Summary

• The CMA's 20 October remedies consultation identifies prohibition of nexfibre's proposed acquisition of Substantial as a possible response to provisional wholesale broadband competition concerns.
• Shareholders InfraVia, Liberty Global and Telefónica say they have not submitted remedies because they dispute the regulator's assumptions about what would happen without the transaction.
• The CMA has made no prohibition decision. Responses to its interim findings close on 23 October, remedies comments on 27 October, and the statutory deadline is 15 December 2026.

The Competition and Markets Authority is considering prohibition of nexfibre’s proposed £2 billion acquisition of broadband operator Substantial as a possible remedy for competition concerns, while the buyer’s shareholders have declined to submit a remedies package and are challenging the assumptions underpinning the regulator’s assessment.

The CMA published its invitation to comment on remedies on 20 October, following provisional findings that the transaction could substantially lessen competition in the wholesale supply of fixed broadband services. Prohibiting the acquisition is among the options identified for consultation, although the regulator has not reached a decision, provisional or final, on which remedy should be adopted.

On the same day, nexfibre’s shareholders InfraVia, Liberty Global and Telefónica said they had not submitted proposed remedies because they consider the CMA’s assessment of the market that would exist without the transaction to be fundamentally flawed.

The disagreement leaves the planned acquisition subject to an unresolved competition investigation. Comments on the CMA’s provisional findings are due by 23 October, responses concerning remedies by 27 October, and the statutory deadline for its final decision is 15 December.

Prohibition enters the remedies consultation

The CMA’s latest intervention follows its interim report, published in early October, which provisionally concluded that the proposed transaction could substantially lessen competition between wholesale fibre broadband providers.

The acquisition would combine nexfibre, a joint venture owned by Liberty Global, Telefónica and InfraVia, with Substantial Group, whose businesses include Netomnia, Brsk, Brsk ISP and YouFibre.

Liberty Global and Telefónica also jointly own Virgin Media O2, giving the proposed transaction a wider significance for competition between the UK’s major fixed broadband infrastructure providers.

In its remedies consultation, the CMA identifies prohibition of the transaction as a possible way to address the competition problem it has provisionally identified.

Prohibition would prevent the proposed acquisition from proceeding in its current form. It is therefore materially different from a measure intended to allow the transaction to complete subject to conditions governing particular assets or commercial arrangements.

The CMA has also examined the general possibility of measures addressing the competition concerns arising from the combination. However, its publication of a remedies consultation does not establish that it has accepted a proposed behavioural undertaking, selected a divestment or determined that the acquisition must be blocked.

The regulator is collecting evidence before deciding what action, if any, would be appropriate following its final competition assessment.

Its provisional findings and the remedies exercise are connected but distinct. The first considers whether the acquisition is likely to damage competition, while the second examines how any resulting problem could be effectively addressed.

Shareholders contest the alternative market scenario

Nexfibre’s shareholders have chosen to challenge the basis of the CMA’s assessment rather than submit a formal package intended to resolve its provisional concerns.

In a joint statement issued on 20 October, InfraVia, Liberty Global and Telefónica described the interim report as “fundamentally flawed”, arguing that its counterfactual assumptions do not reflect the financial and commercial circumstances of Britain’s fibre broadband market.

A counterfactual is the scenario against which competition authorities assess a merger. It describes what is likely to happen if the proposed transaction does not proceed, allowing the regulator to compare that outcome with the market expected after the acquisition.

In this case, the CMA’s analysis considers an alternative outcome in which CityFibre acquires Netomnia, potentially preserving another independent wholesale competitor.

The shareholders dispute the credibility of that scenario. They argue that CityFibre’s financial position, its debt restructuring and the investment required to acquire and develop Netomnia make the proposed alternative commercially unrealistic.

They also reject the assumption that investment associated with nexfibre’s acquisition would proceed to the same extent without the deal.

The shareholders say they engaged with the CMA on potential remedies, including commitments concerning investment and wholesale access, but concluded that such proposals could not address what they regard as errors in the regulator’s underlying market assessment.

On that basis, they have not submitted a remedies package. Their statement leaves open further engagement if the CMA revisits its counterfactual assumptions, rather than establishing an agreed alternative route to clearance.

The absence of a proposal from the shareholders is commercially significant because it leaves the regulator without a formal package from the merging parties to evaluate against the competition problem it has identified. It does not, however, constitute a prohibition decision.

BT and TalkTalk add to the dispute

The shareholders also point to BT’s move to acquire TalkTalk as evidence that conditions in the UK wholesale broadband market have changed since the CMA developed its provisional assessment.

They argue that consolidation involving BT and TalkTalk could reduce the wholesale opportunities available to competing infrastructure providers and should be reflected in the regulator’s analysis of nexfibre’s proposed acquisition.

Those arguments concern the shareholders’ interpretation of market developments, rather than a finding by the CMA that the BT and TalkTalk transaction removes its concerns about nexfibre.

The shareholders have also presented the Substantial acquisition as a route to creating a larger, financially sustainable competitor to Openreach. Their proposed investment programme involves approximately £3.5 billion of additional expenditure and ambitions to develop a fibre network reaching eight million premises.

Those figures describe the shareholders’ proposed investment case and network ambitions. They do not establish that the full expenditure has already been committed to completed infrastructure or that the acquisition would necessarily produce the competitive benefits claimed.

The CMA must assess those arguments against the evidence about existing networks, realistic alternative developments and the ability of infrastructure providers to compete for wholesale customers.

Wholesale access shapes the competition concern

Britain’s full-fibre market involves companies that construct and operate physical networks alongside retail internet service providers that purchase access and sell broadband packages to households and businesses.

Some network operators also have retail operations, while others rely on wholesale customers to generate demand for their infrastructure.

Independent networks can give retailers alternatives when negotiating access prices, service quality, installation arrangements and geographic coverage.

Where networks overlap, those options can influence the terms available to broadband providers even when customers do not directly recognise the infrastructure company supplying their connection.

The CMA’s provisional concern is that combining nexfibre with Substantial could remove a source of wholesale competition in areas where their existing and prospective infrastructure would otherwise compete.

Its assessment therefore involves more than the number of premises passed by the combined network. The regulator must consider which independent suppliers would remain available, whether they offer suitable wholesale services and how competition could develop without the acquisition.

The shareholders’ response focuses on this final element. They argue that a comparison based on an alternative CityFibre acquisition attributes competitive and investment benefits to a scenario that would not realistically occur.

That disagreement affects the entire assessment of the transaction. If the alternative market develops differently from the assumptions used in the interim report, the predicted loss of competition and the remedies considered appropriate could also change.

Equally, financial pressures facing alternative network operators do not automatically establish that reducing the number of independent suppliers would benefit retail providers or their customers.

The regulator must weigh evidence about investment, business viability and effective wholesale competition before reaching a conclusion.

Decision remains open ahead of December deadline

The immediate procedural timetable gives the merging parties and other interested organisations separate opportunities to address the competition findings and possible remedies.

Responses to the interim report must reach the CMA by 5pm on Friday 23 October. The deadline for comments on the remedies consultation is 5pm on Tuesday 27 October.

Those submissions may concern different aspects of the inquiry. Evidence challenging the regulator’s counterfactual could affect its assessment of whether the merger would substantially lessen competition, while comments on prohibition or other possible measures address what should happen if that concern is ultimately confirmed.

The CMA has not announced that the transaction is prohibited, and the shareholders’ refusal to submit remedies has not itself ended the investigation. The regulator can consider further evidence before issuing its final findings and determining whether any intervention is necessary.

The outcome will influence how the proposed combination proceeds and could affect the ownership and development of substantial parts of Britain’s alternative fibre infrastructure.

For retail broadband providers, the relevant commercial issues include the number of independent wholesale networks, the availability of competitive access terms and the capacity of operators to fund reliable services and further expansion.

The case now turns on whether the CMA maintains its provisional assessment after considering the shareholders’ objections and other submissions. Its decision, due by 15 December, will determine whether the acquisition can proceed, requires an acceptable remedy or is prohibited.