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Competition watchdog gives provisional green light to BT/EE merger

Wednesday, October 28th 2015 by Phil Wilkinson-Jones

The Competition and Markets Authority (CMA) has provisionally cleared BT’s takeover of EE.

The proposed £12.5bn acquisition of EE would make BT the country’s biggest fixed line and mobile provider.

But the CMA said the merger was “not expected to result in a substantial lessening of competition in any market”.

The watchdog said that in its view, BT and EE currently operate “largely in separate areas” with BT strong in the fixed broadband, landline and pay TV, and EE strong in the mobile market.

John Wotton, chairman of the CMA inquiry, said a number of concerns had been raised by rival telecoms providers.

“After a detailed investigation, our provisional view is that these concerns will not translate into a competition problem in practice,” he said.

“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.”

Mr Wotton said a merger would be “unlikely” to decrease competition in the telecoms market because BT is a smaller operator in mobile and EE – the UK's largest mobile operator – is “only a minor player” in broadband.

The CMA has also been looking at the impact a merger would have on rival companies that use services supplied by BT and EE, he said.

BT’s fixed line network – which is maintained by its Openreach business – is used by hundreds of broadband and landline providers, while EE supplies backhaul services to other mobile operators.

'Dynamic and evolving'

“We have provisionally found that in some areas it is unlikely that they would have both the ability and incentive to [disadvantage competitors] – and in others that the effects of their attempting to do so would be limited.”

“Having considered all the evidence, the group does not provisionally believe that, in a dynamic and evolving sector, it is more likely than not that BT/EE will be able to use its position to damage competition or the interests of consumers.”

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 consumers and businesses can benefit from further innovation in a highly competitive market”.

EE CEO Olaf Swantee said: “EE welcomes the CMA’s provisional approval of our merger with BT.

"We now look forward to completing the deal quickly, and creating a new combined company designed to benefit both British consumers and businesses, while helping to propel the UK to the very front of global telecommunications."

The CMA has extended the deadline for its final report by eight weeks to 18 January 2016 so it can consider all of the responses to its provisional findings.

Interested parties have until 5pm on 19 November to respond the CMA’s provisional report.

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