UK and EU watchdogs fight over final word on O2-Virgin deal

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UK competition watchdog must ask Brussels for full review of proposed £ 31bn merger between Virgin Media and telecommunications operator O2, kicking off battle relentlessly on which the authority will have the last word on the transaction.

Brussels will receive a request from the UK Competition and Markets Authority, which will argue that the merger only affects UK consumers.

“This major merger will only impact consumers in the UK and since any review is likely to end after the transition period, it is only fair that the CMA requests it now,” CMA told the Financial Times, referring to the December 31 deadline. .

A person familiar with the discussions added, “It is obvious. ”

Like any EU competition authority, the UK can seek to oversee merger cases that are concentrated in the country. The deal with Virgin Media and O2, however, crosses size thresholds that allow the Commission to oversee the case, which means that, as a last resort, it is up to Brussels to decide if it wants to claim jurisdiction.

The withdrawal agreement includes provisions allowing the EU to decide on UK-related mergers, even if the final decision comes after the end of the transition.

European officials should want to retain jurisdiction over the proposed rapprochement on the grounds that they have historically examined telecommunications agreements and that the United Kingdom is still technically part of the EU during the transition period, according to people familiar with the European Commission reflection. .

The commission said: “This transaction has not been officially notified to the commission. If a transaction has a European dimension, it is still up to companies to notify the commission. ”

CMA tried to take control of the £ 10.25 billion O2 buyout approval process proposed by Three in 2015, with the understanding that the combination of the two mobile phone networks would only affect UK consumers .

The request was unsuccessful, but the British watchdog lobbied his EU counterpart publicly asking him to block the three O2 deal, arguing that it would harm consumers’ interests. The deal was eventually blocked by Brussels for competitive reasons in 2016 – a decision that was overturned this year by the court.

The CMA is not the only local regulator trying to wrest control from a takeover decision in Brussels. The German antitrust watchdog, the Bundeskartellamt, attempted to take control of Vodafone’s acquisition of Unitymedia, a German cable network owned by Liberty Media, in 2018, but without success.

In general, Brussels has allowed the combination of mobile and cable assets in recent years, but has taken a firmer stance on mobile-mobile reconciliations. Agreements in Spain, the Netherlands, Sweden, Germany and Eastern Europe have been allowed, but often with remedies that have strengthened the hand of the little challengers.

In the UK, the CMA oversaw BT’s takeover of EE, the mobile network then owned by Deutsche Telekom and Orange, and approved the non-recourse agreement in early 2016.

The leaders of Liberty Global and Telefónica, the respective owners of Virgin Media and O2, have expressed their confidence in recent weeks that the agreement will be approved by regulators because it does not reduce competition and is in line with previous European convergence convergence in telecommunications. A person with direct knowledge of the talks said there was hope that the permit would be received by the end of the year if it was managed by Brussels.

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