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Competition alarm sounded by rivals over £31bn O2-Virgin merger

Lucy Harley-McKeown
·2 min read
O2 logo is seen displayed on a phone screen with Virgin Media logo displayed on the background in this illustration photo taken in Poland on November 19, 2020. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
If the deal were ratified, the pair would create a giant serving 46 million customers. The owners have also claimed it would create 4,000 new jobs in the UK. Photo: Jakub Porzycki/NurPhoto via Getty Images

Telecoms companies have sounded the competition alarm over the planned mega-merger between O2 and Virgin Media.

At he beginning of December, an in-depth investigation into the £31bn ($42.4bn) deal was launched by the Competition and Markets Authority (CMA).

At the time the CMA said it would “fast-track” the process, looking at whether the deal could lessen competition for UK customers of the mobile phone and broadband giants.

The decision to launch a fast-tracked investigation comes 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,” it said.

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.

The CMA said that a “number of third parties” had voiced concerns on the combination. It said the merger could “restrict access to these services, degrade the quality of its service provision or increase the price it charges for wholesale mobile services.”

Among regularly raised concerns that the deal might push up prices, it also said it could have a significant impact on rivals’ costs.

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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 Brussels regulators to hand the case back because it primarily only impacted UK customers and that any findings would come after the Brexit transition period had ended.

If the deal were ratified, the pair would create a giant serving 46 million customers. The owners have also claimed it would create 4,000 new jobs in the UK.

Watch: 10 ways to Brexit-proof your finances