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(Adds comment from Telefonica and Liberty Global, detail)
By Iain Withers and Clara-Laeila Laudette
LONDON, April 14 (Reuters) - Britain's competition watchdog
said on Wednesday it had provisionally cleared the 31.4 billion
pound ($43.3 billion) merger between broadband company Virgin
Media and Telefonica's UK mobile network O2.
The Competition and Markets Authority (CMA), addressing one
of its primary concerns, said that its investigation had
concluded the deal was unlikely to result in a substantial
reduction of competition in the supply of wholesale mobile
services.
"A thorough analysis of the evidence gathered... has shown
that the deal is unlikely to lead to higher prices or a reduced
quality of mobile services – meaning customers should continue
to benefit from strong competition," said Martin Coleman, CMA
Panel Inquiry Chair.
The regulator said it believed there was sufficient
competition within the market to prevent either player raising
wholesale broadband or mobile prices to the detriment of rivals
who use its infrastructure.
The decision was welcomed by Virgin Media owner Liberty
Global Plc and Spain-based Telefonica, which took note
of the CMA's provisional conclusions.
"We continue to work constructively with the CMA to achieve
a positive outcome and continue to expect closing around the
middle of this year," a spokesman for Telefonica told Reuters on
Wednesday.
The two telecommunications groups agreed last May to merge
their British businesses to create a broadband and mobile
powerhouse in a challenge to market leader BT Group.
The two sides said earlier this month that Virgin Media boss
Lutz Schuler would become chief executive of the new company and
O2 chief financial officer Patricia Cobian would take on the
same role within the merged entity.
(1 euro = 0.8673 pounds)
($1 = 0.7253 pounds)
(Reporting by Iain Withers, Clara-Laeila Laudette and Kate
Holton; Editing by Kirsten Donovan)
