EC passes Virgin Media-O2 merger back to UK regulator

The European Commission has acceded to a request by the UK competition regulator, the CMA, to review the planned merger between Liberty Global-owned Virgin Media and Telefónica’s O2.

The CMA lodged its request soon after the EU started its investigation into the merger in October. The decision means that the CMA will now begin a formal investigation of the deal.

Virgin Media and O2 have asked the UK watchdog to move quickly to an in-depth Phase 2 stage of its review through a fast-track process, bypassing a full Phase 1 investigation to determine whether a deal can be cleared or whether a further probe is required.

“Liberty Global and Telefónica note that the European Commission has completed its review of the proposed merger of the UK businesses in Phase 1, and has now referred this matter to the UK’s Competition and Markets Authority. The Parties have requested the CMA to start a ‘fast-track’ Phase 2 in the UK. We have been in close contact with the CMA and Ofcom throughout this process and are confident the transition will be seamless. Our view remains that this transaction is pro-competitive, and we continue to expect closing around the middle of next year,” the pair said in a statement.

The CMA said it was minded to accept the fast-track request, which can be made in cases where the scope of the merger is likely to mean an in-depth investigation.

The decision is nevertheless likely to be disappointing to the two companies concerned. Last month they warned of potential delay following the move by the CMA to the EC to refer the combination back to it for investigation in view of the impending end of the Brexit transition period.

The EC had set a provisional deadline of November 5 to complete its own review, but the CMA request meant that a new deadline of November 19 was set for it to decide on whether or not to accept the UK regulator’s request.

“We welcome the European Commission’s decision to transfer the proposed deal between Virgin and O2 to the CMA for investigation. These are incredibly important UK markets, that continue to evolve, and the deal needs to be carefully reviewed to make sure that consumers are protected,” said CMA CEO Andrea Coscelli of the EC decision.

“We have worked closely with the European Commission so far and we will build on the work that has already been carried out to make sure that the case can be investigated as quickly and efficiently as possible.”