Orange/T-Mobile merger could face UK anti-competition probe

The agreed merger between Orange UK and T-Mobile UK could be significantly delayed if the deal is referred back from the European Commission to the UK telecom regulator Ofcom.

Both celcos are fighting against a UK review due to fears that it could take significantly longer than having the evaluation conducted in Brussels. However, the European Commission's initial inquiry will last about 25 working days, which can be followed by an 18-week, in-depth investigation.

The chances of Ofcom digging into the merger was originally thought to be low following initial comments from the two firms that the joint operation would provide potential benefits such as improved coverage and network quality.

But in a new Mobile Evolution study, Ofcom has raised worries that the merger will impact UK competition. The report stated that Ofcom was satisfied that UK consumers were well served thanks to competition between the country's five mobile carriers, but this situation could change if the merger went ahead. "The proposed merger between T-Mobile and Orange may well have significant implications for the conclusions set out in this document and for our future work programme," it stated. "Our current view is that a market review is not needed, but this might change if one or more competitors left the market, particularly at the network level."

The parent companies, Deutsche Telekom and France Telecom, are lobbying that the review takes place within the EU, worried that a UK inquiry would take much longer and run the risk of losing customers to its UK rivals.

Competition lawyers have also indicated that the celcos could expect a more relaxed attitude towards the merger in Brussels than competition bodies based in London.

For more on this story:
ITPro and Marketing Week

Related stories:
Orange, T-Mobile merge UK operations
Vodafone look to tempt staff away from Orange/T-Mobile UK
Orange dropped T-Mobile UK takeover to push through merger deal
T-Mobile and Orange agree JV terms, huge costs savings promised

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