U.K. Set to Take Lead in Review of Liberty-Telefonica Deal

(Bloomberg) -- European Union regulators are poised to hand the U.K. responsibility over an antitrust review of Liberty Global Plc’s tie up with Telefonica SA this week as British and EU negotiators wrangle over a potential Brexit accord before the end of the year.

The European Commission will agree to a request from the U.K.’s Competition and Markets Authority that it should handle the deal merging Liberty Global’s Virgin Media unit with Telefonica’s O2 in the country, according to people familiar with the matter who asked not to be identified because the discussions aren’t public. The EU has a Nov. 19 deadline to decide on the deal.

The handover would be a rare win for the British as the EU frequently refuses bids by national regulators to examine telecoms deals in their countries. The CMA argued that the U.K.’s departure from the bloc could enmesh regulators in a legal mess if an EU court were to hear challenges over a jurisdiction where the EU would no longer hold sway.

“We remain in constructive dialog with all relevant stakeholders at the EU and CMA and continue to work to the timeline of completing the deal mid-next year,” Liberty Global and Telefonica said in an emailed statement.

‘Only Right’

The CMA referred to a statement from last month that it would be “only right” for it to take control of the review because the merger would only affect U.K. consumers and any effects would only be felt after the U.K. ceased to apply EU law.

The European Commission declined to comment.

Britain is due to quit the EU’s single market on Dec. 31 when the CMA will start taking on merger investigations in parallel with the Brussels-based commission. EU and U.K. officials are meeting this week to strike a deal on their future relationship. Without a deal, trade between the EU and Britain will face quotas and tariffs for the first time in a generation.

Liberty Global Chief Executive Officer Mike Fries said earlier this month that the company would happily engage with the CMA and the British telecoms regulator Ofcom “which we think is absolutely a positive for the U.K. consumer or the U.K. business environment and has virtually no competitive issues at all.”

“We think it’s probably the cleanest, simplest transaction any regulator has looked at,” he told a call with investors. Completing the deal by “mid next year is the time frame we’ve always talked about.”

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