BT's £12.5bn acquisition of EE gets provisional green light from regulator

The two companies work "largely in separate areas" says watchdog which means competition is unlikely to suffer.
Written by Colin Barker, Contributor

The UK's Competition and Markets Authority (CMA), has provisionally cleared BT's giant £12.5bn acquisition of mobile operator EE.

The CMA said while the merger would bring together BT's more than 10 million retail customers and EE's 24.5 million direct mobile subscribers, it was not expected to result in a substantial lessening of competition in any market in the UK.

While BT is strong in supplying fixed communications services (voice, broadband and pay TV), and EE is strong in supplying mobile communications services, the CMA said in there is "limited overlap between them in both categories of service".

The inquiry's chair John Wotton said it had heard a number of concerns from competitors but had decided that these concerns will not translate into a competition problem in practice.

"We provisionally think that the retail mobile market in the UK, with four main mobile providers and a substantial number of smaller operators, is competitive. As BT is a smaller operator in mobile, it is unlikely that the merger will have a significant effect on competition. By the same token, it is unlikely that the merger will have a significant effect on competition in the retail broadband market, where EE is only a minor player," he said.

BT also owns the major broadband wholesale operation BT Openreach, as well as providing many services to other communications providers, including backhaul services to mobile communications providers such as EE, O2, Three and Vodafone.

On this point, the inquiries chair, John Wotton, wrote: "We have only considered Openreach to the extent it is relevant to issues arising from the merger. We are aware of concerns voiced recently about Openreach and wider concerns are currently being considered by Ofcom in their review of the whole telecommunications market."

He also noted: "We have also been looking at the ways in which, as a merged company, BT/EE might try to disadvantage competitors which it supplied with services such as backhaul, wholesale mobile or wholesale broadband services. We have provisionally found that in some areas it is unlikely that they would have both the ability and incentive to do so - and in others that the effects of their attempting to do so would be limited."

The CMA also extended the deadline for its final report by 8 weeks to 18 January 2016 to allow it to consider all responses to the provisional findings in detail before finalising and publishing its decision.

Further Reading:

Should BT and Openreach split to boost broadband Britain?

Vodafone says BT should be made to spin off its broadband network

BT snaps up EE for £12.5bn

EE plans £1.5bn 4G network boost

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