Competition watchdog requests probe into Virgin-O2 merger
The UK competition watchdog has asked the EU to refer the planned tie-up between O2 and Virgin for a full investigation in Britain.
O2’s owner Telefonica in May confirmed plans for a £31bn mega-merger with Virgin Media, owned by Liberty Global.
The proposed deal falls under the remit of the European Commission to review, but could be transferred to the UK’s Competition and Markets Authority (CMA).
Retail risk
The CMA wants to lead the probe given the deal’s “potential impact on competition” is centred solely in the UK.
The legal requirements for the case to be transferred were met, the CMA argued.
“We’ve sent a formal request to the European Commission to review the proposed deal between Virgin and O2,” CMA chief executive Andrea Coscelli said.
“Ultimately, this is a decision for the EC, but as the merger will only impact UK consumers – and any effects would only be felt after the end of the transition period – it is only right for the CMA to request it back.”
O2 and Virgin sent shockwaves through the market when they announced the proposed deal in May.
However, both Telefonica and Liberty had been exploring exit options for their respective subsidiaries for some time.
A stumbling block?
While the CMA’s intervention threatens to provide a stumbling block for the deal, analysts have played down concerns that the deal will be blocked.
They cited the precedent set by BT’s £12.5bn takeover of EE in 2016.
The European Commission has previously said it wants to ensure consistency across different merger cases in the telecoms sector.
However, the CMA argued this was not relevant for the Virgin-O2 deal as the UK transition period will soon expire.
The initial deadline for the European Commission to respond to the request is 19 November.