OFT to probe Tiscali's Pipex buy

The Office of Fair Trading (OFT), the UK's consumer and competition authority, has announced an inquiry into the proposed £210 million acquisition of Pipex by rival internet service provider (ISP) Tiscali.

The regulator is concerned about the effect that a merger would have on competition in the broadband market. The deal was referred to it by the ISPs themselves.

"Tiscali, which merged last August with HomeChoice, the pioneering television-on-demand provider, is the UK's fourth-biggest broadband player with around 11 per cent share of broadband customers," the OFT explained. "Pipex is around sixth with a four per cent customer share."

Tiscali confirmed earlier this month that it had agreed a price for Pipex's broadband and voice call business. Pipex is still seeking a buyer for the remainder of its business, including hosting services and a WiMAX network.

Ironically, given the nature of the OFT's probe, the decision to sell was prompted by increased competition in the market from "free" and cut-price broadband providers such as BSkyB and Carphone Warehouse.

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