The European Commission (EC) has referred the proposed £31 billion joint-venture between Virgin Media and O2 in the UK to the Competitions and Markets Authority (CMA).
British regulators had asked the Commission to transfer responsibility for the case last month, arguing it was better placed to make a judgement as the UK is set to leave the Single Market at the end of 2020.
“The CMA put forward competition concerns in a number of telecommunications markets in the UK, namely the markets for retail and wholesale mobile services, and the market for leased lines. In addition, the CMA claimed that it would be well placed to review the transaction in view of the upcoming expiry of the transition period,” the EC said in a statement.
- These are the best business SIM-only deals around today
- And the best business broadband deals
- Here are the best business mobile phone deals
O2 Virgin Media merger
The EC has acquiesced to the request, stating that close cooperation between the CMA and the EC meant the former was well-informed about the case and that there would be no interruption to proceedings as a result of the transfer. This means regulatory approval will now be dependent on UK national law.
The combination of O2’s mobile infrastructure and Virgin Media’s cable network would immediately create one of Europe’s largest telecoms organisations, powering communications for nearly 40 million subscribers.
Consolidation would also result in £6.2 billion in savings and provide the scale and capability to rival BT and Vodafone in the field of converged networking services and Openreach in the wholesale market.
A proposed £12.5 billion merger between Three and O2 was blocked by the EC in 2016 on the grounds that this would reduce the number of mobile operators in the UK from four to three – although Three has since successfully appealed this decision.
However, given the complementary nature of Virgin Media and O2’s networks, approval in this instance is far more likely – even if it is with conditions.
Parent companies Liberty Global and Telefonica have pledged to create 4,000 jobs and 1,000 apprenticeships if they receive regulatory approval and have committed to increase the combined firm’s gigabit broadband footprint by an additional one million premises, bringing the total figure to 16 million, within 12 months of the merger. There are also pledges to add a further seven million homes to ‘gigabit networks’ and to cover more than 100 towns and cities by the end of 2021.
- Here are the best O2 mobile phone deals
