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O2 and Virgin Media merger to undergo in-depth investigation

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O2 and Virgin Media’s proposed mega merger has been referred for an in-depth investigation.

In May, Telefónica, the Spanish owner of O2, announced a proposed merger with Virgin Media owner, Liberty Global, which would create one of the UK’s largest telecoms firms to rival BT and Sky.

Last month, the UK’s Competition and Markets Authority (CMA) took charge of the regulatory approval process after a bit of back and forth with the European Commission.

At the time, O2 and Virgin requested a ‘fast track’ process of the investigation straight to ‘phase two’, missing the initial ‘phase one’ inquiry.

In most merger cases, a phase one investigation is needed to determine whether a deal can be cleared or whether further scrutiny is required. Merging companies can ask for the CMA to move to phase two where it’s clear from an early stage that the deal requires an in-depth investigation.

The CMA today confirmed it has accepted this request given the deal’s potential impact on competition in several telecommunication markets in the UK, and the in-depth investigation will begin immediately.

It added it is concerned that, following the merger, Virgin and O2 may have an incentive to raise prices or reduce the quality of wholesale services  to other mobile network operators in the UK, ultimately leading to a worse deal for UK consumers.

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