructure gets to a certain point you have to keep being able to make money, maintain the infrastructure you have and keep investing in new network infrastructure.
The tie-up with O2 will make three roughly equal size networks, all with a lot of capital behind them, and all that have the revenues coming in to keep owners/investors happy, whilst being able to (or having to) compete with each other to ensure they hold onto the market share.
BT are known for not giving two tosses about being competitive unless they really have to be (look at how they have the whole Openreach thing sewn up). Again Vodafone only really competes when it has to...
If you say to Hutchinson that the merger can't go ahead, you're basically saying "we want you to stay as the smallest operator, tough luck.". They're then more likely to look for an exit strategy from the UK market - to just keep investing without the right revenue figures is potentially really bad business.
O2/Telefonica will probably stop investing; Telefonica want out and if they're not getting the cash they expected from a sale then they're probably only going to do what they need to for regulatory requirements.
BT/EE and Vodafone will then just take it easy, nether of them rocking the boat.
None of this is "competitive" - even with four players in the market.
At least O2/Three merging will show Hutchinson that they are allowed to compete on a level playing field, and encourage them to be more disruptive in the UK market. Sure, maybe not as when they were fresh faced and making a name for themselves in the industry - but more so than if they have the deal scuppered.
If they then continue to be a bit disruptive, Vodafone and BT/EE will have their hand forced and play the game....?