BT wins provisional approval for EE acquisition

BT received provisional clearance to acquire mobile operator EE, after the UK Competition and Markets Authority (CMA) decided that the move would not substantially lessen competition in any market in the UK.

In a statement, the CMA inquiry group in charge of reviewing the planned acquisition said it has extended the deadline for its final report by eight weeks to Jan. 18, 2016 to allow it to consider all responses to the provisional findings. The deadline for responses to the provisional findings should be submitted in writing by 5pm GMT on Nov. 19, 2015.

The provisional approval is an important step in BT's plan to create the UK's biggest converged provider of fixed and mobile telecoms services and follows the general trend towards consolidation in Europe. The former incumbent agreed in February to buy EE from existing owners Orange and Deutsche Telekom for £12.5 billion (€17.3 billion/$19 billion).

BT said it welcomed the CMA's provisional decision, and would continue to work with the authority through the remainder of its merger enquiry.

Gavin Patterson, BT's CEO, said: "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."

CMA inquiry chair John Wotton said the regulator recognises that the merger is important to many consumers and businesses and had 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," Wotton said.

The regulator said it believes that the retail mobile market in the UK is competitive, with four main mobile network providers and a large number of smaller operators.

"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," Wotton said.

The CMA also looked at the ways in which a merged BT/EE might try to disadvantage competitors that 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," Wotton said.

The CMA said it has 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," the regulator said.

The BT/EE deal is not the only proposed merger in the UK: CK Hutchison is also hoping to buy O2 UK and merge it with Three UK to create a stronger mobile player. That deal is subject to European Union approval, although the CMA recently asked the European Commission to let it investigate the proposed acquisition because it believes the deal will have the greatest impact on competition in the UK.

The request by the UK comes at a time when the Commission is also signalling it will more thoroughly scrutinise the competitive impact of proposed mergers that reduce the number of mobile operators within a national market from four to three.

For more:
- see the CMA statement
- see the BT statement

Related articles:
UK asks to take over Three/O2 review, as Vestager cautions against 4 becoming 3
BT wins plea for speedier EE probe
BT gets ready to put its case for EE acquisition
Ofcom must break up BT as part of review, rivals say
BT agrees to buy EE for £12.5B

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