The UK competition regulator has referred the £31bn O2-Virgin merger for in-depth investigation.
Liberty Global and Telefonica, the respective owners of Virgin Media and O2, struck a deal to merge their UK operations back in May.
Last month the Competition and Markets Authority (CMA) launched its phase one investigation into the mega-merger, arguing the potential impact on competition would primarily affect the UK market.
The regulator’s announcement today comes after the two companies requested it fast-track to a phase two investigation.
Companies are allowed to request when it is clear from an early stage that the deal requires closer scrutiny.
A spokesperson for Liberty Global and Telefónica said they were “pleased” the CMA had agreed to fast-track the process. “We look forward to working constructively with the CMA to achieve a positive outcome. We continue to expect the transaction to close around the middle of next year.”
Both Virgin and O2 currently provide certain wholesale services to other network operators. The CMA is “concerned” that following the merger, Virgin and O2 “may have an incentive to raise prices or reduce the quality of these wholesale services, ultimately leading to a worse deal for UK consumers.”
The transaction originally fell under the EU’s remit but the UK watchdog argued the deal was more relevant to the UK, particularly once the Brexit transition period has ended.
“This merger should only be allowed to go ahead if it delivers good outcomes for consumers such as better service or more competitive pricing,” said Rocio Concha, director of policy and advocacy at Which?