UK Clears $44B Virgin-O2 Merger To Take On BT

Britain’s competition regulator cleared a US$44 billion merger between broadband company Virgin Media and Telefonica’s UK mobile network O2 on Thursday, May 20, after a months-long review.

Virgin owner Liberty Global and Spain’s Telefonica, who agreed a year ago to forge a broadband and mobile powerhouse to challenge market leader BT, hailed the decision as “a watershed moment in the history of telecommunications in the UK.”

“We are reassured that competition amongst mobile communications providers will remain strong and it is therefore unlikely that the merger would lead to higher prices or lower quality services,” Martin Coleman of Britain’s Competition and Markets Authority (CMA) said.

The watchdog said there was sufficient competition in the leased-line market from players like BT Openreach, meaning the combined company would “still need to maintain the competitiveness of its service or risk losing wholesale custom.”

At the same time, the CMA said O2 faces stiff competition in the mobile networks market.

“O2 and Virgin are important suppliers of services to other companies who serve millions of consumers. It was important to make sure that this merger would not leave these people worse off. That’s why we conducted an in-depth investigation,” said Martin Coleman, CMA panel inquiry chair.

“After looking closely at the deal, we are reassured that competition amongst mobile communications providers will remain strong and it is therefore unlikely that the merger would lead to higher prices or lower quality services,” Coleman added.

The deal 

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