Page last updated at 14:04 GMT, Wednesday, 3 February 2010

Orange and T-Mobile deal 'threatens competition'

An Orange and T-Mobile shop in Liverpool
The OFT wants to know if the deal reduces choice too much

The proposed merger between mobile phone firms Orange and T-Mobile in the UK could come under further scrutiny over fears it will harm competition.

The Office of Fair Trading (OFT) has been looking at whether it should consider how the tie-up will affect UK phone users.

It says its initial view is that it should, as a merger will "significantly" affect competition.

It has asked the European Commission to allow it to study the deal.

If the OFT gains permission and continues to think customer choice will be seriously affected it will refer the deal to the Competition Commission for further study.

It's only right that a deal affecting UK consumers should be scrutinised by UK regulators
Peter Vicary-Smith, Which? chief executive

It has been looking into aspects of the planned deal, which, if completed, would create the UK's largest mobile provider, overtaking Telefonica's O2, with about 37% of the market.

T-Mobile, owned by Deutsche Telekom, and France Telecom's Orange announced in September last year that they planned to merge their UK businesses, creating a mobile phone firm with more than 28 million customers.

An Orange spokesperson said: "We are in close contact with all of the authorities involved, including the OFT and Ofcom. We strongly believe that the proposed merger is good for Britain and will continue to work closely with all interested parties."

A Deutsche Telekom spokesman told the Reuters news agency: "We are confident that any concerns about the venture can be dispelled and fundamentally believe that the deal is beneficial to competition."

'Huge impact'

Consumer body Which? said it was "pleased" that the OFT had asked the European Commission to allow it to investigate the merger.

"It's only right that a deal affecting UK consumers should be scrutinised by UK regulators," said Which? chief executive Peter Vicary-Smith.

"This merger will clearly have a huge impact on the mobile market, since it will form the biggest mobile operator in the UK and bring the number of networks down to just four," he added.

"We don't believe the deal should go ahead unless the OFT and Competition Commission are satisfied there will be no detriment to UK consumers"

Rival UK mobile operator 3 said it was concerned about the impact on competition in the UK market, and was also worried about its impact on the ownership of parts of the radio spectrum used for web surfing on mobile phones.

"The proposed merger could lead to a concentration of 84% of the nation's 1800mhz radio spectrum in the hands of a single company. This spectrum is crucial for the realisation of the Digital Britain initiative," the company said in a statement.

"For the merger to take place without significant harm to consumers and competition we believe the merged operator should be required to release at least a third of the 1800mhz spectrum it currently leases."



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