U.K. Set for Brexit Tussle With EU Over Virgin-O2 Phone Deal

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Britain’s deals watchdog said it’s “only right” that it gets to review a tie-up between Liberty Global Plc and Telefonica SA in the nation, setting up a regulatory tussle with the European Union as the U.K. and EU leaders clash over their future relationship.

The Competition and Markets Authority asked the European Commission to transfer a probe into Liberty Global’s plan to merge its Virgin Media unit with Telefonica’s O2 in the U.K. The EU’s competition regulator, which normally clings on tightly to investigations of telecom deals, acknowledged the request, pushing back its deadline to rule on the deal until Nov. 19

“As the merger will only impact U.K. 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,” CMA Chief Executive Officer Andrea Coscelli said in an emailed statement on Thursday.

Liberty Global sought European Commission approval for the transaction last week. EU regulators can transfer a review to smaller national authorities if they think they are best placed to make a decision. The EU has rarely handed back mobile-phone deals and has often taken a harsh line on telecoms consolidation. Although Britain quit the EU earlier this year, EU law still applies and large deals are handled by the Brussels-based authority during a transition period until Dec. 31.

Liberty Global and Telefonica pushed back against the request, saying shifting the deal to the CMA would delay approval.

“We have made a compelling case to enable the European Commission to clear the transaction as soon as possible,” a spokesman for the companies said. “Transferring the case to the CMA will delay this process and our ability to press on with improving the U.K,’s broadband and 5G infrastructure, whilst creating new jobs in the U.K.”

From next year, the U.K. will need to approve deals that affect competition in the country, creating another regulatory obstacle for M&A.

While the EU “has previously highlighted its strong interest in ensuring consistency across different merger cases in the telecommunications sector, the CMA believes that this is not relevant in this case given the imminent end of the transition period following the U.K.’s exit from the EU,” the CMA said.

©2020 Bloomberg L.P.

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