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Labour 'concerned' as BT gets green light to buy EE

Friday, January 15th 2016 by Phil Wilkinson-Jones

Shadow digital minister Chi Onwurah has voiced concerns over BT’s takeover of EE.

The Labour MP admitted she was “surprised” when the £12.5bn deal was given the provisional green light in October and questioned whether the Competition and Markets Authority (CMA) had been “forward-looking enough”.

The CMA today approved the merger, a deal that will make BT the UK’s biggest fixed line and mobile provider, despite a range of concerns being raised by other operators and customers.

Final approval follows a six-month investigation during which the CMA looked at how the deal would affect competition in a number of different areas within the telecoms market.

Ms Onwurah, a former telecoms engineer, said she had concerns over the amount of spectrum held by the combined company and the convergence of the fixed and mobile broadband markets.

She told Cable.co.uk: “To get those together seemed to me to suggest certainly significant consolidation in the market and reduction in the potential for effective competition.

“My concern, particularly on the wholesale issue, was that it wasn’t forward-looking enough so it looked at what we had now but it didn't seem to be looking at what would be the situation in two, three, four years when we have had even more consolidation.”

Ms Onwurah, who has been MP for Newcastle Upon Tyne Central since 2010, added: “I have a great deal of respect for the CMA, I hope they have done a detailed and broad analysis with the support of Ofcom as the sector regulator with the sector expertise.

“I had my concerns and I hope they are addressed in the final report.”

Inquiry chairman John Wotton said the available evidence does not show that the merger is likely to cause "significant harm to competition" or the interests of consumers.

"The retail mobile services market in the UK is competitive, with four main mobile providers and a substantial number of smaller operators. As BT is a smaller operator in mobile, it is unlikely that the merger will have a significant effect," he said. "Similarly, EE is only a minor player in retail broadband, so again it is unlikely that the merger will have a significant effect in this market.

'Wider concerns'

"We have also found that in supplying services such as backhaul, wholesale mobile or wholesale broadband services a combined BT/EE would not have both the ability and the incentive to disadvantage competitors such that there would be significant harm to competition.

"We have heard wider concerns about the sector, including about Openreach and its regulation by Ofcom. Our job has been to examine the specific impact of this merger on competition and consumers and, where relevant, we’ve looked at how these issues might be affected by the merger.

"There is also an ongoing Ofcom review into the sector and its future regulation, where such concerns may have more relevance."

BT said EE will be incorporated into the the wider BT group "over the coming months" and that Marc Allera will become EE CEO following completion of the deal.

BT CEO Gavin Patterson said the combined company will be a "digital champion for the UK, providing high levels of investment and driving innovation in a highly competitive market".

"I have no doubt that consumers, businesses and communities will benefit as we combine the power of fibre broadband with the convenience of leading edge mobile services. I look forward to welcoming EE into the BT family."

In a statement, rival provider TalkTalk said it was disappointed but not surprised by the decision and warned that "the new entity will be even more dominant than it was before privatisation 30 years ago".

"It is dangerous that the regulator has looked at this merger in isolation, given the unprecedented levels of consolidation taking place in the wider telecoms industry. The UK has long been one of the most competitive markets in Europe, but if the Three/O2 merger also goes through, this would end."

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