BT/EE investigation fast-tracked amid ongoing competition concerns

The Competition and Mergers Authority has agreed to fast-track the investigation of BT’s proposed takeover of EE to phase 2, after it identified concerns surrounding the impact any deal may have on competition in UK markets.

It appears that BT is pretty deft at lobbying for the support it need after it requested a fast-track move to phase 2 last month, as reported by Telecoms.com.  A statement released by the CMA said significant competition concerns were raised during the phase 1 consultation period relating to how the takeover could impact various markets in the UK. Namely, it believes there to be 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”.

It is for these reasons that a more thorough phase 2 investigation has been initiated. Speaking to Telecoms.com, the CMA said the next phase will involve a 24 week consultation and decision-making period, with the option for a further 8 weeks if excessive levels of contention arise. While an official time-table for the process is in the offing, it’s likely that the final call will be made sometime in December 2015 or January 2016, significantly sooner than the April 2016 date BT had originally advised.

The process will see an independent panel, which will be thoroughly conflict-checked, review hearings, invitations to comment and submissions from all main parties and third parties involved. All submissions will be made publicly available, before a statement of progress is made prior to a provisional final decision. Depending on the level of contention surrounding the case, the deal will either be totally approved or have solutions proposed for any concerns, assuming it’s not rejected outright.

Naturally, competitors in the UK market aren’t particularly happy about the prospect of a BT/EE merger. In March, fibre broadband specialist CityFibre submitted a complaint to the CMA claiming the acquisition will result in anti-competitive consequences which will damage the government’s ultrafast broadband roll-out ambitions.

Commenting on the concerns raised, executive director of markets and mergers at the CMA, Andrea Coscelli said: “BT and EE are leading suppliers of UK telecommunications services and together they will 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 then went on to recognise BT’s request to expedite the decision making process, in order to allay a lengthy and unnecessarily drawn out investigation.

“BT and EE have recognised that the issues in this case are complex and that the test for reference at phase 1 would be met,” he said. “They therefore requested use of the fast track procedure and, after due consideration, we believe this to be appropriate.”

BT told Telecoms.com of its satisfaction at the fast-tracking of the investigation, and appeared to remain cognisant of its responsibilities to other telecommunications companies in the UK.

‘We are pleased that the CMA have agreed to our request by proceeding promptly to a phase two investigation,” said a BT spokesperson. “We were keen for this to happen as it should result in a shorter end-to-end review period. We believe the acquisition will be positive for UK consumers and businesses as well as for competition, innovation and investment.”

“BT has a strong track record as a wholesaler and that will not change following the transaction. Openreach is obliged to provide access services to all operators on an equivalent basis and that will not change either. We will make our case to the CMA and seek to reassure them on their points.”