UK COMPETITION AUTHORITIES have given BT's £12.5bn takeover of EE the provisional thumbs up, ruling that it won't lessen competition in the mobile and broadband markets.
BT’s plan to buy EE was announced in February, and was quick to draw complaints from rivals such as Vodafone which said that mobile networks will be offered inferior deals on broadcast tower connection fees if the merger goes ahead. TalkTalk has also been a vocal opponent, saying that the deal will "reduce the number of MVNO wholesalers from two to one".
Vodafone and TalkTalk will not be happy today, after the UK Competition and Markets Authority (CMA) ruled that the merger is "not expected to result in a substantial lessening of competition in any market in the UK".
The CMA noted that BT and EE operate primarily in different areas - broadband and fixed line for BT, mobile for EE - with only limited overlap, and that the merger will not create opportunities that other providers, including Virgin Media, Vodafone, Sky, TalkTalk and others, cannot replicate.
CMA inquiry chairman John Wotton said: "We recognise that this is a merger which is important to many consumers and businesses. We have heard a number of concerns from competitors.
"After a detailed investigation, our provisional view is 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."
The CMA ruling has naturally gone down well with BT. CEO Gavin Patterson said: "We're pleased that the CMA has provisionally approved BT’s acquisition of EE. The combined BT and EE will be good for the UK, providing investment and ensuring that consumers and businesses can benefit from further innovation in a highly competitive market."
Not everyone is quite so positive, however. 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.
"Rivals such as Sky, Vodafone and TalkTalk have repeatedly expressed concern over the dominant position of the proposed new entity, particularly around mobile spectrum and backhaul," he said.
"It is sure to further fan the flames of their calls for a structural separation of Openreach from BT, currently being considered as part of Ofcom’s digital review of the UK market."
The CMA seems prepared for this backlash, noting in its ruling: "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 its review of the whole telecoms market." µ
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