Orange and T-Mobile merger: Consumer groups back UK inquiry

Consumer groups today welcomed confirmation that UK competition authorities have asked Brussels for permission to investigate the proposed merger of Orange and T-Mobile. A spokesman for Which? said this morning that it had campaigned for the Office of Fair Trading to scrutinise the proposed tie-up, rather than authorities in Brussels, because it was a deal that affected UK consumers. "We have been very keen to have this looked at because T-Mobile and Orange have networks here. This merger affects British consumers and we think it should be looked at," a Which? spokesman said. If T-Mobile and Orange merge they would have a 37% market share of retail customers in the UK, or 40% including the virtual mobile network operators such as Virgin Mobile that use the two companies' networks to run their services. In December Consumer Focus and the Communications Consumer Panel wrote a joint letter to Neelie Kroes , the Brussels competition commissioner, urging a UK review of the deal, which is originally under the scope of Europe because two thirds of the turnover of the parent companies – France Télécom and Deutsche Telekom respectively – is generated outside the UK. The OFT confirmed to the stock market this morning that it had made a request to the European commission to refer the UK aspects of the proposed joint venture between the two companies. "The OFT's initial view, following consultation, is that the joint venture threatens significantly to affect competition in mobile telecommunications in the UK," the OFT said in a brief statement. "If the request is granted, the OFT intends to examine the proposed joint venture with a view to deciding whether it should be referred to the Competition Commission for an in-depth investigation," the OFT said. If the OFT is handed the powers to investigate, it would delay the plans by the two mobile phone companies to consummate their deal, which was originally announced in September and slated for approval by the Brussels competition watchdogs as early as mid February. The OFT would conduct its own analysis of the situation before deciding whether to refer the tie-up to the Competition Commission for a detailed investigation that could last as long as six months. The OFT said it had petitioned Brussels under Article 9 of the EU merger regulations.