UK watchdog clears O2-Virgin Media merger

The UK’s Competition and Markets authority (CMA) has given the proposed merger of Telefónica’s O2 and Liberty Global-owned Virgin Media a provisional green light.

The watchdog said that the £31 billion merger first announced in May 2020 “is unlikely to lead to any substantial lessening of competition in relation to the supply of wholesale services.”

The CMA initially raised concerns about the potential impact on mobile wholesale markets in January, but the operators swiftly moved to address these within weeks and clarify the situation with the watchdog.

In concluding its report, the CMA said that it is “unlikely that Virgin would be able to raise backhaul costs in a way that would lead to higher charges for consumers” and that other operators such as Openreach provide sufficient competition in the space.

Martin Coleman, CMA Panel Inquiry Chair, said: “Given the impact this deal could have in the UK, we needed to scrutinise this merger closely. A thorough analysis of the evidence gathered during our phase 2 investigation has shown that the deal is unlikely to lead to higher prices or a reduced quality of mobile services – meaning customers should continue to benefit from strong competition.”

The path is now clear for Liberty Global and Telefónica to merge their UK businesses under current Virgin CEO Lutz Schüler. Schüler will head up the joint venture, as announced by the companies last week. Existing O2 chief financial officer Patricia Cobian will serve as CFO of the combined operation.