BT’s £12bn EE deal given final approval by competition watchdog

The competition watchdog has officially approved BTs �12.5 billion buy out of mobile phone firm EE.

The competition watchdog has officially approved BTs �12.5 billion buy out of mobile phone firm EE. - Credit: PA

The competition watchdog has officially approved BT’s £12.5 billion buy out of mobile phone firm EE.

Authorisation from the Competition and Markets Authority (CMA) means the deal brings together the UK’s largest fixed and mobile telecoms businesses.

It comes after the merger was provisionally given the green light in October last year.

Telecoms giant BT announced in February last year that it had agreed to acquire the firm.

Rivals have claimed the move would allow BT to “remonopolise” the UK telecoms sector, forcing broadband firms to use its old network.

But John Wotton, who chaired the inquiry into the deal, said evidence “does not show that this merger is likely to cause significant harm to competition or the interests of consumers”.

BT chief executive Gavin Patterson described the acquisition as “great news”.

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He said: “We are pleased they (CMA) have found there to be no significant lessening of competition following an in-depth investigation lasting more than 10 months.

“The combined BT and EE will be a digital champion for the UK, providing high levels of investment and driving innovation in a highly competitive market.

“I have no doubt that consumers, businesses and communities will benefit as we combine the power of fibre broadband with the convenience of leading edge mobile services. I look forward to welcoming EE into the BT family.”

Following Friday’s approval, BT will commence the formal process of completing the deal. A prospectus will be issued in the week commencing January 25 with the deal set to close on January 29 when Deutsche Telekom and Orange will receive shares in BT.

The telecoms giant will post its third-quarter results on February 1.

The deal is expected to be completed before the end of March.

The CMA inquiry panel said it considered 10 areas of concern - including fears the merging parties would increase prices, lower quality, and reduce the range of their services and/or reduce innovation - but said it was “unanimous” in finding no substantial lessening of competition.

Panel chairman Mr Wotton 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.”

Dan Howdle, telecoms expert at broadband advice site, said telecoms mergers could “marginalise” smaller providers.

He said: “As far as negative impact on UK consumers is concerned, the approval of the BT-EE merger should not be seen as a threat in and of itself.

“Rather, it should be viewed as a new high watermark in the steady reduction of major players to just a handful.

“With O2 and Three also set to merge later this year, along with BT EE, these new giants could potentially marginalise now-smaller providers like Vodafone, making it largely a two-horse race.

“That may well push up prices, and raise barriers to consumers who wish to move freely toward whichever provider is offering them the best deal.

“That’s bad for competition, bad for the industry, and ultimately bad for consumer choice.”