BT’s planned £12.5bn merger with EE has provisionally been given the greenlight by Blighty’s Competitions and Markets Authority.
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BT (LON:BT.A) has been given the all-clear by the Britain’s competition watchdog to acquire mobile telecoms group EE.
A small mobile network from BT has seen a gradual rollout using EE’s network under a MVNO deal, but the CMA believes its market impact would have been limited.
BT said it will continue to engage with the CMA through the remainder of its merger enquiry.
“We recognise that this is a merger which is important to many consumers and businesses”, said John Wotton, Inquiry Chair. “We are aware of concerns voiced recently about Openreach and wider concerns are now being considered by Ofcom in their review of the whole telecommunications market”. It says they operate in largely separate areas, with BT strong in supplying fixed communications services, including voice, broadband and pay TV, while EE is strong in supplying mobile services.
“EE welcomes the CMA’s provisional approval of our merger with BT”, said EE’s CEO Olaf Swantee.
Of key concern is the size of the organisation that would be created, with BT so dominant in the broadband and landline market and EE the largest mobile provider.
The CMA’s provisional findings (PDF) only found one potential market where BTEE might cause a significant lessening of competition: wholesale mobile.
Concerns were dismissed unanimously in all but the wholesale mobile market, where the inquiry group was divided over a possible substantial lessening of competition (SLC). The CMA has also extended the deadline for its final report by 8 weeks to 18 January 2016.
Shares in Just Retirement were up 2.8% at 166.60 pence Wednesday, whilst shares in Partnership Assurance were up 1.5% at 136.75 pence.
Interested parties will have until November 19 to put forward their response to these provisional findings.
Rivals including TalkTalk and Vodafone have hit out at the plans, saying that the deal will concentrate market power. Yet the decision to waive through the deal with no remedies will infuriate BT’s rivals who argue that the combined companies would have too much power at both retail and wholesale levels.
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However, advisers raised concerns the deal could be bad for savers because it would diminish annuity pricing competition.
