The merger of Virgin Media and O2 UK has received provisional approval from the UK's Competition and Markets Authority. Following an in-depth investigation, the regulator concluded that the merger would not significantly reduce competition in the mobile market.
The investigation focused on the wholesale mobile market, where O2 provides network access to several MVNOs and Virgin Media provides leased lines for backhaul at mobile operators. The CMA found the companies face sufficient competition in both segments, while backhaul costs are a relatively small part of the business, making it difficult for the companies to increase prices significantly.
Liberty Global and Telefonica, the respective parent companies of Virgin Media and O2, announced nearly a year ago the agreement to merge the two operators in a 50-50 joint venture. While they initially asked the European Commission to examine the deal, the process was later referred to the UK regulator. In December the CMA decided to open a phase-two investigation.
The provisional findings remain open for public comment until 07 May, after which the CMA will take a final decision by 27 May. The companies said they will continue to work with the CMA to complete its investigation and expect to close the merger around the middle of this year.
