U.K. Takes Over EU Review of Liberty-Telefonica Deal

(Bloomberg) -- The U.K.’s Competition and Markets Authority will take over the European Union’s antitrust review of Liberty Global Plc and Telefonica SA’s British tie-up, a rare win for a regulator about to become a key player in many global deals.

The European Commission said Thursday that it accepted the CMA’s request to rule on the 31.4 billion-pound ($41.6 billion) combination because it affects British customers. The CMA said in a separate statement that it may fast-track its review.

In its handover announcement, the EU authority said its evidence showed the transaction may hamper competition in the U.K., where Liberty Global’s Virgin Media unit and Telefonica’s O2 are “currently two large market players.”

“The CMA is already well informed on the elements of this case and the investigation will continue uninterrupted,” the commission said. It didn’t mention Britain’s exit from the EU’s single market on Dec. 31.

The U.K. authority will next year start taking on merger investigations in parallel with the Brussels-based commission, adding an extra regulatory hurdle to international deals. The CMA has already taken on more staff to handle deal reviews. The EU has frequently refused to hand over complicated telecoms deals to smaller national authorities in the past, citing its better resources and know-how.

CMA Chief Executive Andrea Coscelli said the U.K. review “will build on the work that has already been carried out to make sure that the case can be investigated as quickly and efficiently as possible.”

Virgin and O2 have asked the CMA to fast-track the deal to a phase 2 investigation and the CMA said it expects to do this unless it gets any valid objections. It will accept comments by Nov. 26 on how the deal could affect competition and on the fast-tracking of the review.

Liberty Global and Telefonica said they have been close contact with the CMA and the U.K. telecoms regulator Ofcom “and are confident the transition will be seamless,” according to an emailed statement.

“Our view remains that this transaction is pro-competitive and we continue to expect closing around the middle of next year,” they said.

The CMA had argued that the U.K. should take the transaction because it would only have an impact on the British economy after Brexit. The country’s impending departure from the bloc could also 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.

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