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BT and EE merger given green light by UK competition regulator

BT's buyout of EE does not pose any risk to competition in the UK telecommunications, says CMA.

EE Store Sign
EE and BT will soon be one.

The merger of two of the UK's biggest telecommunications companies, BT and EE, was provisionally approved by regulator the Competition and Markets Authority (CMA) on Wednesday.

BT announced that it had agreed to buy EE in February for £12.5 billion, with parent companies Orange and Deutsche Telekom exchanging their shares for a stake in BT.

Together, BT and EE will form a telecommunications giant, and the CMA has been examining the merger to ensure it will not result in a substantial lessening of competition in the UK market. After looking at how the tie-up will affect several different areas of the telecoms industry, it has concluded the merger poses little risk to competition.

Effectively the CMA has given its blessing for the sale to proceed. All that is now left before the two companies can unite is to finalise its decision in a report, which is due to be published in January. EE and BT customers are unlikely to be affected by the merger, but in future it may give consumers access to better integrated packages, incorporating mobile, broadband and home phone services.

"EE welcomes the CMA's provisional approval of our merger with BT," said EE's CEO Olaf Swantee. "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."

Competitors have raised concerns about the merger, says the CMA, but given that BT is such a small operator in mobile currently, EE will not gain a significant advantage over its three main rivals in the UK mobile market. Similarly, EE has very little influence in the broadband space, so BT will not gain an advantage either.

"After a detailed investigation, our provisional view is that these concerns will not translate into a competition problem in practice," said John Wotton, inquiry chair. "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."

Another ongoing concern of BT's competitors is the company's ownership of Openreach, the national broadband network. The question of whether Openreach should be spun out from BT to operate completely independently is currently being considered by UK regulator Ofcom.

BT promised last month to support universal minimum broadband speeds of 5-10 megabits per second for every home and business across the UK, as well as extending the reach of its superfast fibre network. EE, for its part, was the first UK network to offer fast 4G LTE network speeds and is regularly reported as the country's best performing network across every category by mobile analysis firm RootMetrics, including in its latest report, measuring performance for the first half of 2015.