BT’s £12.5 Billion takeover of EE Gets Provisional Approval

The Competition and Markets Authority announced today that it has provisionally approved BT’s £12.5 billion takeover of EE.

The acquisition, announced back in February, will reduce the number of network operators in the U.K. market and the Competition and Markets Authority’s view is that the two businesses have “limited overlap” in their respective categories of service — noting that BT strong in fixed comms services, while EE is strong in mobile services.

“After looking in detail at different markets — including the supply of retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail fixed broadband services — the group has provisionally decided that the merger is not expected to result in a substantial lessening of competition in any market in the UK,” the CMA said today.

Inquiry chair John Wooton 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.”

EE CEO Olaf Swantee said:

“EE welcomes the CMA’s provisional approval of our merger with BT. We now look forward to completing the deal quickly, and creating a new combined company designed to benefit both British consumers and businesses, while helping to propel the UK to the very front of global telecommunications.”

BT Chief Executive Gavin Patterson said:

“We’re pleased that the CMA has provisionally approved BT’s acquisition of EE. 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”.

The U.K.’s telecoms regulator, Ofcom, is separately considering whether BT should be forced to spin off its wholesale broadband business, Openreach, as part of a separate digital review of the U.K. market — due to be published in January.

On Openreach, the CMA said:

“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.”

The inquiry will now consider responses to its initial findings, and has set a final deadline of January 18 to publish its report.

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