I have seen the EU-OS/Suse discussions for some months now. However, Ubuntu/Arch/Fedora are extremely mature projects. So competing against them will be hard.
I want to know how realistic the scenario (described by the question) is.
@xavier666 Given that Canonical is a British company, that's not something that could happen at all. Red Hat is anyone's guess given that the law doesn't really mean anything to them any more.