The Office of Fair Trading is considering whether it should seek to investigate the proposed merger between Orange and T-Mobile in the UK.
France Telecom and Deutsche Telekom said on Tuesday that they had submitted a proposal for a joint venture between their UK mobile phone businesses to the European Commission for approval.
A merger between France Telecom’s Orange UK and Deutsche Telekom’s T-Mobile UK would create Britain’s largest mobile operator, with 29.5m customers.
Consumer groups want the merger investigated by the UK competition authorities but the French and German telecoms groups would prefer the Commission to review the transaction.
Consumer organisations are concerned about the negative impact on competition resulting from a merger, which would reduce the number of UK mobile network operators from five to four.
Orange is currently the UK’s third-largest operator, and T-Mobile is the fourth. The merger would create a new industry leader, overtaking Telefonica’s O2 and Vodafone.
France Telecom and Deutsche Telekom think the Commission would review the merger faster than the UK competition authorities. An OFT review could be followed by an investigation by the Competition Commission.
However, competition lawyers say the French and German groups may also be hoping that the Commission would take a more lenient approach to the merger compared with UK competition authorities.
Although the OFT can seek to review the merger, the Commission will have the final say on whether Brussels or London looks at it.
The Commission confirmed on Tuesday that it had been notified about the merger proposal. This triggered the start of a merger approval timetable, with the Commission due to give an initial ruling by February 15. At this point, Brussels can either clear the deal or decide to conduct an in-depth investigation, which would take up to 90 days.
The OFT said on Tuesday: “The OFT is currently considering whether to make a request to the EC for the proposed joint venture to be referred to the OFT for review.”
The OFT is expected to decide whether to seek to review the merger quickly, partly based on its assessment of how the Commission intends to scrutinise the transaction.
It has already told the Commission that it regards the UK mobile-phone market as having distinct characteristics from other European countries.
France Telecom and Deutsche Telekom insist they have no plans to make concessions to the competition authorities to secure approval for the merger.
O2 and 3, the smallest UK mobile network operator, say the combined entity should relinquish some valuable radio spectrum at the 1800 MHz frequency.
This spectrum is suitable to support high-speed data services on mobile phones, such as web browsing.