OFT wants to investigate of Orange/T-Mobile merger

EC asked to let OFT look at implications on UK competition of Orange UK/T-Mobile UK joint venture

OFT wants closer look at joint venture

The Office of Fair Trading (OFT) yesterday sought permission from the European Commission (EC) in a written request for OFT's experts to look at the implications of the Orange UK and T-Mobile-UK joint venture on competition within the UK market.

In a statement released today, the OFT said: "Our initial view, following consultation, is that the joint venture threatens to affect competition in mobile telecommunications in the UK."

The statement continued: "If the request is granted, the OFT intends to examine the proposed joint venture with a view to deciding whether it should be referred to the Competition Commission for an in-depth investigation."

All Orange and T-Mobile's UK competitors – 3, O2 and Vodafone – have called for the deal to be examined by UK regulators, rather than be referred to the EC.

One reason for concerns around competition is that a joint Orange/T-Mobile venture would have the largest customer base of any mobile operator - estimated at 40 per cent of the mobile-using population - if T-Mobile's agreement to service Virgin Mobile's customers is taken into account.

Another reason is that the company would have control over licences for the best quality radio spectrum for high-speed mobile broadband services – the 1800MHz band.

In addition, Orange UK's parent company France Telecom, and T-Mobile UK's parent company Deutsche Telekom claimed when the venture was announced that there were synergies of as much as €4bn (£3.5bn) from the deal. Industry analysts said that such a sum could be used to invest in more backhaul and base stations, rather than be passed on to customers in cheaper mobile call and data charges.

The whole issue of radio spectrum redistribution, which the OFT could require from Orange UK and T-Mobile UK before it rubber-stamps the deal, could lead to long delays in the process.

That delay could be exacerbated by last week's news that auctions of other frequencies in the UK radio spectrum could be subject to massive delays.

Speaking at an industry event in Westminster, the Independent Spectrum Broker Kip Meek said that he couldn't see how licences covering the new 2.6GHz radio band – well suited for 4G mobile systems which could eventually see bandwidths up to 1Gbit/s - could be auctioned until 2011.