The UK’s Competition and Markets Authority (CMA) has referred BT’s agreed acquisition of EE for an in-depth Phase 2 competition review, the watchdog announced today.
The decision follows a request by BT in mid-May to skip to a second phase…
The UK’s Competition and Markets Authority (CMA) has referred BT’s agreed acquisition of EE for an in-depth Phase 2 competition review, the watchdog announced today.
The decision follows a request by BT in mid-May to skip to a second phase examination to allow a shorter end-to-end review period than the CMA’s usual process.
The CMA said it had decided to fast-track the fixed/mobile transaction because it met the test for referal since there was “a realistic prospect of a substantial lessening of competition in relation to the supply of wholesale access and call origination services to mobile virtual network operators and fibre mobile backhaul services to mobile network operators in the UK”.
Andrea Coscelli, the CMA’s executive director of markets and mergers who is handling the case, described both companies as leading suppliers of UK telecoms services that together would have a “strong presence in many telecommunications markets.
“They also supply important inputs at the wholesale level, which enable other communications providers to compete at the retail level in the provision of mobile services. We have found that there is a real risk that the merger could reduce their incentives to supply these inputs and that this could have a detrimental impact on the retail mobile market.”
He added that BT’s fast-track request was appropriate given the complexity of the transaction. BT requested a Phase 2 review on 15 May, three days before the CMA kicked off its Phase 1 proceedings.
The resulting consultation drew what the CMA described as “significant competition concerns” around the merger’s impact on other markets, including the retail mobile market. However, because the criteria for a fast track reference were met on the basis of the two issues, the regulator decided it did not need to reach a conclusion on these in Phase 1.
The CMA said that the Phase 2 investigation – which would not be restricted to the initial two issues – would enable third parties to present their views on the merger.
BT noted at the time that even if it were allowed to move straight to the in-depth investigation, it did not expect any deal to close until the end of March 2016.
Laying out its argument for why it should be allowed to buy EE, BT has the transaction would give consumers more choice of fixed-mobile services and quad-play bundles, where it said Virgin Media and TalkTalk were the leading providers.
BT added that the acquisition wouldn’t reduce the number of operators in either the mobile or fixed-line market, nor would it increase its market share in the mobile or broadband market.
