BT merger with EE appears to gain Ofcom support

(Image Credit: iStockPhoto/LaraBelova)

Back in February, BT announced its plan to acquire EE in a move which has caused fierce debate between industry watchers and various regulatory bodies. Opponents to the merger primarily highlight the monopolising share of spectrum the combined giants will have. 

As you can see from the graph below, EE benefits from more spectrum allocated to its business than any other mobile provider in the market. Adding BT's allocation – in the event of an acquisition – places the company in a position to offer more capacity on their network at faster speeds than rivals. 

Ofcom claims that it's not clear this will provide BT with a significant advantage, and dismisses arguments from competitors that it could place them in a position where they will struggle with capacity through pointing towards future technological advancements and further upcoming spectrum sales. 

What is clear from the graph is that Hutchison-owned network Three is far behind EE and Vodafone in terms of allocation; despite not trailing much behind O2. 

Hutchison is preparing a takeover of O2, if the deal passes European competition watchdogs, which puts Three on a fair standing with EE and Vodafone but would reduce competition in the market to just three major operators. Ofcom says that such a deal would add weight to keeping EE and BT separate to ensure competition remains in the market.  

Despite this, Ofcom has advised the Competition and Markets Authority (CMA) that it did not have any current major objections to the BT/EE deal and existing regulation could tackle most concerns... 

"We recognise that, as a vertically integrated firm, BT may have the incentive to discriminate in favour of its downstream divisions, and we impose regulation to address such concerns. We believe the current and future proposed regulation that we apply to BT will limit BT’s ability to discriminate over price, quality and innovation in the provision of leased lines." 

The statement is in regards to fears that BT could use their extensive national fixed line network to cut prices, impact backhaul supply, and or limit the market’s MVNO options. Ofcom has already taken steps to quell these fears across the industry through proposing a plan to force BT into opening its 'Dark Fibre' lines to rival operators. 

A BT spokesman said: “We welcome Ofcom’s submission to the CMA and that they have no major concerns in light of their regulatory powers. We’re confident that the acquisition is good for UK consumers and businesses. We look forward to addressing Ofcom’s comments.” 

What do you think is the best outcome for the UK market? Let us know in the comments.

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