BT’s takeover of mobile phone network EE has been provisionally cleared by the Competition and Markets Authority (CMA).
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The Competition and Markets Authority, the non-ministerial government body that watches over mergers and acquisitions in fair old Blighty, found that the proposed merger of BT and EE would not “result in a substantial lessening of competition in any market in the United Kingdom”.
They are wary that BT will be able to abuse its dominance in supplying back haul services, which they use to carry mobile traffic, and in providing wholesale lines and capacity.
A £12.5bn deal, agreed in February, to combine the fixed-line and broadband group and the mobile network operator can now advance. After a detailed investigation, our provisional view is that these concerns will not translate into a competition problem in practice.
However, the CMA’s inquiry decided there was little overlap between BT and EE’s core markets and it would be unlikely that the merged business would “have both the ability and incentive” to use its position as a wholesale provider of broadband to interfere with competitors.
Rivals TalkTalk and Vodafone say that regulators should force BT to spin off Openreach to improve competition and provide a better service.
The inquiry will now consider responses to its initial findings, and has set a final deadline of January 18 to publish its report.
Interested parties have until 5pm on 19 November to respond the CMA’s provisional report. Kester Mann, a principal analyst at CCS Insight, warned that the clearing of the deal will trigger a backlash from rival operators, which are likely to step up the push for a breakup of BT and Openreach.
“The announcement that no remedies will be applied represents a particular victory for the company”.
Good news for BT then, but it still faces challenges to its broadband infrastructure division, Openreach. EE has approximately 14,000 employees and 553 retail stores, and serves more than 31 million customers across its mobile, fixed and wholesale businesses.
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The Hutchison-O2 deal is being reviewed by European Competition Commissioner Margrethe Vestager, and she is expected to demand significant concessions to ensure that consumers do not get hurt if the market consolidates. We have heard a number of concerns from competitors.
