Phones merger under the microscope

The Office of Fair Trading (OFT) has asked the European Commission for the opportunity to examine the UK aspects of the deal, which is set to create the UK's largest mobile phone operator.

The regulator said: "The OFT's initial view, following consultation, is that the joint venture threatens significantly to affect competition in mobile telecommunications in the UK."

France Telecom's Orange and Deutsche Telekom-owned T-Mobile – currently the UK's third and fourth largest operators – will have 28.4m customers between them and claim a 37 per cent market share.

The deal was announced last year as mobile phone operators struggle in a highly competitive and saturated UK market.

If Brussels approves the referral, the OFT will have to decide whether to refer the merger to the Competition Commission for an in-depth investigation. As well as resulting in a longer period of uncertainty, the two companies may have to offer significant concessions in order to secure regulatory approval.

The European Commission is expected to decide within the next 10 days whether to refer the merger to the OFT or carry out its own investigation.

Consumer groups have lobbied the OFT against the deal, while rival firms have raised concerns about how the new entity will hold most of the radio spectrum at the 1800 megahertz range. This is suitable for next-generation wireless technology.