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BT - EE deal given provisional green light by CMA

The final hurdle has been all but cleared, as the CMA provisionally rules that the £12.5bn deal will not damage competition or the interests of consumers

BT Group's takeover bid for EE has been given a provisional green light by the Competition and Markets Authority (CMA).

The £12.5bn deal, first announced back in February, would more than treble BT’s customer-base, creating a communications behemoth.

The takeover bid has met staunch opposition from major providers across fixed-line, broadband, mobile and television. In what has become a heated battle, the CMA’s announcement is a significant win for BT.

With an apparent flair for the double negative, the chair of the CMA, John Wotton, said: “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.”

“We recognise that this is a merger which is important to many consumers and businesses. We have heard a number of concerns from competitors. After a detailed investigation, our provisional view is that these concerns will not translate into a competition problem in practice.”

The CMA said it would hold off on the publication of its final ruling until January 18 in order to consider responses to the decision.

BT’s CEO Gavin Patterson was unsurprisingly upbeat about the provisional ruling.

“We’re pleased that the CMA has provisionally approved BT’s acquisition of EE,” he said. “The combined BT and EE will be good for the U.K., providing investment and ensuring consumers and businesses can benefit from further innovation in a highly competitive market.”

While team BT will be dancing a jig in light of the CMA’s decision, there is still the issue of Ofcom’s investigation into the provider's position in the broadband market.

Many competitors are calling for BT to spin off Openreach. They argue that Openreach, which provisions, maintains and upgrades the fixed line network, may show bias towards both BT and EE.

BT maintains that without retaining full ownership of Openreach, it would not have the resources needed to make advancements in the network’s infrastructure.

Tom Mockridge, chief executive of Virgin Media, is the only competitor to side with BT on the issue. The CEO of the only firm not wholly reliant on BT’s core infrastructure told attendees of an industry conference that BT should be allowed to retain control of Openreach.

“Some have argued that BT should be forced to divest Openreach. As a significant infrastructure investor, that is not something we agree with,” he said.

The CMA said that when it came to mobile specifically, it did not see the merger causing any competition issues.

“We provisionally think that the retail mobile market in the UK, with 4 main mobile providers and a substantial number of smaller operators, is competitive,” Wotton said. “As BT is a smaller operator in mobile, it is unlikely that the merger will have a significant effect on competition.”

While this is great news for BT, the language could potentially spell trouble for the merger between Three and O2.

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