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OFT requests T-Orange investigation

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The Office of Fair Trading has requested control of the investigation into the merger of T-Mobile and Orange, making a quick decision unlikely and delighting the competition.

The request (pdf) asks that the European Commission hand over the UK parts of the investigation to the UK authorities. It has requested this on the basis that the merger will have an immediate impact on the UK mobile industry, but will also change how UK operators are able to deploy new technologies and could lead to the untimely death of 3UK.

The OFT is allowed to request control if it can demonstrate UK-specific issues to which its greater understanding of the local market can be applied. The submission to the EU lays out those aspects where the OFT feels more qualified, along with comments from "the Joint Venture*" and other interested parties, though all the really good bits are redacted.

Most entertaining are the arguments that T-Mobile and Orange don't really compete with each other, and that neither of them is a particularly competitive company anyway. The companies did provide the OFT with statistics showing the numbers of customers they steal from each other (redacted, unfortunately) which the OFT admits aren't particularly large, but they aren't small either.

But most significant is the argument, proposed by 3UK, that the merged company would have little incentive to maintain the network-sharing agreement 3UK currently has with T-Mobile. That agreement sees 3UK and T-Mobile operating one 3G network between them, to reduce costs and increase coverage for all. 3UK suggests that a merged T-Orange would have no incentive to maintain its investment in that agreement, which could leave 3UK floundering.

T-Orange responds that it's committed to sharing the network, and its agreement with 3UK demands significant damages if it pulls out (details redacted, obviously). But the OFT notes that T-Orange could, for example, shift its customers onto Orange's existing network, then let the network it shares with 3UK slowly disintegrate.

No-one is saying that T-Orange will do that, only that it could, and thus the OFT wants to investigate the situation properly.

The other area that requires proper investigation is radio spectrum. We've already noted that T-Orange will end up with a whole bundle of radio spectrum, and the OFT reckons that such a broad ownership would enable the merged company to deploy a nationwide LTE (4th generation) network without disrupting its existing customers - something no other network in the UK could do.

That is another UK-specific argument, on which the OFT reckons it is best placed to rule.

The request is unlikely to be refused, though there has to be a formal acquiescence: bad news for Orange and T-Mobile, who had hoped to get the nod from the EU within a few months, good news for the competition who are really worried at having so much power in one pair of hands. For everyone else it just means a few more months of uncertainty as to who owns whom. ®

* T-Orange is not the official name of the merged entity. It hasn't got a name yet and we just call it T-Orange 'cos we like the name.

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