BT's £12.5bn EE takeover approved by CMA

BT's £12.5bn EE takeover approved by CMA

BT’s proposed takeover of EE has been given preliminary approval by the Competition and Market’s authority (CMA).

The regulator said that it had given the deal the green light because it does not expect it to result in a ‘substantial lessening of competition’ in the mobile and broadband markets.

Explaining the reasons why the merger had been approved, the chair of the inquiry John Wotton 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.’

‘Small operator’ BT

Wotton said that the CMA believed BT’s position as a ‘smaller operator in mobile’ meant the takeover would not have a ‘significant effect on competition’ in that market. Likewise EE’s relatively small broadband presence meant that the impact on that space would be limited.

Addressing the supply backhaul services Wotton said that the regulator believed that it was unlikely to have both the ability and incentive to disadvantage competitors.

EE boss slams rivals who look to ‘roadblock’ BT deal

The decision was welcomed by BT CEO Gavin Paterson who reiterated the firm’s stance that the merger would be good for UK business: ‘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’.

EE seeks quick completion

EE CEO Olaf Swantee said that following the approval the business would look to complete the deal quickly, he 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’.  

Voda's disappointment

Vodafone has expressed disappointment that BT's takeover of EE has been by the CMA. The network said that the merged businesses would have a negative impact on the market, advising the CMA to now turn its focus on seperating BT Openreach.

A spokesperson said: 'We strongly believe the combination of the UK’s dominant supplier of digital fixed infrastructure, upon which all other providers rely, with the largest mobile operator would have a negative impact on the market and the services available to millions of UK consumers and businesses.'

All eyes on Three

The decision comes after the CMA requested the right to investigate the industry’s other major deal; the purchase of O2 by Three’s owners Hutchison Whampoa.

CMA asks to investigate O2/Three merger

The rhetoric in that statement couldn’t be further from the BT statement in which the regulator expressed concerns about a significant impact on competition. The deal is currently being investigated at a European level.

Updated 10:48 28/10/2015

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