The Competition and Markets authority has referred the proposed merger of Liberty Global’s Virgin Media and Virgin Mobile with Telefonica’s O2 for an in-depth Phase 2 investigation.
It follows a request from the two companies that the regulator undertake a fast track process.
The CMA will fast track a case to Phase 2 where that there is sufficient evidence at an early stage of the investigation for the CMA to conclude that there is a realistic prospect that the transaction would result in a substantial lessening of competition in one or more markets.
Both Virgin and O2 provide wholesale services and mobile backhaul, and the CMA is concerned a merged company might look to raise prices or reduce the quality of these wholesale services.
In November, the European Commission granted a request by the CMA that it should be responsible for any investigation.
The O2 mobile network is the largest in the UK with 34 million customers including the Tesco Mobile and Giffgaff.
Virgin Media has 5.27 million broadband subscribers, 3.69 million TV subs and 3.18 million mobile telephony customers.