The U.K. competition watchdog has revealed that its investigation into the impact of BT’s proposed acquisition of EE will take into account the implications of the planned merger between mobile operators 3UK and O2.
The Competition and Markets Authority (CMA) on Friday published a statement of issues in which it outlined the key areas it will investigate in the BT/EE case. BT formally submitted its planned £12.5 billion acquisition of EE to the CMA in May and last month the CMA confirmed that it would review the deal and its impact on competition.
"Of relevance to the CMA inquiry into the merger is a parallel telecoms transaction subject to merger control clearance by the European Commission, involving the proposed acquisition of Telefonica UK (O2) by Hutchison Whampoa," the document states.
The European Commission is analysing the £10.25 billion deal Hutchison Whampoa brokered for O2 UK in March, and not the CMA.
However, "we will consider the potential implications of the proposed merger and the Commission’s investigation for competitive concerns in the U.K. and in particular the counterfactual," the CMA said.
The counterfactual refers to the competitive situation in the market if there were no BT/EE merger. The CMA uses this type of assessment to determine whether a merger would bring about what it terms as a substantial lessening of competition, or SLC, in the market.
The CMA s aid there are a number of factors that could lead it to adopt a counterfactual that differs from the prevailing conditions of competition in the market, including the proposed 3UK/O2 merger. It will take into account various scenarios that could occur if the Commission blocks the deal, approves it, or approves it with remedies.
It will also look at BT’s presence in the retail mobile market, since BT claims that if the tie-up with EE were not to go ahead, it would still push ahead with its own mobile plans.
"The counterfactual will reflect the fact that BT has entered the consumer segment of the retail mobile market," the CMA said. "The details of BT’s future competitive strength in retail mobile services will be considered as part of the competitive assessment."
In addition to examining the retail mobile market, the CMA’s probe will also consider the impact of the merger on the wholesale mobile and mobile backhaul services markets, and the wholesale and retail broadband sectors.
It laid out certain competitive scenarios in the statement of issues. Interested parties have until the end of July to submit any comments.
