Liberty and Telefónica warn of potential delay as CMA requests EC to refer Virgin Media-O2 merger back

Liberty Global and Telefónica have warned of a potential delay to the merger of their UK operations after UK competition watchdog the CMA, has made a request to the European Commission to refer the proposed combination of Virgin Media and Virgin Mobile with O2 to it.

The CMA said that it believed the case should be transferred given its potential impact on competition in several retail and wholesale telecommunication markets in the UK.

The watchdog said that the legal requirements for a transfer of the case to the national regulator had been met and argued that any impact on competition will be limited to UK customers.

Perhaps more contentiously, the regulator said while the EC had previously highlighted its interest in ensuring consistency across different merger cases in the telecommunications sector within the EU, the CMA believes that this is not relevant in this case given the imminent end of the Brexit transition period.

“We’ve sent a formal request to the European Commission to review the proposed deal between Virgin and O2,” said CMA CEO Andrea Coscelli.

“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.”

Following the CMA request, Liberty Global, owner of Virgin Media, and Telefónica issued a statement in which they made the case that having the merger referred back to the UK regulator would delay the process.

“Last week we formally requested the European Commission to approve the merger of Virgin Media and O2. 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,” the pair said.

“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.”

The EC has an initial deadline of November 19 to respond to the request.

The EC set a provisional deadline of November 5 to complete its review of whether the merger of Telefónica’s UK arm and the Liberty Global-owned cable operator would have an adverse impact on the UK’s converged communications market.

The Commission has previously ruled on merger proposals affecting both parties. In 2013 it approved Liberty Global’s acquistioin of Virgin Media and in 2016 it blocked Hutchison’s proposed acquisition of O2 on the ground that it would reduce competition in the mobile sector.