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.