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BT/EE acquisition receives provisional approval from CMA

Posted by: Lucy Cornwell 28 Oct 15  | Engineering
CMA gives provisional approval for BT acquisition of EE 
 


BT has received provisional approval from the CMA (Competition and Markets Authority) for their acquisition of mobile telecoms company EE.

The CMA stated that, having looked ‘in detail at different markets – including the supply of retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail fixed broadband services’, they have ‘provisionally decided that the merger is not expected to result in a substantial lessening of competition in any market in the UK’. They compared the two companies, finding that they ‘operate largely in separate areas with BT strong in supplying fixed communications services (voice, broadband and pay TY), EE strong in supplying mobile communications services, and limited overlap between them in both categories of service.

The £12.5bn takeover, which was first announced in February of this year, would create a communications giant covering fixed-line phones, broadband, mobile communications and paid-TV, and more than treble BT’s retail customer base, adding EE’s 24.5 million direct mobile subscribers to their existing 10 million consumers.

John Wotton, Chair of the CMA Inquiry, 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 4 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.

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.

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.”

The inquiry group considered 10 areas of concern (or theories of harm), which were outlined in the issues statement published in July. It was unanimously decided that in relation to nine of the ten areas reviewed, there was no SLC (substantial lessening of competition). Regarding the tenth area, the group was evenly divided over whether the concern in question gave rise to an SLC, but as the finding of an SLC requires a two-thirds majority, none was found.

It is somewhat unclear, as yet, what effect this acquisition could have on the rigging industry. It is possible that, should a lessening of competition indeed occur as a result, that lower rates for rigging jobs could follow. However, the CMA’s provisional approval suggests that any SLC should be unlikely, and indeed the merger could lead to improved opportunities within the telecoms industry.

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