UK fixed incumbent BT’s proposed acquisition of EE, the country’s largest mobile operator, took a huge step forward with provisional approval from the Competition and Markets Authority (CMA).
Having looked at both retail and wholesale telecoms markets in the UK, the CMA concluded that the proposed takeover will not lead to substantial lessening of competition, or SLC, a view that is sure to disappoint rivals of BT and EE.
Separately, the CMA is pushing to lead a probe into the UK telecoms market’s other mega-deal – Hutchison’s proposed acquisition of Telefonica O2. The CMA wants to scrutinise the deal rather than the European Commission (EC).
“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,” said inquiry chief John Wotton in a statement.
Provisionally, the authority found that the retail mobile market with four main operators, as well as smaller players, is competitive. As BT is smaller, the merger is unlikely to have an impact on the level of mobile competition, it said. Similarly, the deal won’t dent competition in fixed broadband, where BT is strong but EE’s presence is small.
The CMA also looked at how BT/EE might try to disadvantage rivals which it supplies with services, including backhaul, wholesale mobile or wholesale broadband.
“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,” said Wotton.
“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,” he added.
CMA’s Top Ten
The inquiry looked at ten areas of concern, previously outlined in its July issues statement and was unanimous in provisionally finding no SLC in all but one of the markets reviewed.
The exception was the wholesale mobile market, where the inquiry group was “evenly divided” over whether the concerns gave rise to an SLC. However, a finding of SLC requires a two-thirds majority of the group, and therefore no SLC was found in this area.
The full provisional findings will be published later this week and the CMA has extended the deadline for its final report by eight weeks to 18 January 2016, so that it can consider all the likely responses to its provisional finding. The deadline for responses is 19 November.
In addition, the statement noted: “We have 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,” said the CMA.
Analyst Bengt Nordstrom reacted to the news by suggesting that it bodes well for hopes of a successful 3/O2 conclusion. “The CMA’s decision should in theory make the 3/O2 tie-up in the UK more likely. If you approve one, it also makes sense to approve the other, in the interests of promoting fair competition.”