BT’s £12.5bn acquisition of EE receives the all clear

The Competition and Markets Authority (CMA) has cleared BT’s anticipated £12.5bn acquisition of EE.

This decision follows CMA’s initial clearing of the merger in October 2015.

The £12.5bn acquisition will see the formation of the UK’s largest fixed telecoms business and the UK’s largest mobile telecoms business.

Other operators and customers in the UK telecoms industry voiced several concerns about the deal, therefore the CMA carried out an in-depth assessment.

After examining the provisional findings, as well as the extensive evidence gathered during the inquiry, the CMA inquiry group has decided that the merger is not expected to result in a substantial lessening of competition (SLC) in any market or markets in the UK, including in relation to the supply of retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail broadband services.

BT Group plc and EE Limited mainly operate in different areas with BT dominant in supplying fixed communications services (voice, broadband and pay TV), whereas EE is strong in supplying mobile communications services.

BT also provides many fixed services to other communications providers, including backhaul services to mobile communications providers such as EE, O2, Three and Vodafone. These backhaul services connect radio masts to core networks. EE also provides wholesale mobile services to other mobile service providers such as Virgin Media.

The CMA looked at how the merger would affect competition in a number of different areas of the telecoms sector. As well as examining how it might affect competition for services to consumers which both companies currently provide, the CMA also considered whether it might alter the merged company’s incentives to continue to supply services to other communications providers on a wholesale basis.

John Wotton, Inquiry Chair, said: “Since our provisional findings, we have taken extra time to consider responses in detail but the evidence does not show that this 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 4 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.

“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.

|We have also found that in supplying services such as backhaul, wholesale mobile or wholesale broadband services a combined BT/EEwould 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.“

The CMA considered 10 areas of concern outlined in the issues statement published in July 2015, and the overall impact on the merger on the UK telecoms sector. But it didn’t discover any SLC in relation to any of the markets reviewed.

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