The UK’s competition authority set out the scope of a probe into the proposed merger of O2 UK with fixed provider Virgin Media, with a focus on the impact on MVNOs and provision of fibre backhaul.
In a consultation document released yesterday (21 January), the UK Competition and Markets Authority (CMA) outlined the full extent of its detailed investigation into the deal between Liberty Global-owned Virgin Media and Telefonica’s O2 UK announced in May 2020.
One of the main potential sticking points cited by the CMA was the position of Virgin Media as the second largest provider of fibre backhaul to the country’s mobile operators behind BT’s Openreach.
The regulator said there were concerns the new business would have the incentive and ability to alter agreements with other MNOs, including upping prices, changing terms or reducing service quality.
Regarding the MVNO market, it will investigate similar risks of O2 changing terms or cutting supply of wholesale mobile services, and how these actions would change the competitive outlook for virtual operators and consumers.
The CMA does not plan to look into the direct impact on consumers of O2 and MVNO Virgin Mobile being owned by the same business.
“Evidence we have seen to date suggests that Virgin Mobile has a low and declining market share at the retail level.”
“We have also seen evidence that suggests that O2 and Virgin Mobile are not close competitors, in particular Virgin focuses on attracting mobile customers by cross-selling its mobile offering as an add-on to its fixed services.”
Comments on the CMA’s investigation scope close on 4 February.