CMA Says Provisionally Clears Proposed Merger Of Virgin Media And Virgin Mobile With O2

The U.K. Competition and Markets Authority or CMA Wednesday said it has provisionally cleared the proposed merger of Virgin Media, Inc. (VMED.L,VMED) and Virgin Mobile with O2.

Virgin Media and Virgin Mobile are owned by Liberty Global plc, while O2 is owned by Spanish telecom major Telefonica SA (TDE.L,TEF).

The regulator noted that both Virgin and O2 provide certain wholesale services to other mobile network operators in the UK, as well as retail services to consumers. The CMA was clear at the outset of its in-depth inquiry that it was not concerned about overlapping retail services such as mobile, due to the small size of Virgin Mobile.

The CMA has therefore focused on whether the merger could lead to reduced competition in wholesale services as part of this review.

The CMA said it was initially concerned that, following the merger, Virgin and O2 could raise prices or reduce the quality of their wholesale services, or withdraw them altogether.

These concerns led to the merger being referred to a group of independent CMA Panel members for an in-depth Phase 2 investigation.

Following the examination, the CMA inquiry group has now provisionally concluded that the deal is unlikely to lead to any substantial lessening of competition in relation to the supply of wholesale services for several reasons.

Martin Coleman, CMA Panel Inquiry Chair, said, “Given the impact this deal could have in the UK, we needed to scrutinise this merger closely. A thorough analysis of the evidence gathered during our phase 2 investigation has shown that the deal is unlikely to lead to higher prices or a reduced quality of mobile services – meaning customers should continue to benefit from strong competition.”

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