Having got control of the approval process the Competition and Markets Authority has already moved to phase 2 of its investigation into the UK telecoms mega-merger.
The CMA finally wrestled jurisdiction away from the European Commission over the proposed merger of Virgin Media with O2 UK last month. It immediately vowed to get a move on with a process that the EC had kept on the back-burner for five months and set itself a deadline of 1 February 2021 to complete phase 1.
To its credit the CMA has completed that initial process well ahead of schedule and is kicking off phase 2 today. The rationale is simple: phase 1 is designed to find out whether or not there are competition concerns and it’s quite obvious, in this case, that there are. Phase 2 is when those concerns are explored, so we might as well get on with it. In fact, having praised the CMA, it could have proceeded to phase 2 as soon as it got control, but some degree of reserve and decorum is apparently still required.
“Both Virgin and O2 provide certain wholesale services to other mobile network operators in the UK – wholesale mobile services and mobile backhaul, respectively,” said the CMA announcement. “The CMA is concerned that, following the merger, Virgin and O2 may have an incentive to raise prices or reduce the quality of these wholesale services, ultimately leading to a worse deal for UK consumers.”
They got the order wrong regarding who provides which wholesale service but that can be forgiven in the name of haste. The only competition concern that springs immediately to mind is that they may impose wholesale bundles on customers. But, since there will still be plenty of competitors in both markets after the merger, that shouldn’t be reason enough to block it.