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The European Commission, Europe's competition watchdog, has opened an in-depth investigation into plans by three telecommunications companies to create a joint "mobile wallet" venture in the UK.

The European Commission, Europe's competition watchdog, has opened an in-depth investigation into plans by three telecommunications companies to create a joint "mobile wallet" venture in the UK.

Mobile operators Telefónica, Vodafone and Everything Everywhere want to allow customers to make payments via their phone using near-field communications technology - a programme dubbed "Project Oscar". The system stores debit or credit card information on handsets and enables payment by swiping the phone near a reader at the checkout.

Following a preliminary investigation, the European Commission found that the joint venture between the three companies may have "the technical and commercial ability and incentive to block future competitors" from entering the mobile wallet services market in the UK.

Concerns were initially raised by 3UK, which complained to the Commission that the project is "discriminatory" since the three companies involved represent more than 90% of UK mobile subscribers.

The new joint venture would provide various mobile commerce services to businesses, including mobile payment transaction services, mobile marketing services, and associated data analytics services. However a similar proposal from a group of six Dutch companies, known as Travik, was already delayed because of struggles with regulation.

The Commission has 90 working days, until August 27, to reach a decision, meaning that the group's plans for a summer launch will have to be put on hold. Meanwhile, telecom companies in other European countries including Germany, Denmark, Hungary and Sweden will be watching closely as digital wallet projects are in the pipeline despite growing competition from Google, which launched its service in the US last September.