Virgin Media and O2’s £31bn merger under investigation by watchdog

A detailed investigation has been launched by a watchdog into the £31bn merger between Virgin Media and O2.

The in-depth phase 2 inquiry by Competition and Markets Authority (CMA) follows a request by the firms, who are seeking swift approval by the regulator for the deal.

Under a “fast-track” process, investigators from the CMA will look at whether the tie-up could reduce competition and so hurt customers of the mobile phone and broadband giants.

The CMA said it is “concerned that, following the merger, Virgin and O2 may have an incentive to raise prices or reduce the quality of these wholesale services, ultimately leading to a worse deal for UK consumers”.

Previously, the CMA blocked a merger between O2 and rival network Three, although it has previously waved through BT’s deal with EE.

Evidence will be submitted by the networks’ parent companies, Liberty Global, which owns Virgin Media and Virgin Mobile in the UK, along with Telefonica, which owns O2.

A spokesperson for Liberty Global and Telefonica said: “Liberty Global and Telefonica are pleased that the CMA has agreed to the parties’ request to start a ‘fast-track’ to phase 2 process in the UK.

“We look forward to working constructively with the CMA to achieve a positive outcome. We continue to expect the transaction to close around the middle of next year.”

The merger, first announced in May, would bring together O2’s 34 million customers on its mobile network with Virgin’s 5.3 million broadband, pay-TV and mobile users.

The deal values Virgin Media at £18.7bn and O2 at £12.7bn.

At the time the merger was announced, the companies said it would create a “full converged platform” for customers, and will mean an investment of £10bn in the UK over the next five years.

The CMA was only granted permission to investigate the deal after the European Commission handed over the case in November.

Under European law, the biggest mergers are generally dealt with by the commission’s regulators in Brussels.

But the CMA asked for the case back because it mainly only affected UK customers and any findings would come after the Brexit transition period had ended.

Source: Read Full Article