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Telecoms companies warn on BT takeover of EE

Telecoms companies have warned the Competition and Markets Authority (CMA) that a takeover of mobile telecoms group EE by BT would damage the market. 22 Jul 2015

The CMA published an issues statement last week, laying out the "key questions that the inquiry is examining" in what will be the second phase of its investigation.

Sky, SSE and TalkTalk, Virgin Media, Vodafone and business telecoms group Gamma have all lodged submissions with the authority about the proposed takeover, which would create the largest fixed and mobile communications group in the UK.

In its submission. Sky said that the takeover would bring a "substantial lessening of competition in several areas".

"BT controls via Openreach the supply of essential wholesale inputs on which downstream competitors rely," it said.

"EE also controls critical mobile inputs in the form of wholesale access to the UK's largest mobile network underpinned by the UK's largest spectrum-holdings," Sky said. This is at a time when "access to those inputs and ability to combine them at scale is likely to be crucial to the ability of rivals to compete effectively," it said.

BT would be able to discriminate on pricing, costs, product development, fault repair, as well as the quality of its service, Sky said.

TalkTalk described BT as a "generally unwilling wholesaler across all of its products and in particular is very unlikely to be willing to offer wholesale MVNO [mobile virtual network operator – wireless service providers who do not own the network infrastructure that they use] deals to providers planning to offer bandled products which would compete with its own integrated products".

Gamma is a group of telecoms companies that sells to business end users through independent providers using its own national fibre and switching network. It began is submission by noting "disappointment" that the CMA had no contacted it asking for input, noting that it had learned of the requests sent to other telecoms providersfrom "an article in the Financial Times".

While protecting "residential consumers is an extremely important part of any review", Gamma said, this "cannot be at the expense of ensuring that the needs of British business are also met".

In looking at the details of the BT/EE merger, the CMA is also assessing the effect of a proposed acquisition of Telefonica UK by Hutchison Whampoa on the UK market, it said.

BT announced in February that it had agreed a £12.5 billion takeover of mobile network operator EE.

In May, BT and EE asked the CMA to 'fast track' its review of the merger.

The CMA will issue its final report by 23 November, it said.