The £12.5 billion ($17.9 billion) proposed acquisition of British wireless carrier EE by British Telecom has reportedly been given the all-clear by the Competition and Markets Authority (CMA) of the UK. According to the country’s competition watchdog, the merger between the two will not result in a “significant lessening of competition”, which is why the proposal has apparently gotten the green signal from the British competition regulator. This decision was supposed to be due on Monday, but clearly they have moved things up and given the go ahead on Friday itself. While rival telecommunication companies in the UK have been vocal in their opposition of the deal, the two companies in the midst of this merger have always argued that the deal would be good news for customers, seeing as it will allow the merged entity to offer new products and services for its customers.
Critics of the deal, like rivals Vodafone and Talk-Talk, as also a section of neutral third party observers, however, point out that the merger might give rise to an all-new monopoly in the UK telecom market, by giving too much power to the combined entity that will hold about forty-five percent of the wireless market in the country with over twenty-five million wireless subscribers and about 8.8 million fixed-line broadband subscribers, giving them control of around forty percent of the overall consumer telecom market. CMA, however, counters such arguments by saying that it has spent the better part of the last year investigating concerns of other industry players and neutral third-party commentators, but the approval now shows that the organization is satisfied that nobody has anything to fear about the re-emergence of a monopoly in the UK telecom market, even though not everybody is convinced.
In a statement issued by the CMA explaining its decision, Mr. John Wotton, who chaired the watchdog’s inquiry into the proposed deal, said, “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”. As a result of the merger, Mr. Olaf Swantee will be stepping down from his position as the company CEO, something he described as the “hardest decision in his career”. As for the reactions from the two companies on clearing the regulatory hurdle, both BT and EE released statements expressing their satisfaction, optimism and indeed, vindication at the CMA giving them the green light. The deal, however, is far from being done and dusted, and reports indicate that the formalities are expected to be completed by the end of FY 2015-16.