CMA publishes 'issues statement' as part of examination of proposed O2 UK-Virgin Media merger

22 Jan 2021

Following the request from O2 UK and Virgin Media that their proposed merger be fast-tracked to an in-depth investigation by the Competition and Markets Authority (CMA), the latter body has now published an ‘issues statement’ in which it details its provisional main concerns related to the tie-up. The statement sets out the scope of the watchdog’s inquiry, outlining initial theories on what might adversely affect competition, but it does not set out findings or conclusions. Specifically, the CMA has called attention to two areas, namely the wholesale MVNO sector and the wholesale leased line market, saying it has identified ‘primary potential theories of harm’ in relation to the operators’ activities in these sectors.

A deadline of 4 February 2021 has been set for submissions on the CMA’s issues statement.

As previously reported by CommsUpdate, in May 2020 Spain-based Telefonica, parent company of O2 UK, and Virgin Media parent Liberty Global inked an agreement to merge their British subsidiaries to form a 50:50 joint venture (JV). At that time it was claimed that the combination of the two service providers will create a nationwide integrated communications provider with annual revenue of around GBP11 billion (USD15 billion) and more than 46 million pay-TV, fixed broadband and mobile subscribers. Further, the companies suggested that the JV initiative will deliver ‘substantial’ synergies, valued at GBP6.2 billion on a net present value basis after integration costs, and equivalent to cost, CAPEX and revenue benefits of GBP540 million on an annual basis by the fifth full year post-closing.

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