NTL's purchase of Cable & Wireless' consumer cable TV business could be delayed after the UK government launched an investigation into what it called 'serious concerns' about the competitive impact of the merger.
Stephen Byers, secretary of state for trade and industry, has referred the proposed acquisition to the Competition Commission, known previously as the Monopolies & Mergers Commission - even though the director general of Fair Trading (DGTF) advised against the referral.
"I have considered carefully the DGTF's advice but am concerned about the possible effects on this developing market of the reduction in the number of cable operators from three to two," said Byers in a statement issued this afternoon.
"These concerns are in my view sufficiently serious to warrant thorough examination by the Competition Commission and I am therefore referring this acquisition so that it can be fully investigated," he said.
The Commission will report on their investigation by 25 February.
NTL chief executive Barclay Knapp said: "We will comply forthwith to reach a rapid conclusion. We continue to believe the combination of the companies is in the public interest and note, as stated in the announcement of the DTI, that the annouced referral does not in any way pre-judge the outcome."
Knapp added that NTL would work to minimise any delay to the transaction and said he still expected to complete the transaction in the spring of 2000, as previously announced.
Cable & Wireless and CWC in a joint statement said they were disappointed by the decision but also expected the deal to close next Spring.
"We believe that this transaction enhances the strength of competition to the benefit of the consumer, " the statement added.
In July NTL announced its intention to buy CWC's consumer business - including cable TV, telephone and Internet customers - in a £8.2 billion transaction.
Cable & Wireless chief executive Graham Wallace was due to brief journalists in London this afternoon, but cancelled at the last minute after hearing about the investigation.
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