BT’s hopes of acquiring EE were given a boost on Wednesday when it received preliminary approval from the U.K. competition watchdog.
The Competition and Markets Authority (CMA) has reached a preliminary decision that the proposed merger will not cause a substantial lessening of competition (SLC) in the U.K.’s retail fixed and mobile markets, nor in its wholesale fixed and mobile markets.
"Having considered all the evidence, the group does not provisionally believe that, in a dynamic and evolving sector, it is more likely…that BT/EE will be able to use its position to damage competition or the interests of consumers," said CMA inquiry chair John Wotton, in a statement.
With four mobile network operators and a host of MVNOs, including BT, the CMA believes the U.K. mobile market is sufficiently competitive and will remain so after the deal closes.
"By the same token, it is unlikely that the merger will have a significant effect on competition in the retail broadband market, where EE is only a minor player," Wotton said.
On the wholesale side, the CMA said the merged entity will have limited ability and incentive to disadvantage competitors.
"The announcement that no remedies will be applied represents a particular victory for the company," noted Kester Mann, principal analyst, operators, at CCS Insight.
"Rivals such as Sky, Vodafone and TalkTalk have repeatedly expressed concern over the dominant position of the proposed new entity, particularly around mobile spectrum and backhaul. It is sure to further fan the flames of their calls for s tructural separation of Openreach from BT, currently being considered as part of Ofcom’s digital review of the U.K. market," he said.
Assuming the deal receives final approval, Mann said, it will enable BT to launch "a potent strategy to cross-sell broadband and TV services to ‘new’ mobile customers."
Meanwhile, the path might not be so smooth for the U.K.’s other major telco merger.
The European Commission is reviewing 3UK’s proposed acquisition of O2 UK, which promises to reduce the number of mobile operators to three from four.
A similar deal between Telenor and TeliaSonera in Denmark was scrapped after the telcos failed to win over EU competition commissioner Margrethe Vestager, casting doubt over the prospects of further consolidation across the continent.
