CMA refers proposed O2 UK-Virgin Media merger for in-depth investigation

14 Dec 2020

A proposed merger between British mobile network operator (MNO) O2 UK and multi-play provider Virgin Media has been referred for an in-depth ‘Phase 2’ investigation, the Competition and Markets Authority (CMA) has confirmed. In a press release regarding the development, the UK government noted that the moves comes after the two operators involved had requested that the competition body move quickly to the second stage of its review through a ‘fast-track’ process. Merging companies can ask for a case to be fast-tracked to Phase 2 where there is sufficient evidence at an early stage of the investigation for the CMA to conclude that there is a realistic prospect that the transaction would result in a substantial lessening of competition in one or more markets.

With the CMA having accepted the request ‘given the deal’s potential impact on competition in several telecommunication markets in the UK’, it highlighted the fact that both Virgin and O2 provide certain wholesale services to other MNOs in the UK – wholesale mobile services and mobile backhaul, respectively. As such, the CMA said it is concerned that, following the merger, the enlarged body may have ‘an incentive to raise prices or reduce the quality of these wholesale services, ultimately leading to a worse deal for UK consumers’.

It has been confirmed that the Phase 2 probe will begin immediately, and this in-depth investigation will reportedly be overseen by an inquiry group chosen from the CMA’s independent panel members. Over the course of the investigation, the group will gather evidence from a range of sources to inform its in-depth analysis, while in the coming weeks it expects to publish an issues statement setting out in detail the aspects it expects to investigate; interested parties will then have the opportunity to present their views on the merger and the issues. According to the CMA, its full referral decision and expected timelines for its Phase 2 investigation will be published ‘shortly’.

United Kingdom, Liberty Global (incl. LGI), O2 UK, Telefonica, Virgin Media