LONDON (Reuters) - Britain on Friday said it had referred the merger between broadband company Virgin Media and Telefonica (MC:TEF)'s UK mobile network O2 to an in-depth competition investigation, given the potential impact of the $38 billion deal on consumers.
The Competition and Markets Authority said O2 and Liberty Global-owned Virgin had requested the merger should be fast tracked to an in-depth investigation.
It said both Virgin and O2 provided wholesale services to other mobile network operators in the UK, including wholesale mobile services and mobile backhaul.
"The CMA is concerned that, following the merger, Virgin and O2 may have an incentive to raise prices or reduce the quality of these wholesale services, ultimately leading to a worse deal for UK consumers," it said.
The two companies said they were pleased that the CMA had agreed to their request to start a fast-track to Phase 2.
"We look forward to working constructively with the CMA to achieve a positive outcome," a spokeswoman for the two said.
"We continue to expect the transaction to close around the middle of next year."
Liberty Global (NASDAQ:LBTYA) and Telefonica agreed in May to merge their British businesses to create a powerhouse in mobile and broadband to take on market leader BT.