Competition and Markets Authority clear EE and BT deal

By admin | Advice Centre

Oct 29

The Competition and Markets Authority (CMA) have provisionally cleared the £12.5bn deal between BT and EE which was announced in February.

It will see the BT group takeover the UK’s largest mobile phone operator EE. The swoop was cleared by the competition watchdog on the grounds that the deal was “not expected to result in a substantial lessening of competition in the UK,” they said.

The deal will create a communications giant, covering fixed-line phone, broadband, mobile and TV and will treble BT’s retail customers. The CMA proposed no changes in the terms of the deal, as with little similarity between BT and EE’s core markets it is unlikely to damage the interest of consumers.

The CMA said the two firms operated in different telco areas “with BT strong in supplying fixed communications services (voice, broadband and pay TV), EE strong in supplying mobile communications services, and limited overlap between them in both categories of service.”

John Wotton, chair of the CMA inquiry said: “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.

EE currently has around 25m subscribers and is joint owned by former state telecom companies, Deutsche Telekom in Germany and Orange in France. Both French and German governments retain stakes in the business and will gain stakes in BT under the proposed deal.

BT chief executive, Gavin Patterson welcomed the arrangement: “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.”

BT is dominant in the UK’s broadband business, owning the infrastructure of how broadband is delivered throughout the UK – even via Sky.

Communications watchdog Ofcom have launched a separate investigation in a wider review of the competition in digital communications, specifically into the breakup of internet broadband and the position of BT-owned Openreach in the market.

Competitors such as Vodafone have spoken of their disappointment of the CMA decision and call for Ofcom to force BT to sell off Openreach; improving competition and the service they provide.

The CMA said in a statement: “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 publication of the enquiry’s final report, however, has been pushed back until January 18th in order to consider all responses.

BT also continue to have increasing conflict with leading pay-TV providers, Sky, as they introduce more pay-TV services and make substantial investments in sports rights. Furthermore, Sky plan to offer mobile contracts through a deal with the second largest mobile operator O2, which will continue to drive competition in the market.

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