UK regulator seeks to review O2-Virgin deal

FILE PHOTO: A woman speaks on her mobile telephone outside an O2 shop in Loughborough, Britain, January 23, 2015. REUTERS/Darren Staples/File Photo

LONDON (Reuters) - The British competition regulator has asked to review the merger between Liberty Global's LBTYA.O Virgin Media and Telefonica's O2 TEF.MC instead of Brussels because any impact on consumers will be felt in the UK and after Brexit.

The two companies have agreed to merge their British businesses in a $38 billion deal that will pose much stronger competition to market leader BT BT.L.

“Ultimately, this is a decision for the European Commission, but as the merger will only impact UK consumers – and any effects would only be felt after the end of the transition period – it is only right for the CMA to request it back,” said Andrea Coscelli, head of the Competition and Markets Authority.

A spokesman for Telefonica and Liberty Global said the companies had formally requested the European Commission to approve the merger of Virgin Media and O2 last week, while keeping the CMA and regulator Ofcom fully informed and engaged.

“We have made a compelling case to enable the European Commission to clear the transaction as soon as possible,” he said.

“Transferring the case to the CMA will delay this process and our ability to press on with improving the UK’s broadband and 5G infrastructure, whilst creating new jobs in the UK.”

He said the companies firmly believed the deal would bring substantial benefits to UK consumers and should be swiftly approved.

Reporting by Kate Holton; Editing by Alistair Smout and Stephen Addison