updated 04:00 pm EST, Wed February 3, 2010
UK regulators ask to take over investigation
The UK's Office of Fair Trading has asked to review the proposed merger between France Telecom SA and Deutsche Telekom AG’s British units. The two companies do business in the UK as Orange and T-Mobile, respectively. Currently the deal is being examined by the European Commission, which will rule on the request by March 1. A review by the British agency would most likely delay the merger until next year.
The OFT acted in response to concerns of consumer groups and two other UK telecom companies, Telefonica SA's O2 and Hutchison Wampoa's 3. The merger would create Britain's largest mobile phone service provider, with about 43 percent of the market. Currently O2 is the largest with approximately 27.9 percent of the market, according to market regulator Ofcom.
To grant the transfer, the OFT will have to show that the British market has distinct characteristics requiring local scrutiny. The European Commission has previously reviewed and approved other mobile mergers restricted to one member state, so the OFT's request may not be granted. The UK is also one of Europe's most competitive markets, with five full-service mobile providers. Italy, Germany, and France each have four.
The UK merger review, a two stage investigation, would probably take longer than the EU's process. The merger would likely be delayed until 2011 if the OFT's request is granted.
Since 2004, the OFT has requested local review of proposed mergers only four times. One was withdrawn. [via Business Week]