The UK’s Competition and Markets Authority (CMA) has made a request to the European Commission to refer the proposed merger of Virgin Media and Virgin Mobile with O2 to the CMA for investigation.
Liberty Global plc (Liberty) owns Virgin Media and Virgin Mobile in the UK, and Telefónica S.A. (Telefónica) owns O2. Liberty and Telefónica formally notified the planned merger of Virgin Media, Virgin Mobile and O2 to the European Commission (EC) on September 30th 2020.
The proposed merger falls under the remit of the EC to review but can, subject to the agreement of the EC, be transferred to the CMA.
The CMA believes that the case should be transferred given its potential impact on competition in several retail and wholesale telecommunication markets in the UK.
The legal requirements for the case to be transferred to the CMA are met, and any impact on competition will be limited solely to UK consumers.
“We’ve sent a formal request to the European Commission to review the proposed deal between Virgin and O2,” advised Andrea Coscelli, Chief Executive at the CMA. “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.”
While the EC has previously highlighted its strong interest in ensuring consistency across different merger cases in the telecommunications sector, the CMA believes that this is not relevant in this case given the imminent end of the transition period following the UK’s exit from the EU.
The initial deadline for the EC to respond to this request is November 19th 2020. The CMA has liaised closely with the EC on its investigation to date and will continue to do so in the event that the EC decides jurisdiction should not be transferred.
“Last week we formally requested the European Commission to approve the merger of Virgin Media and O2,” commented a spokesman for Liberty Global and Telefónica. We have kept the UK CMA and Ofcom fully informed and engaged throughout this process. “We firmly believe this is a pro-competitive transaction that will bring substantial benefits to UK consumers and should be swiftly approved. We have made a compelling case to enable the European Commission to clear the transaction as soon as possible. Transferring the case to the CMA will delay this process and our ability to press on with improving the UK’s broadband and 5G infrastructure, whilst creating new jobs in the UK,” he contended.