Orange-TMo joint venture could be delayed by UK review
Published: 22 December, 2009
READ MORE: M&A | UK | T-Mobile | Orange | Regulator
Many observers have been assuming that the proposed merger between the UK arms of Orange and T-Mobile would proceed without significant hitches. This was based on the fact that the customer share commanded by the new entity would still be lower than that of many market leaders in Europe. But now it seems the path may be less smooth, with a real prospect that the deal could be referred back from the European Commission to the UK regulator Ofcom.
France Telecom and Deutsche Telekom, the parents of the UK cellcos, are opposing a UK review as this could take significantly longer than concentrating the approval process in Brussels. However, the Commission's initial inquiry will last about 25 working days, which could be followed by an 18-week, in-depth investigation.
It was initially believed that Ofcom would not conduct its own probe, because it would be keen to facilitate benefits of the deal for the UK market, such as improved coverage and network quality. But in a new Mobile Evolution study, Ofcom has raised concerns that the merger will reduce competition. "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," the regulator 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."
Competition lawyers believe the operators could expect a more relaxed attitude towards the merger in Brussels than at the UK's competition authorities.
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