UK seeks final say on Virgin Media-O2 merger from EU

Liberty Global CEO, Mike Fries

The UK’s Competition and Markets Authority (CMA) is set to ask Brussels for full control over the review and approval of the proposed merger of Liberty Global’s Virgin Media and Telefónica’s O2.

The merger, announced at the beginning of May, has a proposed valuation of £31 billion, and promises to create “a stronger fixed and mobile competitor in the UK market” with synergies of £6.2 billion.

With the parties agreeing on a fee, it is now up to regulators to approve the merger, but the Financial Times reports that there is some debate as to whether the European Commission should get involved.

In a statement to the business paper, the CMA argued that the deal “will only impact consumers in the UK” and that a review “will likely conclude after the transition period,” with the UK set to fully cut ties with the EU on December 31.

The UK’s withdrawal agreement gives the CMA the power to rule on mergers that solely impact the UK, and the regulator reportedly will argue that the EU has no place in the matter.

The FT however adds that the EU will want to remain involved on the grounds that it has previously examined such deals and that the UK is technically still a part of the EU during the transition period.

In a statement, the European Commission said: “This transaction has not been formally notified to the commission. If a transaction has an EU dimension, it is always up to the companies to notify it to the commission.”

Telefónica for one will hope that the CMA is able to seize control of the merger away from the EU, with the Commission previously derailing its 2016 deal to sell O2 to Three for £10.3 billion. However, while the EU Commission did have the final say there, the CMA put pressure on the European body to block the deal.

In a UK which will initially be in a much poorer financial state out of the EU, the CMA may be more willing to push through the deal which should increase competition at the top end of the country’s telecommunications business.

For their part, Liberty Global and Telefónica have expressed confidence that the deal will clear any regulatory hurdles as there is little crossover between the businesses of Virgin Media and O2.