BT’s £12.5bn acquisition of EE cleared by UK Competition Authority

15 Jan 201629 Shares

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BT's acquisition of EE brings together the UK’s largest fixed telecoms business and the UK’s largest mobile telecoms business

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The acquisition of EE by BT, which brings together the UK’s largest fixed telecoms business and the UK’s largest mobile telecoms business, has been cleared by the Competition and Markets Authority (CMA).

BT announced its plans to acquire EE in February last year.

The CMA surmised that the acquisition was unlikely to harm competition as BT was smaller in mobile and EE was a minor player in broadband.

A range of concerns were raised by other operators and customers in the UK telecoms industry

After a “complex, rigorous and detailed” assessment, the CMA decided the merger would not significantly lessen competition in the market.

BT has 88,000 employees in 61 countries, with 72,000 of these working in the UK. BT controls around 31pc of the UK fixed-broadband market and has a 38pc share of the market for telephone traffic.

EE has 33.8pc share of the mobile market in the UK.

‘The retail mobile services market in the UK is competitive, with four 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’
– JOHN WOOTON, CMA INQUIRY CHAIR

The CMA said that BT and EE operate largely in separate 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.

It said BT (including Openreach) also provides many fixed services to other communications providers, including backhaul services to mobile communications providers such as EE, O2, Three and Vodafone.

EE is a minor player in retail broadband in the UK

CMA added that these backhaul services connect radio masts to core networks. EE also provides wholesale mobile services to other mobile service providers such as Virgin Media.

“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,” John Wooton, inquiry chair, said.

“The retail mobile services market in the UK is competitive, with four 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/EE would 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,” Wooton added.

EE store image via Shutterstock

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com